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): June 28, 2006

WITS BASIN PRECIOUS MINERALS INC.

(Exact Name of Registrant as Specified in Charter)

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

80 South 8^th Street, Suite 900 Minneapolis, Minnesota (Address of Principal Executive Offices)   55402-8773 (Zip Code)

612.349.5277

(Registrant’s telephone number, including area code)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Vianey Mine Concession

On June 28, 2006, the Registrant closed on an option agreement (the “Option Agreement”) with Journey Resources Corporation, a corporation duly organized pursuant to the laws of the Providence of British Columbia and its wholly-owned subsidiary Minerales Jazz S.A. de C.V., a corporation duly organized pursuant to the laws of Mexico (collectively as “Journey”), whereby the Registrant may earn up to an undivided 50 percent interest in certain mining claims comprising the Vianey Mine Concession (“Vianey”) located in Guerrero State, Mexico, of which Journey is the recorded and beneficial owner of 100 percent of Vianey.

In order to earn the first 25 percent interest in Vianey, the Registrant issued 500,000 shares of its $.01 par value common stock and must further provide an aggregate of $500,000 (on or before December 31, 2006) for an exploration work program to be directed by Journey as identified in the NI 43-101 Technical Report Pertaining To: The Vianey Mine - Guerrero State, Mexico (dated of October 18, 2004 and revised March 10, 2005) prepared by Rodney A. Blakestad J.D., C.P.G., (the “Blakestad Report”).

In order to earn the final 25 percent interest in Vianey, the Registrant must issue an additional 500,000 shares of its $.01 par value common stock (on or before January 15, 2007) and must further provide an additional $500,000 (on or before September 30, 2007 as directed by Journey) for further exploration work identified in the Blakestad Report.

Should the Registrant not provide the additional shares of common stock and fund the entire $1,000,000 required for the exploration, it will loose all of the rights under the Option Agreement with any one default.

On April 18, 2006, the Registrant entered into a letter-of-intent with Journey and issued 100,000 shares of its $.01 par value common stock, which allowed the Registrant a due diligence period until June 15, 2006 (subsequently extended until June 30, 2006) thereafter to execute a formal option agreement. All common stock issuances to Journey have been provided “piggy-back” registration rights.

The foregoing is qualified in its entirety by reference to the Option Agreement and the Blakestad Report, which are being filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K; and such exhibits are incorporated herein by reference. In addition, the Registrant is attaching as Exhibit 99.1 a Press Release dated June 28, 2006, with respect to the Option Agreement, which is incorporated herein by reference.

Hawk MacNugget Claims

On June 29, 2006, the Registrant executed two agreements relating to an exploration project located in Canada. The first agreement was pursuant to a Memorandum of Agreement between the Registrant and Hawk Precious Minerals Inc., (the “Hawk Memorandum”). Hawk Precious Minerals Inc., a corporation organized under the laws of Ontario, Canada (“Hawk”), is an affiliate of the Registrant. H. Vance White, our Chief Executive Officer and a director, is also an officer and director of Hawk. Under the terms of the Hawk Memorandum, the Registrant acquired a 50 percent interest in certain mining claims located in northern Ontario (the “Claims”), held entirely by Hawk by issuing Hawk 40,000 shares of the its $.01 par value common stock.

Under the terms of the second agreement, the Registrant sold a portion of its Claims to MacDonald Mines Exploration Ltd., a Toronto Stock Exchange listed company (“MacDonald”) under a further Memorandum of Agreement between the Registrant, Hawk and MacDonald (the “Hawk/MacDonald Memorandum”). With the execution of the Hawk/MacDonald Memorandum, the Registrant beneficially received 50,000 unregistered shares of MacDonald’s publicly-traded common stock, whereby MacDonald would become a 51 percent owner in the Claims and become the operator of the exploration efforts of the Claims.

With the execution of both agreements, a formal joint venture agreement is to be drafted and will include a dilution formula requiring further monetary participation of the Registrant in order to maintain its 24.5 percent interest in the Claims.

In order to comply with the provisions Section 302A.255 of the Minnesota Business Corporation Act, with respect to agreements and transactions between the Registrant and Hawk or any of its affiliates, the Registrant’s Board of Directors (the “Board”), established a committee of the Board (the “Committee”) comprised solely of directors having no material financial interest in Hawk or any of its affiliates. The Committee was given the full power of the Board in all matters relating to transactions between the Registrant and Hawk or any affiliate of Hawk, including, without limitation, approving the terms of such transactions and the consideration to be paid by the Registrant to Hawk or any of its affiliates. Effective as of June 15, 2006, the Committee approved and authorized the execution of the two agreements relating to the Hawk MacNugget Claims.

The foregoing is qualified in its entirety by reference to the Hawk Memorandum and the Hawk/MacDonald Memorandum, which are being filed as Exhibits 10.3 and 10.4, respectively, to this Current Report on Form 8-K; and such exhibits are incorporated herein by reference.

Item 9.01.   Financial Statements and Exhibits.

(c) Exhibits

Exhibit	Description of Document
10.1	Option Agreement by and between the Registrant, Journey Resources Corporation and Minerales Jazz S.A. de C.V., dated June 28, 2006.
10.2	NI 43-101 Technical Report Pertaining To: The Vianey Mine - Guerrero State, Mexico (dated of October 18, 2004 and revised March 10, 2005) prepared by Rodney A. Blakestad J.D., C.P.G.
10.3	Memorandum of Agreement between the Registrant and Hawk Precious Minerals Inc., dated June 29, 2006.
10.4	Memorandum of Agreement between the Registrant, Hawk Precious Minerals Inc., and MacDonald Mines Exploration Ltd., dated June 29, 2006.
99.1	Press release dated June 28, 2006.

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 30, 2006	By:	/s/ Mark D. Dacko
		Mark D. Dacko
		Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description of Document
10.1	Option Agreement by and between the Registrant, Journey Resources Corporation and Minerales Jazz S.A. de C.V., dated June 28, 2006.
10.2	NI 43-101 Technical Report Pertaining To: The Vianey Mine - Guerrero State, Mexico (dated of October 18, 2004 and revised March 10, 2005) prepared by Rodney A. Blakestad J.D., C.P.G.
10.3	Memorandum of Agreement between the Registrant and Hawk Precious Minerals Inc., dated June 29, 2006.
10.4	Memorandum of Agreement between the Registrant, Hawk Precious Minerals Inc., and MacDonald Mines Exploration Ltd., dated June 29, 2006.
99.1	Press release dated June 28, 2006.

EX-10.1

EXHIBIT 10.1

OPTION AGREEMENT

THIS AGREEMENT is dated for reference as of the 28^th day of June, 2006.

AMONG:

JOURNEY RESOURCES CORPORATION, a company duly organized pursuant to the laws of the Province of British Columbia and having an office at #1208 - 808 Nelson Street, Vancouver, British Columbia, V6Z 2H2

(“Journey”, and collectively with Jazz, the “Optionors”)

OF THE FIRST PART

AND:

MINERALES JAZZ S.A. DE C.V., a corporation duly organized pursuant to the laws of Mexico and having an office at Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sin MEXICO 82149

(“Jazz”, and collectively with Journey, the “Optionors”)

OF THE SECOND PART

AND:

WITS BASIN PRECIOUS MINERALS INC., a company duly organized pursuant to the laws of the State of Minnesota and having an office at 900 IDS Center, 80 South 8th Street, Minneapolis, Minnesota, 55402

(the “Optionee”)

OF THE THIRD PART

WHEREAS:

(A)The Optionors are the recorded and beneficial owners of an undivided 100% interest in and to certain mineral concessions situated in Guerrero State, Mexico to be known as the Vianey Mine Concession, as detailed in the specific description of the mineral concessions in Schedule “A” attached hereto (herein called the “Property”); and

(B)The Optionors have agreed to grant an exclusive option to the Optionee to acquire up to a 50% undivided interest in and to the Property by paying certain consideration and by incurring certain exploration Expenditures on the Property upon the terms and conditions herein;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency which is hereby acknowledged, the parties agree as follows:

PART 1

DEFINITIONS

1.1In this Agreement, except as otherwise expressly provided or as the context otherwise requires:

(a)“Area of Common Interest” means, subject to Part 15, the area included within two (2) kilometres of the boundaries of the Property, but excluding any third party mineral claims in existence as of the Effective Date;

(b)“Effective Date” means the date first above written;

(c)“Expenditures” means all direct or indirect costs and expenses incurred by the Optionee in respect of prospecting and exploring the Property after the date of this Agreement pursuant to §2.2 hereof. The certificate of the Controller or other financial officer of the Optionee, together with a statement of Expenditures in reasonable detail shall be prima facie evidence of such Expenditures;

(d)“Force Majeure” has the meaning set forth in Part 11;

(e)“Joint Venture” means the joint venture to be formed between the Optionors and the Optionee in respect of the Property upon exercise of the Option and which is more particularly described in Part 6;

(f)“Joint Venture Agreement” means the Joint Venture Agreement containing, but not limited to, terms and conditions as set out in Part 6 to be entered into between the Optionee and the Optionors if the Optionee exercises this Option;

(g)“Option” means the exclusive right herein granted by the Optionors to the Optionee to permit the Optionee to acquire up to a 50% undivided interest in and to the Property;

(h)“Option Period” means the period from the Effective Date to and including the earliest of:

(i)the date of exercise of the Option, or

(ii)the termination hereof pursuant to Part 14;

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(i)“Property” means the mineral concessions described in Schedule “A” (the “Property”) as they may be augmented pursuant to Part 15 (such augmenting claims or interests being referred to herein as the “Additional Property” and included as part of the Property), and all mining leases and other mining interests derived from any such claims, and a reference herein to a mineral claim comprised in the Property includes any mineral leases or other interests into which such mineral claim may have been converted and Property includes all Property Rights;

(j)“Property Rights” means all licenses, permits, easements, rights-of-way, surface or water rights and other rights, approvals obtained by either of the parties either before or after the date of this Agreement and necessary or desirable for the development of the Property, or for the purpose of placing the Property into production or continuing production;

(k)“Registrable Securities” means the Shares, and all shares of common stock issued or issuable in respect of the Shares by virtue of any stock split, stock dividend, recapitalization or similar event, excluding Shares which have been (a) registered under the Securities Act of 1933 (the “Securities Act”) pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) publicly sold pursuant to Rule 144 promulgated under the Securities Act;

(l)“SEC” means the United States Securities and Exchange Commission; and

(m)“Shares”means theshares of common shares in the capitalstock of the Optionee which are issuable by the Optionee under this Agreement;

PART 2

GRANT AND EXERCISE OF OPTION

2.1Subject to the terms of this Agreement, the Optionors hereby grant to the Optionee the sole and exclusive right and option (the “Option”) to acquire up to a 50% interest in and to the Property, such 50% interest to be free and clear of all liens, charges, encumbrances, security interests and adverse claims arising from or through the Optionors, and subject to the laws applicable to the Property.

2.2In order to exercise the Option, the Optionee must:

(a) issue 500,000 Sharesto Journey on or before June 30, 2006;

(b) on or before December 31, 2006, incur Expenditures in the aggregate amount of USD$500,000 pursuant to a work program commenced and operated by the Optionors, as outlined in the Blakestead Technical Report dated October 18, 2004 and revised March 10, 2005;

(c) on or before January 15, 2007, issue an additional 500,000 Sharesto Journey; and

(d) on or before September 30, 2007, incur additional Expenditures in the aggregate amount of USD$500,000 pursuant to a secondary work program commenced and operated by the Optionors, as recommended by the Optionors’ consultants.

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All Shares of the Optionee issuable to Journey hereunder, shall have piggy back rights and shall be the subject of a registration statement with the SEC, within sixty (60) days of the issuance of such Shares, or within such time as is reasonably practical and mutually agreed.

PART 3

VESTING OF INTEREST

3.1Upon complying with all of the requirements set forth in §2.2, the Optionee will immediately be vested in and be deemed to legally and beneficially own a 50% interest in the Property, and a Joint Venture between the Optionors and the Optionee will be deemed to have been formed with terms and conditions of a Joint Venture Agreement to be negotiated in good faith upon terms and conditions as described in Part 6.

3.2Upon the Optionee satisfying only the obligations set forth in §2.2(a) and§2.2(b) above, the Optionee will immediately be vested in and be deemed to legally and beneficially own a 25% interest in the Property, and a Joint Venture between the Optionors and the Optionee will be deemed to have been formed with terms and conditions of a Joint Venture Agreement to be negotiated in good faith upon terms and conditions as described in Part 6.

PART 4

TITLE TRANSFER

4.1Upon the Optionee exercising the Option by satisfying all of the requirements set forth in §2.2, the Optionors shall execute such documentation as the Optionee may prepare and reasonably request be executed under the laws of Mexico to record to the extent possible, the respective interests of each of the parties in the Property.

4.2Upon the Optionee satisfying the obligations set forth in §2.2(a) and §2.2(b), the Optionors shall execute such documentation as the Optionee may prepare and reasonably request be executed under the laws of Mexico to record to the extent possible, the respective interests of each of the parties in the Property.

PART 5

OPERATOR’S FEE

5.1The Optionors in their capacity as operators of the work programs during the Option Period, to be conducted pursuant to §2.2, may charge a fee equal to ten percent (10%) of Expenditures.

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5.2  Such operator fee shall cover all of the Optionors’ home office overhead costs and all general and administrative expenses including telephone, faxes, and direct management salaries and wages.

PART 6

FORMATION OF JOINT VENTURE

6.1  If the Optionee satisfies all of the obligations set forth in §2.2, the Optionors and Optionee (each a “Participant”) shall be deemed to have formed a Joint Venture for the purpose of carrying out further exploration, development and production work on the Property, and shall negotiate in good faith the comprehensive terms of a Joint Venture Agreement, which shall include but not be limited to the general terms contained in this Part 6.

6.2The project shall be run on a 50%/50% basis or a 75%/25% basis (“Participating Interest”), whichever is applicable in accordance with the terms hereunder, with both Participants contributing to all costs in operating the Joint Venture in proportion to its percentage of undivided Participating Interest. The aggregate amount of Expenditures on the project at the point of execution of the Joint Venture Agreement will be deemed to be the current value of the project (the “PV”). The PV will be updated each time an additional expenditure is made.

(a)if, at the time of formation of the Joint Venture, the Optionee has satisfied only those obligations set forth in §2.2(a) and §2.2(b), the Participants shall have the following initial Participating Interests in the Joint Venture:

Party	Participating Interest			Deemed Exploration Expenditures
Optionee		25	%		25% of PV
Optionors		75	%		75% of PV

(b)if, at the time of formation of the Joint Venture, the Optionee has satisfied all of the requirements set forth in §2.2, the Participants shall have the following initial Participating Interests in the Joint Venture:

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Party	Participating Interest			Deemed Exploration Expenditures
Optionee		50	%		50% of PV
Optionors		50	%		50% of PV

6.3  Direction of the Joint Venture, including all operations on and in connection with the Property, shall be managed by the management committee (the “Management Committee”) comprised of one representative of the Optionors and one representative of the Optionee. All decisions of the Management Committee shall be made by simple majority of the votes cast. The representative of a Participant in the Management Committee shall have such number of votes as equals such party’s Participating Interest at the time of the vote. The party with the most Interest in the project shall have the deciding vote. In the case where the parties have an equal interest, the representative of the Operator shall have the deciding vote. The party with the deciding vote is the “Manager” and “Operator”.

6.4  A Management Committee meeting must be held quarterly with at least one representative from each of the Optionors and Optionee present at the meeting to form a quorum. The Operator shall present a project update and budget at each quarterly. Meetings may be held in person or by telephone.

6.5  A management fee shall be paid based on a percentage of Expenditures, as follows:

(a) to Optionors during the Option Period: 10%;

(b) to Manager after Joint Venture formation: 5% for all qualified exploration expenditures incurred; and

(c) to Manager after full feasibility report accepted: 5% for all qualified expenditures during construction, development and operations of the mine.

The management fee shall cover all Manager’s office overhead costs and all general and administrative expenses including telephone, faxes, and direct management salaries and wages.

6.6The Optionors, until the Joint Venture Agreement is entered into, and the Manager after the Joint Venture Agreement is entered into may, at its discretion from time to time, invite the non-managing party to contribute to the agreed upon budget and participate in the then current work program. When this occurs, the non-managing party will invoice the Manager for the additional contributed amounts and no management fee will be applied to these funds.

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6.7Funding of the project will be as follows:

(a) each party will contribute to all costs in proportion to its percentage of undivided Property interest (“Interest”) from time to time as determined by the Management Committee;

(b) each Participant will have fifteen (15) days from the Management Committee’s approval date of each quarterly budget to elect to fund their respective share of the estimated capital costs or exploration costs. 50% of these funds must be provided prior to the expenditure commitment. The other 50% shall be provided once the Manager gives evidence of the expenditure;

(c) if either Participant elects not to contribute their share of the capital costs or exploration costs of the project, then the other Participant has the right to contribute to the non-contributing Participant’s share of capital costs or exploration costs to the project resulting in a diluted ownership Interest of the non-contributing Participant, using the capital costs or exploration costs of the project as the denominator for dilution calculation purposes;

(d) if the non-contributing Participant first elected to contribute their share of capital costs or exploration costs to the project and fails to do so for whatever reason, then this Participant is considered to be delinquent. In this case, an accelerated dilution formula will apply by using 50% of the capital costs or exploration costs of the feasibility study as the denominator for dilution calculation purposes;

(e) if at any time either Participant’s working Interest in the project is reduced below 10%, then their interest will automatically convert to a 5% net project interest (the “NPI”); and

(f) the Operator shall be entitled to include in each budget, in addition to the amounts to be actually expended, the reasonably estimated cost of satisfying continuing obligations relating to environmental protection, rehabilitation, reclamation and de-commissioning.

6.7The Property shall be registered in the name of each Participant with each Participant’s Interest noted in such registration, or as required under Mexican law.

6.8 The Joint Venture Agreement will supersede this Agreement, provided that the provisions of Part 9, as well as all rights and liabilities of each party in existence on the date on which the Joint Venture Agreement is entered into, shall continue thereafter.

6.9 In the event the parties are unable to negotiate the terms of the Joint Venture Agreement, the parties agree to refer the determination of the terms of such Agreement not agreed upon to binding arbitration as contemplated by Part 13.

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PART 7

ASSIGNMENT OF OPTION

7.1Subject to §7.2, each party shall have the right to assign, transfer, convey or otherwise dispose of all or part of its rights and interests in this Agreement, provided that as a condition precedent to such assignment, (i) the assignee shall execute a counterpart of this Agreement and thereby agree to be bound by the contractual terms hereof in the same manner and to the same extent as though a party hereto in the first instance; (ii) the assignor shall not be relieved or discharged of any of its obligations or liabilities hereunder and the other parties may continue to look to it for the performance thereof, and (iii) the assignor will subject any further assignment, transfer, conveyance or disposition of its rights and interests in this Agreement to the restrictions set out in this §7.1.

7.2If the Optionee wishes to assign, transfer, convey or otherwise dispose of all or part of its rights and interests in this Agreementpursuant to §7.1, it may do so only with the consent of the Optionors, such consent not to be unreasonably withheld.

PART 8

RIGHT OF ENTRY

8.1Throughout the Option Period, the Directors and Officers of the Optionors and its servants, agents and independent contractors, will have the sole and exclusive right in respect of the Property to:

(a) enter thereon;

(b) have exclusive and quiet possession thereof;

(c) do such prospecting, exploration, development and/or other mining work thereon and thereunder as the Optionors in their sole discretion may determine advisable;

(d) bring upon and erect upon the Property buildings, plant, machinery and equipment as the Optionors may deem advisable; and

(e) remove therefrom and dispose of reasonable quantities of ores, mineral and metals for the purpose of obtaining assays or making other tests.

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PART 9

OBLIGATIONS OF THE PARTIES DURING OPTION PERIOD

9.1During the Option Period the Optionors will:

(a) maintain the Property in good standing by the doing of the performance of all actions which may be necessary in that regard and in order to keep such mineral claims free and clear of all liens and other charges arising from the Optionors’ activities thereon except those at the time contested in good faith by the Optionors,remove therefrom and dispose of reasonable quantities of ores, mineral and metals for the purpose of obtaining assays or making other tests.

(b) permit the directors, officers, employees and designated consultants of the Optionee, at their own risk, access to the Property at all reasonable times, and providing the Optionee agrees to indemnify the Optionors against and to save the Optionors harmless from all costs, claims, liabilities and expenses that may be incurred or suffered as a result of any injury (including injury causing death) to the Optionee and their respective employees or designated consultants while on the Property;

(c) while exploration and development is carried out, furnish the Optionee with quarterly progress reports and with a final report within ninety (90) days following the conclusion of each work program which will be deemed to occur upon the verification of final assays. The final report shall show the exploration and development performed and the results obtained and shall be accompanied by a statement of costs and copies of pertinent plans, assay maps, drill records and other factual engineering data. All information and data concerning or derived from the exploration and development shall be kept confidential except as permitted under this Agreement;

(d) deliver to the Optionors on or before six (6) months after each anniversary hereof, a report (including up-to-date maps if there are any) describing the results of work done in the last completed expenditure year, together with reasonable details of Expenditures made,

(e) do all work on the Property in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority and file for all available assessment credits, and

(f) indemnify and save the Optionee harmless in respect of any and all costs, claims, liabilities and expenses arising out of the Optionors’ activities on the Property.

9.2 During the Option Period the Optionee will:

(a) Fulfill the payment and expenditure requirements as set forth in §2.2 in a timely manner and within the time period prescribed; and

(b) indemnify the Optionors against and save the Optionors harmless from any and all costs, claims, liabilities and expenses that may be incurred or suffered as a result of any injury (including injury causing death) to the Optionee and its directors, officers, respective employees or designated consultants while on the Property.

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PART 10

REPRESENTATIONS AND WARRANTIES

10.1The Optionors jointly and severally represent and warrant to the Optionee that:

(a) the Optionors have not entered into and are not aware of any other agreements in respect of the Property;

(b) the mineral interests comprised in the Property have, to the best of the Optionors’ knowledge been duly and validly staked, recorded and issued pursuant to all applicable laws and regulations in Mexico and to the best of its knowledge are in good standing;

(c) all rentals, taxes, duties, royalties, assessments, charges or fees and other assessments and levies pertaining to the Property and required to be paid by law or regulation have been fully paid as of the Effective Date;

(d) there are not any suits, actions, prosecutions, investigations or proceedings, actual, pending or threatened, against or affecting the Optionors that relate to or has an adverse effect on the Property;

(e) any and all previous work conducted on the Property was conducted in accordance with all applicable environmental laws, orders and rulings, and there are no outstanding assessments or liabilities relating to past work conducted on the Property which are now, or in the future may be, payable by any party;

(f) each of the Optionors has full power and absolute authority to grant to the Optionee the rights provided in this Agreement;

(g) they have obtained all necessary corporate authorization for the execution of this Agreement and the performance of this Agreement by them; and

(h) this Agreement constitutes a legal, valid and binding obligation of each of the Optionors; and

(i) the Optionors have all necessary permits and authorizations under applicable law to carry on operations.

10.2The Optionee represents and warrants to the Optionors that:

(a) the execution and delivery of this Agreement and the exercise by the Optionee of the rights granted to it under this Agreement will not conflict with or result in a breach of or default under any agreement or other instrument of obligation to which the Optionee is a party or by which it may be bound;

(b) it has obtained all necessary corporate authorization for the execution of this Agreement; and

(c) this Agreement constitutes a legal, valid and binding obligation of the Optionee.

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10.3The representations and warranties contained in §10.1 are provided for the exclusive benefit of the Optionee and a breach of any one or more of them may be waived by the Optionee in writing in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty.

10.4The representations and warranties contained in §10.2 are provided for the exclusive benefit of the Optionors and a breach of any one or more of them may be waived by each of the Optionors in whole or in part at any time without prejudice to their rights in respect of any other breach of the same or any other representation or warranty.

PART 11

FORCE MAJEURE

11.1If the Optionee is at any time either during the Option Period prevented or delayed in complying with the Expenditure requirement provisions of this Agreement in §2.2 by reason of strikes, walk-outs, labour shortages, power shortages, fuel shortages, fires, wars, acts of God, governmental regulations restricting normal operations, shipping delays or any other reason or reasons beyond the control of the Optionee (and for greater certainty excluding factors related to a lack of funding), the time limited for the performance by the Optionee of its obligations hereunder will be extended by a period of time equal in length to the period of each such prevention or delay, provided however that nothing herein will discharge the Optionee from its obligation to timely pay the share consideration under §2.2(a) or §2.2(c).

11.2The Optionee will within seven (7) days of a force majeure event as set forth in §11.1 give notice to the Optionors of such event and upon cessation of such event will furnish the Optionors with notice to that effect together with particulars of the number of days by which the obligations of the Optionee hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

PART 12

CONFIDENTIALITY

12.1Subject to §12.2 all information received or obtained by the Optionee or the Optionors hereunder or pursuant hereto shall be kept confidential and no part thereof may be disclosed or published without the prior written consent of the other except such information as may be required to be disclosed or published by law or regulation; provided that either party may disclose information to any person or persons with whom it proposes to contract pursuant to Part 7 and have agreed to hold the same in confidence, it being agreed that prior to such disclosure, the non-disclosing party shall receive notice thereof and a copy of the confidentiality agreement executed by the person or persons with whom the disclosing party proposes to contract pursuant to Part 7.

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12.2Confidential information shall not include the following:

(a)information that, at the time of disclosure, is in the public domain;

(b)information that, after disclosure, is published or otherwise becomes part of the public domain through no fault of the recipient;

(c)information that the recipient can show already was in the possession of the recipient at the time of disclosure; or

(d)information that the recipient can show was received by it after the time of disclosure, from a third party who was under no obligation of confidence to the disclosing party at the time of disclosure.

12.3Except as required by law or regulatory authority, neither party shall make any public announcements or statements concerning this Agreement or the Property without the prior approval of the other, not to be unreasonably withheld.

12.4The text of any public announcements or statements including news releases which a party intends to make pursuant to the exception in §12.3 shall be made available to the other party not less than twenty-four (24) hours prior to publication and the disclosing party shall limit or amend such disclosure as may be requested by the non-disclosing parties to the extent such limitation or amendment allows the disclosing party to meet its legal obligations. If either of the Optionors or their affiliates (including parent corporations) are identified in such public announcement or statement it shall not be released without the consent of the relevant Optionor in writing. Neither party may issue a release containing a factual error identified by the other party.

PART 13

ARBITRATION

13.1All questions or matters in dispute with respect to the interpretation of this Agreement will, insofar as lawfully possible, be submitted to arbitration pursuant to the terms hereof using “final offer” arbitration procedures.

13.2It will be a condition precedent to the right of any party to submit any matter to arbitration pursuant to the provisions hereof, that any party intending to refer any matter to arbitration will have given not less than ten (10) days’ prior written notice of its intention so to do to the other party together with particulars of the matter in dispute.

13.3On the expiration of such ten (10) day period, the party who gave such notice may proceed to commence procedure in furtherance of arbitration as provided in this Part 13.

13.4The party desiring arbitration (“First Party”) will nominate in writing three (3) proposed arbitrators, and will notify the other party (“Second Party”) of such nominees, and the other party will, within ten (10) days after receiving such notice, either choose one (1) of the three (3) or recommend three (3) nominees of its own. All nominees of either party must hold accreditation as either a lawyer, accountant or mining engineer with a minimum of ten (10) years’ experience in their given profession. If the First Party fails to choose one of the Second Party’s nominees, then all six (6) names shall be placed into a hat and one name shall be randomly chosen by the president of the First Party and that person, if he/she is prepared to act, shall be the nominee. Except as specifically otherwise provided in this Part 13, the arbitration herein provided for will be conducted in accordance with the Commercial Arbitration Act (British Columbia). The parties shall thereupon each be obligated to proffer to the arbitrator within twenty-one (21) days of his/her appointment a proposed written solution to the dispute and the arbitrator shall within ten (10) days of receiving such proposals choose one of them without altering it except with the consent of both parties.

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13.5The expense of the arbitration will be paid as specified in the award.

13.6The parties agree that the award of the arbitrator will be final and binding upon each of them.

PART 14

DEFAULT AND TERMINATION

14.1The Optionors may terminate this Agreement in the event of a material breach of any term or condition of this Agreement by the Optionee, which material breach is not corrected within thirty (30) days of the receipt by the Optionee of written notice which describes such breach in reasonable detail.

14.2If this Agreement is terminated, the Optionee shall:

(a) forthwith discharge all amounts due and owing to Optionors and third parties in connection with the Operations;

(b) within 180 days deliver to the Optionors copies of all reports, maps, plans, photographs and drill logs of the Optionee relating to the Property, provided that the Optionee does not make any representation or warranty concerning the accuracy or completeness thereof; and

(c) within the said 180 days remove from the Property any machinery, buildings, structures, facilities, equipment and all other Property of every nature and description erected, placed or situated thereon by the Optionee; any Property not so removed at the end of the 180 day period shall, at the written option of the Optionors delivered to the Optionee, become the Property of the Optionors.

14.3If the Optionee is prevented from or delayed in performing its obligations in §14.2(b)or §14.2(c) bya force majeure event as set forth in §11.1, the relevant period of 180 days referred to therein shall be extended by the period of the force majeure event.

-13-

PART 15

AREA OF COMMON INTEREST

15.1There shall exist an area of common interest within the area included within two (2) kilometres of the boundaries of the Property (as detailed in the specific description of the mineral concessions attached hereto as Schedule “A”), but excluding any third party mineral claims existing as of the Effective Date. If either party (or permitted assignee hereof) acquires any mineral rights within such area by staking or by the granting of such additional prospecting permits, they shall, at the election of the other party (made by it within twenty (20) days of written notice), be made part of the Property for all purposes and may be referred to as Additional Property.

PART 16

REGISTRATION RIGHTS

16.1Subject to the terms, conditions and limitations set forth herein, following the date that the Optionee is required to make an issuance of Shares under this Agreement (an “Issuance Date”), the Optionee will use commercially reasonable efforts to file one or more registration statements with the SEC in the appropriate form (each a “Resale Registration Statement”) within sixty (60) days following such Issuance Date (a “Filing Date”) to allow the resale of the Registrable Securities under the Securities Act, and use its commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC as soon as practicable following the Filing Date and, in any event, prior to the date which is 180 days after each applicable Issuance Date.

16.2If, following an Issuance Date, the Optionee shall determine to prepare and file with the SEC a registration statement relating to an offering of common stock for its own account under the Securities Act (an “Optionee Registration Statement”), then the Optionee shall send to the Optionors written notice, at least twenty (20) business days prior to the filing of such registration statement, of such determination and that all or part of such Registrable Securities then held by the Optionors may be included in such registration statement at the Optionors’ request. And if, within fifteen (15) business days after delivery of such notice, the Optionors shall so request in writing, the Optionee shall include in such registration statement the resale of the Registrable Securities requested by the Optionors to be so included. Such written notice shall state the intended method of disposition of the Registrable Securities by the Optionors.

PART 17

NOTICES

17.1Each notice, demand or other communication required or permitted to be given under this Agreement (“Notice”) to the Optionors or the Optionee by the other shall be in writing and will be sent by personal delivery, fax or prepaid registered mail to the addresses of the parties as follows:

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(a) if to the Optionors:

#1208 - 808 Nelson Street

Vancouver, British Columbia V6Z 2H2

Facsimile: [(604) 633-2462]

Attention: [Jack Bal]

(b) if to the Optionee:

900 IDS Center, 80 South 8th Street

Minneapolis, Minnesota, USA 55402

Facsimile: [(612) 395-5276]

Attention: [H. Vance White]

17.2The date of receipt of such Notice will be the date of delivery or fax thereof if delivered or faxed during business hours, or, if given by registered mail as aforesaid, will be deemed conclusively to be the third day after the same will have been so mailed except in the case of interruption of postal services for any reason whatever, in which case the date of receipt will be the date on which the Notice is actually received by the addressee.

17.3Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which Notices will be given to it thereafter until further change.

PART 18

GENERAL

18.1This Agreement is subject to the approval of the Board of Directors of each of the Optionors and the Optionee, and acceptance of the TSX Venture Exchange if required.

18.2This Agreement will supersede and replace any other agreement or arrangement, whether oral or written, heretofore existing between the parties in respect of the subject matter of this Agreement.

18.3No consent or waiver expressed or implied by either party in respect of any breach or default by the other in the performance of such other of its obligations hereunder will be deemed or construed to be a consent to or a waiver of any other breach or default.

18.4The parties will promptly execute or cause to be executed all documents, deeds, conveyances and other instruments of further assurance which may be reasonably necessary or advisable to carry out fully the intent of this Agreement or to record wherever appropriate the respective interests from time to time of the parties in the Property.

18.5This Agreement will inure to the benefit of and be binding upon the parties and their respective successors and assigns, subject to the conditions hereof.

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18.6This Agreement will be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

18.7All sums of money referred to herein are expressed in United States currency.

18.8The headings appearing in this Agreement are for general information and reference only and this Agreement will not be construed by reference to such headings.

18.9In interpreting this Agreement and Schedule “A” hereto attached, where the context so requires, the singular will include the plural, and the masculine will include the feminine, the neuter, and vice versa.

18.10Nothing herein will constitute or be taken to constitute the parties as partners or create any fiduciary relationship between them.

18.11No modification, alteration or waiver of the terms herein contained will be binding unless the same is in writing, dated subsequently hereto, and fully executed by the parties.

18.12 This Agreement may be executed in counterpart and by facsimile.

IN WITNESS WHEREOF this Agreement has been executed on behalf of the Optionors and the Optionee by their duly authorized officers on the 28th day of June, 2006.

WITS BASIN PRECIOUS MINERALS INC.

Per:/s/ H. Vance White

Authorized Signatory

JOURNEY RESOURCES CORPORATION

Per:/s/ Jack Bal

Authorized Signatory

MINERALES JAZZ S.A. DE C.V.

Per:/s/ Jack Bal

Authorized Signatory

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SCHEDULE “A”

Mineral Concessions Comprising The Property

The Vianey Mine Concession located in Guerrero State, Mexico.

The concession constitutes 5,022 contiguous hectares⁽¹⁾, centered on UTM coordinates 431,330m E, 1,987,020m N (WGS 84, Zone 14), or -99.6485 degrees E, 17.9704 degrees N. The property is held under Exploitation concession (Number 164151, Exp. No. 5929, issued March 5, 1979).

Minerales Jazz S.A. de C.V. (a wholly owned subsidiary of Journey Resources Corporation) acquired 100% interest in the property from Minera LMX, Minera Chilpancingo, S.A. de C.V. and the underlying owner, Mr. Jorge Briones de Garcia, in 2004.

⁽¹⁾ Amended to include the additionally held claims in the area of interest, notwithstanding that they may be held at this time under the name of a third party. Such additional claims are currently in the process of being transferred into the name of Minerales Jazz S.A. de C.V.

EX-10.2

EXHIBIT 10.2

NI 43-101 TECHNICAL REPORT PERTAINING TO:

The Vianey Mine - Guerrero State, Mexico

Summary of Property Setting, Prior Exploration, and Mineral Potential,

With Recommendations for Exploration

October 18, 2004

Revised March 10, 2005

Prepared For: Minerale Jazz S.A. de C.V.

5525 West Boulevard, Suite 123

Vancouver, B.C. Canada

V6M 3W6

Tel. (604) 677-6830

Prepared By: Rodney A. Blakestad, J.D., C.P.G.

1602 W. Placita Sin Nieve

Sahuarita, Arizona 85629

Tel./Fax: (520) 625-5046

MasOro@dakotacom.net

Vianey Mine - Guerrero State, Mexico Page

1.   Summary

This report provides a summary of the physical setting, geology, recent exploration history and mineral exploration potential of the Vianey Mine concession and provides recommendations for exploration. The report was prepared in conformance with National Instrument 43-101 at the request of Minerale Jazz SA de CV.

The Vianey Mine concession is a historically productive mining property with mineral values primarily in silver-zinc-lead, and local gold-copper credits. The subject property has been involved in prior underground exploitation by third parties and is said to have realized production intermittently since prior to the Spanish conquest. The concession consists of 44 hectares held under Exploitation concession (Number 164151, Exp. No. 5929, issued March 5, 1979) pursuant to the laws of Mexico. Minerale Jazz SA de CV exercised a lease with option to purchase the property held between Minera LMX SA de CV, and Minera Chilpancingo SA de CV, and the owner of the concession. The property is owned 100% by Minerale Jazz with no royalty, back-in rights, or other encumbrance.

The Vianey Mine concession is located in south-central Mexico, within a belt of Mesozoic limestone-siltstone-volcanic rocks, intruded locally by Cenozoic igneous rocks. The belt is the southern part of the Sierra Madre province, which includes a string of gold-silver and base metal deposits that occur in a NW- to NNW-trending belt from the state of Oaxaca (to the ESE) northward to the Arizona border with Sonora.

Preliminary mineral resource calculations were compiled by Hawley (2000a and 2000b) for mineralization left in-place above the -75 meter level and in areas of recent drilling above and below that level. The resource estimates are not confirmed in this analysis; instead the property is viewed as an exploration target for silver-zinc-lead and local gold-copper mineralization. On-site examination and available exploration data (drill data and channel sample results) indicate a high probability for discovering extensions to known productive silver-bearing veins on Vianey Mine concession. Excellent exploration potential extends both laterally and vertically from the areas of historical production and recent drilling. An exploration plan and strategy for development are recommended.

Initial exploration is recommended to comprise of lithological and structural mapping of the underground and surface exposures, and aerial photography or high-resolution satellite imagery interpretation of the area. The objective of recommended work is to locate and orient approximately 3,230 meters of angle-hole diamond core drilling to test the grade, thickness, and continuity of mineralization at depth and along strike of known mineralized structures. Particular emphasis should be placed on the down-dip projections of the productive mineral system, where success in further exploration will add substantial tonnage to the mineralization identified at- and above the -75 meter level. The estimated cost of the proposed exploration is $461,780 USD or $577,225 CAD.

If favorable results are obtained during the recommended work, subsequent work plans are deferred for future consideration and should be addressed by a Qualified Person as the results warrant. The medium-term strategy recommended for Vianey Mine is that a decline be considered for access to the underground workings below the -75 meter level so that underground drilling and potential future exploitation can be accomplished efficiently.

Page i

TABLE OF CONTENTS

1.	Summary	i
2.	Introduction and Terms of Reference	1
3.	Disclaimer - Reliance on Other Experts	1
4.	Property Description and Location	1
5.	Accessibility, Climate, Local Resources, Infrastructure and Physiography	5
6.	History	6
7.	Geological Setting	12
7.1	Stratigraphy of Sedimentary Rocks	12
7.2	Intrusive Rocks	13
7.3	Structural Framework	13
8.	Deposit Types	13
9.	Mineralization at the Vianey Mine Concession	14
10.	Exploration	15
11.	Drilling	16
12.	Sampling Method and Approach	22
13.	Sample Preparation, Analyses and Security	22
14.	Data Verification	22
15.	Interpretation and Conclusion	23
16.	Recommendations	23
17.	Pertinent References	26
18.	Statements of Qualification of Mr. Rodney Blakestad	27
ILLUSTRATIONS
Figure 1:	Location map of Mexico and the Vianey project area.	2
Figure 2:	Detail map of the Vianey Mine area	3
Figure 3:	Location of Vianey Mine and nearby mineral deposits	5
Figure 4:	View from Vianey Mine portal across valley	6
Figure 5:	Plan map for the Vianey Mine concession	7
Figure 6:	Longitudinal section of the Vianey Mine	10
Figure 7:	Regional geology map of the Vianey Mine area	12
Figure 8:	Massive sulfide on left portion of vein	14
Figure 9:	Lens of massive sulfide in fault zone	14
Figure 10:	Example of an un-named, near vertical hydrothermal vein	15
Figure 11:	Plan map of the -75 Level showing 1996 drill stations	17
Figure 12:	Table of mineralized intercepts and drill hole section - station 1	18
Figure 13:	Table of mineralized intercepts and drill hole section - station 2	19
Figure 14:	Table of mineralized intercepts and drill hole section - station 4	20
Figure 15:	Table of mineralized intercepts and drill hole section - station 6	21

Page ii

LIST OF TABLES

Table 1:	List of holes drilled at the Vianey Mine concession1	16
Table 2:	Proposed exploration budget for the Vianey Mine	24

APPENDIX A -Vianey Mine Title Opinion 29

Page ii

2.   Introduction and Terms of Reference

This report was prepared at the request of Minerale Jazz SA de CV as a National Instrument 43-101 (Standards of Disclosure for Mineral Projects) Technical Report. Following the guidelines of Companion Policy 43-101-CP and Form 43-101-F1 for Technical Reports, this document includes a description of the physical attributes of the property, its ownership, location and access, a brief description of its geological setting, a compilation of previous work on the property, a description of the exploration potential for the Vianey property, and contains recommendations for exploration.

The Vianey Mine concession (the subject property) is situated within the southern Sierra Madre Occidental province in the south-central region of Mexico (Reyes, et. al, 2000). The property contains a number of silver-base metal exploration targets based on an assessment of drilling and other exploration work carried out on the tenement by Hawley (2000a) and others.

Field examination by the author verified the presence of these mineralized structures. A near-term campaign of geological mapping, structural analysis, underground sampling, and surface drilling is recommended; a budget to conduct the same is set forth.

All units used in this document are metric, unless otherwise indicated and all currency amounts are in US Dollars, unless otherwise indicated.

3.   Disclaimer - Reliance on Other Experts

In preparing this report the writer reviewed a number of internal reports, drill records, and resource compilation tables and maps pertaining to the geology and the existence of silver-zinc-lead resources defined at the Vianey property by previous workers, and from published maps and reports (see Pertinent References). The writer acknowledges the input of Mr. Peter Hawley, a Qualified Person, who has extensive knowledge and experience with the Vianey Mine and the underground exploration performed there. Ground-truth evaluation of the property took place by the writer between August 21 and August 23, 2004, which resulted in identification of several issues involving prior exploration and sample reports. Notwithstanding, the writer believes that the preexisting data are reasonably accurate and sufficient to form a sound basis to recommend aggressive exploration of the concession.

The writer did not have the means to investigate title of the property or the status of periodical tax payments required by the Mexican government to maintain the property in good standing. Thus, the writer relies entirely on the title opinion attached to this document as Appendix A.

4.   Property Description and Location

The Vianey Mine is located in the north-central part of the state of Guerrero, which lies in the southern part of Mexico (see Figure 1). The Vianey Mine concession is located about 250 km by road south of Mexico City and 160 km north of Acapulco. Road access is good via highway 95, then by 15 kilometers of gravel road.

Page 1

The concession exists in the municipality of Cocula, 1.6 km southeast of the small town of Atzcala, where labor suitable for exploration and limited mining can be found. Supplies and equipment area available in the towns of Mezcala and Chilpancingo, the capital of Guerrero, located on the main highway approximately 8 and 48 km south of the property respectively. A major power line passes near the property and electrical power is available at the mine.

Figure 1: Location map of Mexico and the Vianey project area showing major cities and roads (R. Blakestad, 2004).

The Vianey Mine is situated within the Morelos National Mining Reserve on the southwestern flank of the southern Sierra Madre Occidental province that extends north-northwest to the border between Sonora and Arizona, and east-southeast to Oaxaca State. The region is characterized by moderately steep rolling hills with alternating valleys of gentle gradient. Elevations in the area range from 450 to 850m above sea level. A major drainage system, the Balsas River, flows generally east to west through the region, about 2.5 km south of the site (see Figure 2).

Page 2

The concession constitutes 44 contiguous hectares, centered on UTM coordinates 431,330m E, 1,987,020m N (WGS 84, Zone 14), or -99.6485 degrees E, 17.9704 degrees N. The property is held under Exploitation concession (Number 164151, Exp. No. 5929, issued March 5, 1979).

Right of access over the surface is not an issue with the Vianey Mine claim, as it straddles the main road between Atzcala and Mezcala. The owner of the surface estate of the concession is not known; restrictions and rights of use to the surface were not determined. The property was formerly in production on a small-scale basis by Minera Chilpancingo, SA de CV.

Minera LMX SA de CV acquired a purchase option on the property in 1996 and conducted exploration summarized below. Minerale Jazz SA de CV acquired 100% interest in the property from Minera LMX, Minera Chilpancingo, SA de CV and the underlying owner, Mr. Jorge Briones de Garcia, in 2004. Accordingly, there is no royalty or ownership encumbrance regarding the property. An independent legal assessment of the title to the property is presented in Appendix A of this report.

Figure 2: Detail map of the Vianey Mine area showing the capital Chilpancinco, the Rio Balsas and the major electrical power line that passes just north of the property.

Base map from Maps of Mexico (2004).

In Mexico, all minerals are held in trust for the people of Mexico by the national government. Surface rights can be held by the government, local communities (“ejidos”), or privately held by companies or individuals. Under the mining regulations, there are no provisions for patent to mineral lands in Mexico. The granting of permission for an individual, a cooperative, or a commercial company to acquire rights to explore for-, and ultimately for extracting minerals from the ground, is governed by legislation administrated by the government of Mexico.

The Mexico mining code of 1990 was revised in June 1992, and its current enabling Regulations were issued by the President of Mexico in 1999. The government, under the mining code, can grant to individuals and Mexican corporations mining concessions with the right to explore and extract mineral resources.

Page 3

“Concessions” refer to mining lots, the perimeter and name of which is determined by the applicant, and which are granted on “free” land (“tierra libre”). Exploration concessions are granted to whoever first requests them; if two or more persons request the same area at the same time, a lottery is held to award the concession. Concessions are initially granted for exploration purposes. An Exploration concession is valid for a period of six years; an Exploitation concession for fifty years. Exploitation concessions can be renewed once for an additional fifty years, if requested before the end of the expiration of the original concession. The Vianey Mine is under an Exploitation concession, which was granted in 1979 and will expire, unless renewed, in 2029.

The main obligations which arise from a mining concession, and which must be kept current to avoid its cancellation, are the performance of assessment work, the payment of mining taxes (technically called “duties”), and compliance with environmental laws.

The Mining Law establishes that minimum amounts of funds for assessment work be spent in performing exploration work (in the case of exploration concessions) or exploration and/or exploitation work (in the case of exploitation concessions); in the latter case the sales of minerals from the mine may be substituted in lieu of the equivalent amount of minimum expenditures. A report must be filed in May of each year regarding the work done during the previous calendar year.

Mining duties must be paid in advance in January and July of each year, and they are based on the type of concession, on the surface area of the concession and the number of years that have elapsed since the date of issue. Environmental laws require the filing and approval of an environmental impact statement for all exploitation work, and for exploration work that does not fall within the threshold of a standard issued by the Federal Government for mining exploration. Environmental permitting for exploitation, absent any strong local opposition to the project, can be usually achieved in less than one year (Sanchez, 2001).

Potential environmental impacts and social impacts to communities affected by future land disturbance and mining activities are reviewed by the environmental protection sector of the government. There are no known or observed environmental liabilities respecting the concession or the land adjacent to the Vianey Mine. The writer is not aware of any requirements to survey the property, other than those that would be conducted in the ordinary process of applying for an exploration concession, or those incident to developing a production plan (for environmental purposes).

Water is scarce in Mexico, and mining operations generally require a great deal of water. The system that has been in place since the mid-nineties is based on a market allocation of water. Since the use of most water requires a water concession, by making this concession transferable within its hydrological district a market was created for water rights in each such district. Typically, with prior approval of the National Water Commission, a miner will purchase water rights, cap the existing wells, and drill a new well near his mining project (Sanchez, 2001).

At the Vianey Mine, no water occurs in the mine, even at the lowest -75 meter level.

Page 4

There are no facilities at the mine. Situated approximately 40 meters in front of the main portal, there exists a 940 tonne stockpile of ore from recent underground development work. Other than a small shed and an electrical control box, there are no buildings, tailings piles or waste stockpiles on the property.

There are no other constraints, obligations, or environmental liabilities known to the writer that constitute a concern for Minerale Jazz in regards to exploration on the property. The exploration recommended in this document will require permits for drilling, which are normally readily available. An underground development program would require an explosives permit, impact assessments and environmental planning permits from various Mexican government agencies, which entails several months of planning and governmental document review.

5.   Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Vianey Mine property is located in the Guerrero Gold Belt, in the central Guerrero State

Morelos National Mineral Reserve, southwestern Mexico, 15 km northwest of Mezcala. The property can be reached using Highway 95, from Mexico City or Acapulco to Mezcala at the Balsas River and 15 km of gravel road to Atzcala (population ~ 2000), 1.6 km from the mine site. Access is somewhat restricted from June to October, due to rainy season. Electricity and water supplies are readily available near the site, and telephone, medical facilities and labor are available from the local towns. Land for mining, milling and waste disposal is available on- and immediately adjacent to the concession.

The Vianey Mine is located in a region known to have many mines. It is situated near populated centers that can provide all the necessary services, labor and suppliers to sustain a mining operation. Most of these towns and villages can be accessed by paved roads or highways. A railroad and a local airport can be accessed in Iguala, 55 km north of Valerio on Highway 95 (see Figure 3).

Figure 3: Location of the Vianey Mine and nearby mineral deposits. Map after Hawley (2000a).

One of the closest mills capable of processing ore extracted from the Vianey Mine is located in Taxco, 80 km to the north of Valerio, on Highway 95; it is operated by Industrial Minera Mexico S.A. The mill uses flotation and a cyanide leach process, with an operating capacity of 1500 tons per day (Ciesielski, 2001). Other mills are located in the vicinity of Vianey Mine, but their suitability for processing poly-metallic silver ores is not known.

Page 5

The region around Vianey Mine consists of rolling hills, generally covered with lush vegetation (see Figure 4), and low-gradient valleys where extensive farming takes place. Valley elevations are on the order of 450 meters and local hills rise to elevations of 850 meters. The climate is semi-tropical with a rainy season from June to October and generally warm temperatures throughout the year (range 10 to 40° C). Work and mining operations can be accomplished on a 12-month basis.

Figure 4: View from Vianey Mine portal across valley to Atzcala, with power line in background.

6.   History

According to Hawley (2000a), the Vianey Mine has been operated intermittently on a small-scale basis since the 1400s. More recently, the mine is said to have been in almost continuous production since about 1976 by Compania Minera de Chilpancingo S.A. and operated until 1996 on a small scale with short breaks, extracting 200 to 300 tonnes per month.

Underground workings put in by Compania Minera de Chilpancingo, and its predecessors, amounts to seven levels, several winzes, two shafts and numerous stopes. The portal is at the “0” Level approximately 540 meters elevation (see Figures 5 and 6), which penetrates into the mountain about 100 meters in an easterly direction. The various level numbers reflect distance in meters above and below the 0 Level. Two primary veins were developed by Chilpancingo: the Tepemesquite and the Vianey Veins.

Page 6

Stopes exist along the Tepemesquite vein between the +25 and 0 Levels on a N110°E vein system that dips 85°N. The Vianey Vein was developed on the 0, -25, -38, -50, -68 and -75 levels. The levels are connected by two internal shafts and are generally accessible, but with difficulty. Developments on the Vianey Vein extend in a southeast direction following veins and mineralized structures trending generally N145° to 155°E dipping 80° to 85°SW. The lower levels extend from the area of the portal to the southeast about 200 meters. Numerous faults trend parallel to- and cross the trend of the tunnels.

Underground workings include crosscuts, stopes and winzes that occur at irregular intervals along both lower levels. The amounts of ore and waste rocks extracted from the Vianey Mine are not documented, but extensive underground development is evident (see Figures 5 and 6).

Figure 5: Plan map of Vianey Mine concession showing the location of the portal and projection of underground veins to the “0” level. Map by R. Blakestad, 2004.

Minera LMX SA de CV, a former subsidiary of LMX Resources Ltd., took over the Vianey operations in 1996 and started various exploration and development works. The first phase of exploration was conducted in the mine by P.H. Consultants Ltd of Val d’Or, Quebec, in order to determine what resources were still contained in the old workings. A total of 252 meters of vertical fan drilling was completed from drill station one, 276 channel samples were taken, and 433 additional samples were obtained. All samples were analyzed for 38 minerals by a combination of fire assay, ICP, and aqua regia-AA methods by Bondar Clegg Laboratories.

A second phase of exploration completed in November 1996 accomplished 2,173 meters of underground core drilling from drill stations one through six. The second phase drilling further delineated the mineralized zones identified by the first program and resulted in the partial definition of a new breccia chimney called the Twilight Zone.

The phase one and phase two exploration campaigns established the basis for a “geological” resource estimate of mineralized blocks. The mineralized blocks defined by the underground drilling and channel sampling were viewed as a “geological” resource because a mining method had not been specified and no dilution factor was applied; additionally, the cost for mining and milling had not been determined to justify an appropriate cut-off grade. Notwithstanding, a resource of 440,601 short tons (399,625 metric tonnes) representing an in-place value of $65/ton (Thorpe, 1998) was calculated based on an arbitrary cut-off value of $50/ton USD, using metal prices quoted by the Financial Post on February 18, 1997 ($645/t for lead, $1195/t for zinc, and $5.21/oz for silver). Average metal grades were not reported for this initial resource calculation.

Page 7

Though the calculation of the resource is conceptual in nature and does not attain the level of diligence required for reporting under NI 43-101 section 1.3, these data are considered by the writer to be relevant as a preliminary estimate of the order of magnitude of mineralization defined by the first two phases of exploration, and it formed a basis for further exploration.

In May 1997, Minera LMX started a third phase to verify and expand previous findings and to mine accessible reserves for direct shipping. After stockpiling about 940 tonnes of material from underground development work, the company abruptly closed the operation and the third drilling program was interrupted shortly after it was initiated.

The property was sold to the Chief Geologist of Minera LMX, who later defaulted on a property payment and a legal battle ensued. After several years of inactivity, the legal matters were settled and Minerale Jazz SA de CV acquired 100% interest in the property, free of royalties and encumbrances, with a cash payment in 2004 (Vezina, prs. comm., 2004), but did not conduct any physical exploration of the property.

In the interim between cessation of operations in 1997 and acquisition by Minerale Jazz, several summaries of the exploration data and resource calculations were compiled by Hawley (2000a), Hawley (2000b), and Ciesielski (2001).

Hawley (2000a) prepared a study of the drill intercepts and channel samples from the underground workings at Vianey Mine to establish a basis for resource and reserve calculations and to set the parameters for a cash flow analysis. A more detailed revised analysis, in line with the CIM Standards on Mineral Resources and Reserves prepared by the CIM Standing Committee on Reserve Definitions dated August 20, 2000, with supporting drill logs, assay sheets and underground development summaries was subsequently prepared (Hawley, 2000b).

The parameters used for the detailed resource study (Hawley, 2000b) are as follows:

Specific Gravity	3.2 g/cc
Mining Rate	100 T/day
Mining Days/Year	300 days
Metal Price (Northern Miner Sept 14, 2000)
Silver	US$ 4.88/oz
Lead	US$ 0.217/lb

Page 8

Zinc	US$ 0.579/lb
Dilution	10%
Mining Costs	US$ 29.17/ton
Trucking Costs	US$ 10.00/ton
Custom Milling Costs	US$ 18.00/ton
Mill Recovery (based on Tasco Custom Mill)
Silver	75.84%
Lead	78.93%
Zinc	75.31%

The revised resource estimate was based on a cut-off grade of 100 g/T silver, based on weighted average grade of drill intercepts and channel samples without consideration for accompanying lead, zinc, or other recoverable metals. Rectangular mining blocks were identified based on consideration of the previous mining history, distribution of drill intercepts and channel samples, and drifting in the mineralized zones extending 25 meters above or below the areas where samples were taken. Mining block values were calculated using mine channel samples extended 12.5 meters upward or downward and up to 12.5 meters left and right laterally and drill hole pierce points in the longitudinal section with a 25-meter sphere of influence. In the case where channel samples or drill intercepts reported values less than the 100 g/T silver cut-off grade, the extrapolation distance was taken half way between the closest valid sample site and the invalid site. All drill intercepts were corrected for true with determinations by trigonometric calculation. A minimum 1.5 meter horizontal mining width was used and where the intercept or channel sample was less than 1.5 meter, appropriate dilution at zero grade was factored in, then, subjected to a ten percent dilution factor, resulting in a 1.6 meter horizontal width.

Based on his extensive experience with the property, its mining history and exploration, Hawley placed the majority of the reserves in the Proven mineral reserve category. Probable mineral reserves were calculated by extending the sphere of influence from a minimum of two Proven reserve blocks by a maximum of 12.5 meters in a vertical or horizontal direction.

Using the above parameters, Hawley established the following reserve base:

·   Proven mineral reserve: 61,814 tonnes grading 399.32 g/T Ag, 3.7% Pb, and 2.63% Zn.

·   Probable mineral reserve: 5,652 tonnes grading 406.65 g/T Ag, 4.27% Pb, and 2.28% Zn.

A resource base was placed in a Measured or Indicated resources category according to drill hole continuity with mine workings above, or two or more drill hole intercepts showing continuity in grade and width, and the availability of detailed drill logs and assay reports. The resource base, fully diluted, was calculated to be:

·   Measured mineral resource: 139,656 tonnes grading 338.61 g/T Ag, 2.04% Pb, and 2.84% Zn.

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·   Indicated mineral resource at Drill Station 2: 16,170 tonnes grading 132.0 g/T Ag, 1.14% Pb, and 1.71% Zn.

·   Indicated mineral resource at Drill station 6: 121,728 tonnes grading 135.69 g/T Ag, 1.46% Pb, and 5.46% Zn.

The total, fully diluted, proven and probable reserves plus measured and indicated mineral resources were calculated to be 345,020 metric tons 269 g/T Ag, 2.13 % Pb, and 3.66 % Zn. The general distribution of reserve-resource blocks is shown in Figure 6.

Figure 6: Longitudinal section of the Vianey Mine showing stopped areas, resource blocks, and underground sample sites. View looking northeast, map from Hawley (2000b).

In addition, a surface stockpile at the portal of the mine consisting of 940 tonnes grading 212 g/T Ag, 2.7% Pb, and 5.6% Zn was placed in the Proven reserve category (Hawley, 2000b). Supporting assays and work sheets for this determination were not available to the writer.

A review of the mineral resource and reserve calculation data, coupled with inspection of the underground workings, indicate that the resource summaries may not be consistent with the requirements of Section 1 of NI 43-101. Though the resource calculations were properly calculated and the summaries of exploration results are indicative of substantial mineralization at the Vianey Mine, the writer identified significant issues relating to: 1) the underground “channel samples”, which were attributed considerable weight in the resource study, were observed to be chip samples or chip-channel samples rather than true channel samples, 2) extrapolation of drill intercepts to support “proven reserves” were, in the writer’s opinion, too far apart to correlate as “proven reserves”, 3) missing drill logs and assay reports for phase two drilling activities and underground sampling, and 4) inconsistencies in the use of terms [tons/tonnes, g/t vs. g/T, “reserves” vs. “resources”, etc.], causes some concern in the resource designation. The writer rejects the resource estimates for purposes of this Qualifying Report, but suggests they be used in consideration of the mineral potential of the Vianey Mine property for purposes of further exploration and future resource determinations.

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Ciesielski (2001) conducted an independent review and analysis of the Vianey Mine data. A mineral reserve estimate was established using a standard rectangular method based on the distribution of 134 channel samples on the different mine levels and the LMX drill hole pierce points on the mine longitudinal section. Sample locations and drill hole pierce points were digitized and plotted. Channel sample grades for Ag, Pb, and Zn were indexed according to gross in situ value using $4.60/oz Ag, $0.24/lb Pb and $0.53/lb Zn. Following Hawley (2000b) a horizontal with of 1.5 meters was used and diluted by 10% where necessary to maintain a 1.6 meter effective mining width and a 12.5 meter search radius was applied. The resulting data were statistically processed using statistical nearest neighbor and triangulation method, then, replotted in longitudinal sections.

The resulting plots of metal grade in longitudinal sections showed a good correlation with Hawley’s 2000b resource-reserve block calculation (Figure 6), with the advantage of displaying gradational changes in grade for silver, zinc, and gross value distribution. Grade distribution panels for silver using 100 g/T cut-off and for zinc at an equivalent 1.35% cut-off were prepared. These data indicate that Ag and Zn concentrations increase with depth and to the southeast of the longitudinal sections. A similar distribution was demonstrated with the gross value index using a $90/ton (sic) cut-off.

The Ciesielski (2001) analysis states that their results support the reserves calculated by Hawley (2000b) and that the grades comport with the averages from Minera de Chilpancingo metal sales reports for the years 1990 to 1992 (this later data is not in the materials reviewed by this writer). Ciesielski did not produce an independent tabulation of resource-reserves, but stated that there is more than sufficient information to demonstrate the presence of measured and probable reserves and indicated resources to warrant further exploration.

The mineral resource-reserve quantities and grades are reported here for the sole purpose of establishing an order of magnitude for the tonnage and grade of mineralization defined by exploration at the Vianey Mine as of the end of 1997. As stated above, there are issues related to sample distribution and adequacy of channel samples used in the calculation, that suggest the resource calculation may not meet the requirements of Section 1 of NI 43-101. The calculation, however, was performed by a Qualified Person (P. Hawley) with intimate experience with the property and its mineralization. At an absolute minimum, the results of exploration to date and the resource evaluations serve to form a strong basis for recommending aggressive exploration of the Vianey Mine, which is recommended, and is set forth below in greater detail.

7.   Geological Setting

The Vianey Mine property is located in the Sierra del Sur Metallogenic Province in the

Guerrero Gold and Massive Sulfide Belts (Hawley 2000a. See also Figure 3). This province is characterized by Cretaceous sedimentary and volcanic rocks intruded by Lower Tertiary intermediate composition stocks. It hosts intrusive associated gold-copper-silver deposits. To the west, the massive sulfide belt hosts several silver-lead-zinc and copper deposits.

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The Vianey Mine is located in the Morelos Guerrero Basin of Cretaceous age, mostly composed of a folded and faulted limestone sequence up to 2500 meters thick, intruded by granodiorite and monzonite plutons, which are responsible for development of silver-lead-zinc mineralization in veins, skarn and breccia bodies.

Various types of deposits occur in this geological context, i.e. mesothermal lenses, veins and breccias (Vianey Mine), iron- and gold-bearing skarns, disseminated iron-gold-copper or hydrothermal veins and epithermal gold-mercury deposits. In the Guerrero basin, the Morelos Mineral Reserve is under going intense mineral exploration by Teck-Cominco Corporation and other companies, which control large concessions near the Vianey Mine.

Figure 7: Regional geology map of the Vianey Mine area. Map after Hawley (2000a). Black stars indicate other mineral deposits and prospects in skarn and intrusive-related environments.

7.1   Stratigraphy of Sedimentary Rocks

The Vianey property is underlain by limestones, limestone breccias, calcareous and carbonaceous siltstones, and argillites intruded locally by felsic dikes and plugs with affiliated skarn. The local Stratigraphy consists of limestone underlain by limy siltstone of undetermined thickness, but known to exceed 2500 meters thick. These rocks are part of regionally extensive shallow marine sedimentary sequence that form an elliptical exposure of Cretaceous carbonate lithologies known as the Morelos-Guerrero Basin.

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7.2   Intrusive Rocks

The Vianey Mine carbonate sequence is intruded by granodiorite and monzonite plutons, dikes, sills and irregular plugs. These intrusive masses are intimately associated with mineral deposits throughout the region.

7.3   Structural Framework

The structural trends are predominantly northerly and northwesterly. These principal trends have spatial affinity with several of the silver- and poly-metallic deposits on a regional basis, including at Vianey Mine. The combination of intrusive rocks and proximity to major structures is believed to be especially important in localization of important mineral deposits (see Figure 7).

The carbonate Stratigraphy in the Vianey Mine region is broadly folded and domed. Major folds, with amplitudes of fifty- to hundreds of meters are common. Drag folds and distortions of the bedded rocks are common in the underground exposures at the subject property.

8.   Deposit Types

Various types of mineralization occur as a result of the interplay between Stratigraphy, structure, and proximity to intrusive centers in the district. The different types of deposits known to occur are as follows:

·   Lenses, veins, mantos or breccias containing silver and poly-metallic Pb-Zn-Cu (Vianey deposit)

·   Skarn zones and replacement concentrations or iron and gold (Nukay deposit)

·   Disseminated and hydrothermal vein type Fe-Au-Cu (La Subsida deposit)

·   Epithermal and hot springs deposits of mercury (Hg) and gold (Brasil and Laguna deposits).

Mineralization at the Vianey Mine includes veins, breccias, lens and mantos of silver - and poly-metallic (Pb-Zn) mineralization with local concentrations of gold and copper. The veins and breccia zones predominate in apparent importance. Most of the veins are localized along NW-SE trending structures and E-W structures; the lenses occur in fault zones and as sulfide concentrations with calcite, gypsum and quartz between some bedding planes.

Two major breccia zones of significance have been identified in the limestone (the Don Pedro and Twilight Zone). These are believed to be in-part structural breccias and in-part related to shrinkage of rock units adjacent to- or above intrusive masses. In either or both cases, the breccia is associated with calcite-gypsum-quartz gangue minerals and weak to moderate hydrothermal alteration with disseminated to semi-massive poly-metallic sulfide mineralization and important amounts of associated silver.

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9.   Mineralization at the Vianey Mine Concession

In the veins, lenses and mantos, mineralization consists primarily of massive- to semi-massive sulfides with gypsum, calcite and silica. The sulfides are mostly pyrite, galena (Pb), sphalerite (Zn) chalcopyrite (Cu) and acanthite (Ag). The veins are usually associated with faults (see Figure 8) and the lenses of massive sulfide occur in fault gouge zones (Figure 9) and as inter-bed lenses.

Figure 8: Massive sulfide on left portion of vein on the -75m level with stringer sulfide mineralization (right).	Figure 9: Lens of massive sulfide in fault zone -in headwall with slickensides on right.

Both photos by R. Blakestad, 2004 - width of view ~1m.

The character of the veins is different on different structures. In some cases, the observed veins are massive sulfide 0.1 to 0.5 meters thick, with or without parallel stringer sulfides (0.2 to 1.5 cm thick) in a matrix of calcite-silica-gypsum gangue (Figure 8). These veins occur over widths of one to three meters and may include more than one zone of massive or semi-massive sulfide. In other cases, the veins are discrete, zoned veins with calcite cores and massive galena-sphalerite (minor pyrite) mineralization, as in Figure 10 below.

Numerous veins and lenses of mineralization were observed in underground structures with divergent attitudes on the 0, -38, and -75 levels, indicating that several vein systems occur. The main vein on the 0 Level (the Tepemesquite Vein) follows a N 110° E trend and dips north at 85°; the principal Vianey Vein and sub-parallel veins on the lower levels tend to be more NW-SE trending and dip steeply to the southwest. These later veins are well suited to exploration by drilling from the surface, as the dip direction coincides somewhat with the surface topography.

The principal vein encountered on the -38, -50 and -75 levels is the Vianey Vein. It averages about one meter in thickness, but increases up to three meters wide in the southeastern portion of the workings. Drifting on the vein returned encouraging values of silver lead, and zinc over 24 meters of advancement (Thorpe, 1998). Drilling from underground stations 1, 2, 4, and 6 intercepted three to five discrete mineralized zones, which are shown in greater detail in Section 11 “Drilling” below.

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Figure 10: Example of an un-named, near-vertical hydrothermal vein in limestone host rocks showing the central core of calcite+gypsum+quartz between selvages of massive galena (gray) and sphalerite (brown). The vein is 0.32 meter wide. A sub-parallel, sphalerite stringer two to four centimeters thick occurs without calcite, 0.6 meters to the right of the main vein. Photo by R. Blakestad, 2004.

At least two relatively large breccia zones have been encountered by drilling during the exploration phases conducted by Minera LMX. The Don Pedro breccia, according to Hawley (2000a), constitutes a broad zone of relatively low-grade mineralization with a pipe-like form that plunges 30 degrees to the northwest along the hanging wall of the Vianey Vein. The Don Pedro breccia is not well characterized in the available literature on the property, but it is considered to be a significant target for further exploration.

A second zone of breccia mineralization, the “Twilight Zone” was encountered by drilling in the phase two program. This mineralized breccia is interpreted to be a stratabound limestone breccia, or manto, striking N 120 E, dipping about 32 degrees SW. Sphalerite-galena-pyrite mineralization occurs in the breccia matrix with pervasive orthoclase alteration and appears to be replacement in nature, approximately six meters thick and with undefined strike length exceeding 32 meters. Similar to the San Pedro breccia, the Twilight Zone breccia constitutes a target for further exploration in the southeastern portion of the underground workings.

10.   Exploration

Minerale Jazz SA de CV has conducted no exploration of its own during the past three years and thus has no additional new information to add to that which was summarized and calculated by Thorpe (1998), Hawley (2000a and 2000b) and Ciesielski (2001). All exploration is considered to be in a historical perspective and is reported in Section 6 “History” above.

In order to maintain a consistency of flow for the organization of this technical report, a more detailed description of the drilling conducted in 1996 is presented below.

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11.   Drilling

Drilling at the Vianey Mine was carried out under the oversight of Minera LMX in 1996. The first phase of drilling was conducted in the mine at Drill Station 1 by P.H. Consultants Ltd of Val d’Or, Quebec, consisting of 252 meters of NQ-size core drilling. A second phase of drilling completed an additional 2173 meters of BQ-size core drilling from stations 1 through 6 in November 1996. Britton Hermanos Perforations de Mexico was awarded the second contract.

All 1996 drilling was from underground at stations on the -75 Level (see Figure 11). Drill holes were fanned out in a vertical array from each station. The drill stations and corresponding holes are as follows:

Table 1: List of holes drilled at Vianey Mine.

PHASE 1:

STATION	HOLE #	LENGTH	AZIMUTH	DIP
1	VM-01	31.6m	45	0
1	VM-02	72.9m	225	-45
1	VM-03	87.8m	225	-65
1	VM-04	45.1m	225	-85
1	VM-05	54.1m	225	-20
PHASE 2:
STATION	HOLE #		AZIMUTH	DIP
1	VM-05	77.8m	225	-20
1	VM-06	122.3m	225	+45
1	VM-07	95.2m	225	+70
2	VM-08	92.1m	230	+60
2	VM-09	102.8m	230	+30
2	VM-10	116.5m	230	0
2	VM-11	106.7m	230	-30
2	VM-12	22.3m	230	-60
3	VM-13	91.5m	245	+70
3	VM-14	140.3m	245	+45
3	VM-15	89.0m	245	0
3	VM-16	49.4m	245	-45
3	VM-17	101.2m	245	-70
4	VM-18	86.0m	190	+70
4	VM-19	92.1m	190	+45
4	VM-20	107.3m	190	0
4	VM-21	107.3m	190	-45
4	VM-22	107.3m	190	-70
5	VM-23	25.0m	125	-45
5	VM-24	50.9m	125	0
5	VM-25	113.4m	125	+45
6	VM-26	95.1m	137	0
6	VM-27	124.1m	137	-45
6	VM-28	93.6m	137	+45

Significant mineralized intercepts and simplified drill cross-sections showing the mineralized zones are displayed in Figures 12 through 16 below (reproduced with permission, P. Hawley, 2005). Cross-section figures for drill stations 3 and 5 are not available for reproduction.

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Drill intercepts in the drill intercept tables set forth in Figures 12 through16 reflect linear sample widths, un-adjusted for intercept angle. Adjustments to the linear intercept to derive true thickness was calculated by the trigonometric formula: HW=(I*COS((90-ZCA)*Pi/180), where HW is the horizontal width, I is the intercept width, ZCA is the dip angle of the structure.

Figure 11: Plan map of the -75 Level showing 1996 drill stations and trace of drill holes completed. Map by R. Blakestad, 2005, redrafted from Thorpe (1998).

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Figure 12: Table of mineralized intercepts and drill hole section for Drill Station 1 on the -75 level Vianey Mine. Section view looking N 135 degrees East. Tables and section from Hawley 2000b.

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Figure 13: Table of mineralized intercepts and drill hole section for Drill Station 2 on the -75 level Vianey Mine. Section view looking N 140 degrees East. Table and section from Hawley 2000b.

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Figure 14: Table of mineralized intercepts Drill Station 4 on the -75 level Vianey Mine. Section view looking N100 degrees East. Table and section from Hawley 2000b.

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Figure 15: Table of mineralized intercepts and drill hole section for Drill Station 6 on the -75 level Vianey Mine. Section view looking N 47 degrees East. Tables and section from Hawley 2000b.

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12.   Sampling Method and Approach

Core from the drill holes returned good recovery. The drill cores were split in the field with a percussion core splitter and ½ sections of the core were submitted to Bondar Clegg Laboratories for ICP, fire assay and aqua regia-AA determinations. Sample intervals were generally in one-meter increments with starting and ending segments determined by visual attributes of mineralization. Drill intercept angles with dipping mineralized structures were corrected by application of a trigonometric formula to establish true widths after composite sample intervals were determined by weighted average methods. Other details of the core sampling program are not known.

Underground, the writer observed a number of channel samples and determined that the “channel samples” were, without exception, not deep enough or wide enough to constitute industry standard channel samples for resource-reserve determinations. In most cases, the underground sample line was clearly visible and the samples taken were probably reasonably representative of the zone sampled, however, heavy reliance on channel samples was made in the resource calculation by Hawley (2000b), therefore caution in interpreting the sample accuracy is justified.

13.   Sample Preparation, Analyses and Security

The writer is not aware of details of sample preparation and security; therefore not comments are set forth. The analyses were conducted by Bondar Clegg Laboratories, which is a widely respected commercial laboratory. Issues regarding the reliability of analyses are not in contention.

14.   Data Verification

The writer visited the property and underground workings between August 21-23, 2004. The 0, -38, -50, -68, and -75 levels were inspected and the general layout of previous mining and more recent exploration was observed. Underground observations confirm the layout and general configuration of mining stopes, passageways, and drill stations as set forth in the documents pertaining to the Vianey Mine property.

Numerous files, unpublished reports and exploration data were reviewed in the course of evaluating the mineral potential of the property. These and the drill logs for phase one underground drilling and all supporting assay data sheets were reviewed and compared for conformity. No transcription errors or omissions were identified. Though no standards or blank samples were submitted to the Bondar Clegg laboratory, numerous duplicate drill and channel samples were submitted to Inchcape Testing Services (the Mexico subsidiary of Bondar Clegg) for comparative assays. A reasonable correlation between the duplicate assays was observed.

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Representative drill intercept calculations were reviewed and recalculated to check accuracy. No significant errors or omissions were detected. However, drill logs and assay sheets for phase two underground drilling were not available for review and thus could not be checked.

No reference to assay results for drill holes at underground Drill Station 5 could be found, indicating that the assays for drill holes VM-23, VM-24, and VM-25 are not in the database.

15.   Interpretation and Conclusion

The geological interpretation set forth by previous investigators is reasonable and supported by observations of the writer on the surface and underground. Veins, lenses, breccias and mantos bearing silver-rich massive, semi-massive and disseminated sulfide mineralization occur in several areas of the mine with a dominant trend striking northwest, dipping steeply to the southwest. Most of the mineralization is structurally controlled by faults and shear zones, with lenses of sulfide locally occurring between certain bedding planes in a calcareous sedimentary rock environment.

Several mineralized zones were observed underground and several parallel to sub-parallel mineralized zones were intercepted by drilling vertical fanned drill holes at all the drill stations except Stations 3 and 5. Drilling and chip-channel sampling indicate substantial amounts of potentially economic mineralization occur above the -75 meter level adjacent to preexisting stopes. Drilling below the -75 level has shown that the mineralization extends to the -125 and locally to the -150 meter level. Breccia zone mineralization, possibly suitable for large-scale underground mining, has been identified, but not fully delineated.

The writer concludes that the Vianey Mine is an excellent advanced-stage exploration target with exceptional opportunity for the definition of additional mineralization.

16.   Recommendations

Aggressive exploration of the Vianey Mine is warranted and recommended. A program of detailed mapping and sampling of underground exposures is recommended, coupled with a structural analysis of faults and bedding attitudes. The objective of the underground exploration should be to identify suitable surface drill sites that will provide for a series of diamond core drill holes to penetrate the areas of projected mineralization at the -150 meter level and -200 meter levels. Additional underground mapping and sampling will also assist in the process of converting identified mineralization to resource-reserve classifications under NI 43-101.

Surface drill stations should be sited at 50-meter intervals, progressing from the portal area to the southeast for a distance of 200 meters (five stations, or more if drilling indicates that the mineralization continues in the southeast direction). With a topographic advantage of drilling from the southwest of the trace of the Vianey Vein, two holes of 195 and 225 meters each, with a azimuth bearing N 35 degrees East, should reach the -150 and -200 levels (with a 70-meter offset to the southwest) from the vein trace, if inclined at -65 and -77 degrees respectively. Five drill stations of two drill holes each will amount to 2,100 meters of drilling. A 10% contingency in the drilling is applied to account for topographic and structural unknowns, for a total deep drilling objective of 2,310 meters.

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Direct drilling costs, including mobilization/demobilization, set-up, moves, consumables and fuel are estimated at US$60/meter, for $138,600.

Objectives of the proposed drilling are multi-fold:

1.   Explore the extension to deeper levels of the known mineralized structures (to the -200 meter level), thereby potentially increasing the potential resource base.

2.   In the process of drilling for deeper intercepts, the drill will prospect for new zones of mineralization in the interval from the surface to known mineralization.

3.   In the process of drilling from the surface into the deeper levels of the mineralized zone, the interval can be evaluated for future development work, such as construction of a decline to the lower levels of mineralization to facilitate access by modern mechanized mining machinery and to facilitate access to the lower levels for future underground drilling.

Particular interest should be placed on penetrating the mineralized San Pedro and Twilight Zone breccias to assist in better definition of their mineral potential. Eight additional drill holes, averaging 115 meters each, bearing N 35 degrees East, inclined at -40 to -55 degrees, are recommended to penetrate the breccia zones at locations to be determined from underground mapping. A direct drilling budget for 920 meters amounts to $55,200.

The near-term exploration recommended here is designed to provide the impetuous for consideration of large-scale underground mining of the Vianey Mine. If deeper drill exploration is successful in defining similar thickness and grade reported for the upper levels, the mass of mineralization will be greatly increased and scale of future exploration and considerations for potential mining will need to be scaled up accordingly.

The estimated cost of the recommended exploration program is $461,780 USD ($577,225 CAD), including 10% contingency.

Table 2: Proposed exploration budget for the Vianey Mine:

Geological mapping Drill logging & Support	Underground mapping and structural + 2 drill geos; eight man-months, with field support, lodging, transportation, assistants & labor OH @ 30%	$ 86,700
Drilling	Direct drilling costs for 3,230 meters @ $60/m	$193,800
Geochemical	1,100 rock and core samples, including preparation	$ 22,000
Supplies/ Misc. field	Field supplies, lodging, meals, transportation	$ 21,300
Permits & reporting	Permit and report preparation	$ 20,000
Home Office/Mgmt	$40,000 Lump sum + Proj. Manager for 6 mo.	$ 76,000
Contingency	Lump sum @ 10%	$ 41,980
Total Project Cost	USD	$ 461,780

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Actual costs realized during exploration may be different than projected in this section due to cost variables beyond the control of Minerale Jazz and its contractors. Delays caused by personnel availability, transportation costs, weather conditions, and variable site conditions are among the variables to be encountered, and actual drilling contract costs may vary.

The scope, objectives, and budget for a follow-up program of increased drill hole density and decline ramp construction should be determined by a Qualified Person after analysis of results from completion of the recommended program.

Respectfully submitted,

Rodney A. Blakestad, J.D., C.P.G.

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16. Pertinent References

Ciesielski, A., 2001. Qualifying report on the Vianey Mine, State of Guerrero, Mexico. Bumigeme Inc., unpublished report. p. 26.

Hawley, PJ., 2000a. Scoping study for the qualification of a pre-feasibility report and proposed bulk sample and exploration program for Robex Resources Inc. On the Vianey Mine, Guerrero State, Mexico, 38 p.

Hawley, P.J., 2000b. Reserve and drill resource study for Robex Resources Inc. on the Vianey Mine, Guerrero State, Mexico, 122 p.

Maps of Mexico, 2004. Web site:http://www.maps-of-mexico.com/mexico_states.shtml

Megaw, P.K.M., 2004. Imdex, International Mineral Development & Exploration web site: http://www.imdex.com/c_l.htm.

Mining Engineering, 1994. Mining in Mexico. Societyfor Mining, Metallurgy, and Exploration, Vol. 46, No. 4, April 1994. pp. 292-322.

Reyes, J.S., Rodarte, G.E., Jimenez, R.B., and Franco, E.R., 2000. Carta Geologico-Minera Chilpancinco 14Q-k(1), 1:100,000 Scale. INEGI, 1 sheet.

Sanchez, R.M., 2001. An overview of mining law in Mexico. Latin Lawyer, Nov/Dec. 2001, pp. 61-63.

Thorpe, J., 1998. Progress report - phase three underground exploration development program for LMX Resources Ltd. Unpublished report.

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17. Statements of Qualification of Rodney A. Blakestad, J.D., C.P.G..

I, Rodney A. Blakestad, do hereby certify that:

·   I am an independent Consulting Geologist with a residence at 1602 W. Placita Sin Nieve, Sahuarita, Arizona 85629.

·   I am a graduate of the University of Alaska at Fairbanks, having attained a Bachelor of Science degree in Geology, 1973.

·   I am a Professional Geologist, registered in the State of Alaska, 1980 (PG #0022).

·   I am a Certified Professional Geologist in good standing with the American Institute of Professional Geologists, 1980 (C.P.G. #4899).

·   I am a graduate of the University of Denver Law School, having attained a Juris Doctor degree in Natural Resources Law, 1989.

·   I have practiced my profession of Exploration Geologist for at least 15 years in matters of gold mining and gold and silver exploration, and for an additional ten years in matters of base metals and PGM exploration.

·   I have prior personal experience with poly-metallic veins systems occurring in central and northern Mexico.

·   I personally visited the site subject of this report during the month of August 2004, and spent the greater part of three days (August 21, through 23, 2004) on the property or its immediate surroundings.

·   I am a Qualified Person in conformance with National Instrument 43-101.

·   I have read and understand the National Instrument 43-101 and Form 43-101-F1, and declare that I wrote the report in conformance thereof.

·  I am responsible for the technical report entitled “The Vianey Mine - Guerrero State, Mexico”, dated October 18, 2004 and revised March 10, 2005, which is intended to be compliant with the reporting requirements of National Instrument 43-101.

·   I do not know of any material fact or material change with respect to the subject matter of this report which if not reflected in the report, the omission of which or the failure to disclose such, would make the report misleading.

·   I certify that I do not own, nor do I expect to acquire, directly or indirectly, any interest in the Vianey Mine property or the securities of Minerale Jazz SA de CV, Journey Unlimited Omni Brands Corporation, or any affiliates, or affiliated entities thereof.

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·   I certify that I am not under any agreement, arrangement, or understanding, nor do I expect to become, an insider, associate, partner or employee of Minerale Jazz SA de CV, Journey Unlimited Omni Brands Corporation, or any affiliates, or affiliated entities thereof.

·   I certify that I have not received a majority of my income during the past three years preceding the date of the report referred to above from Minerale Jazz Journy Unlimited or any affiliates, or affiliated entities thereof.

·   I consent to the filing of this Qualifying Report with any stock exchange or other regulatory authority, and I consent to electronic publication of this document, including on the web sites of Minerale Jazz SA de CV and/or Journey Unlimited.

Prepared in Tucson, Arizona effective the date of October 18, 2004, Revised March 10, 2005.

Rodney A. Blakestad, J.D., C.P.G.

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APPENDIX A

VIANEY MINE, TITLE OPINION

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EX-10.3

  
    
      Unassociated Document





  
    

EX-10.4

EXHIBIT 10.4

Memorandum of Agreement

Joint Venture Agreement made Between MacDonald Mines Exploration (Optionee) and Hawk Precious Minerals Inc. and Wits Basin Precious Minerals Inc. (both as Optionors)

The Optionee can acquire a 51% undivided right, title and interest in and to the Property (“Hawk MacNugget Claims” as per Schedule A attached hereto) and the Property rights free and clear of all Encumbrances except as noted by making payments to the Optionors in the following amounts and by the dates indicated subject to TSX and Board Approval where necessary:

1. Issue 50,000 common shares of MacDonald to Hawk on or before June 30, 2006.

2. Issue 50,000 common shares of MacDonald to Wits Basin on or before June 30, 2006.

At the commencement of the Joint Venture the Participating Interest of each Party shall be:

Party	Participating Interest
MacDonald (Managing Partner)		51	%
Hawk Precious Minerals Inc.		24.5	%
Wits Basin Precious Minerals Inc.		24.5	%

All Parties agree that this agreement will form the basis for drafting a formal Joint Venture Agreement between the parties in conjunction with legal counsel, which will include an industry standard dilution formula for non-participation.

IN WITNESS WHEREOF this Memorandum has been executed as of the date so indicated below.

MacDonald Mines Exploration Ltd.

By:	/s/ Richard Schler	June 29, 2006
	Authorized Signatory	Date

Hawk Precious Minerals Inc.
By:	/s/  H. Vance White	June 29, 2006
	Authorized Signatory	Date

Wits Basin Precious Minerals Inc.
By:	/s/  Stephen D. King	June 29, 2006
	Authorized Signatory	Date

Schedule “A”

To Memorandum of Agreement between MacDonald Mines Exploration Ltd. and Hawk Precious Minerals Inc. and Wits Basin Precious Minerals Inc.

Claims located in the McFaulds Lake area

Claim Numbers	Number of Units
3019423	16
3019424	16
3019425	16
3019426	16
3011945	16

EX-99.1

EXHIBIT 99.1

Wits Basin Completes Due Diligence on

Vianey Silver Mine in Mexico

Right to Earn up to 50% Interest Is Exercised

Minneapolis, Minnesota, June 28, 2006 - Wits Basin Precious Minerals Inc. (OTCBB:WITM) is pleased to announce completion of due diligence, ahead of schedule, relating to the Vianey Mine Concession located in Mexico. As previously announced on May 31, 2006, Wits Basin signed a letter-of-intent and had until June 30, 2006, in which to complete its due diligence, whereby it may earn up to an undivided 50% interest in certain mining claims comprising the Vianey Mine from Journey Resources Corp. (TSX-V:JNY).

Geologist Dr. Clyde Smith stated, “The Vianey Mine in the state of Guerrero is located in an area of southern Mexico known for mineral deposits of a variety of geologic types. The silver-lead-zinc vein, manto, and breccia deposits that have been mined almost continuously on the Vianey property since 1976 are characteristic of several of the ore deposits in this part of Mexico. Significant past production from six underground levels on two principal veins indicates a broad distribution of silver-lead- zinc ore in steeply dipping structures over an area of 300 metres in length and 150 metres in depth; some underground workings terminate in apparent ore grade mineralization. Underground drilling programs conducted in 1996 from the deepest level of the mine (75 metre level) totaled 2425 metres of core drilling. Numerous holes intersected several potential ore grade mineralized zones over potentially mineable widths at depths of up to 100 metres below the deepest mine workings. In addition, two sizeable breccia bodies have been identified that hold potential for bulk scale underground mining.”

“We believe the Vianey Mine project exhibits excellent potential for development and we’ve elected to move forward exercising the option to explore this former producing silver mine,” said Vance White, CEO. “Our plan is to develop an exploration program to help prove up additional mineralization that we believe could be several million tons.”

About Dr. Smith

Dr. Smith holds a B.A. from Carleton College, a M.Sc. from the University of British Columbia, and a Ph.D. from the University of Idaho. He is a registered Professional Engineer with the Association of Professional Engineers and Geoscientists of British Columbia. Dr. Smith has founded or co-founded five exploration companies and is responsible for the discovery of four deposits: the Jason lead-zinc-silver deposit, Yukon Territory, Canada; the Santa Fe gold deposit, Nevada; the North Lake gold deposit, Saskatchewan, Canada; and the Solidaridad gold-silver-copper deposit, Mexico. He is currently engaged in a gold-platinum project in Nevada and serves as the consulting geologist for El Capitan Precious Metals, Inc. on its El Capitan gold-platinum group metals project in New Mexico.

About the Vianey Mine

A review of past calculations completed in 1997, by Hawley, P.J., 2000b, states a total in all categories of 345,020 metric tonnes grading 2.13% lead, 3.66% zinc and 269 grams of silver per tonne. (These data are historical resource estimates under National Instrument 43-101, which have not been sufficiently verified by a qualified person to be classified as current mineral resources. Wits Basin is not treating these historical estimates as current resource estimates and therefore, these historical estimates should not be relied upon).

About Wits Basin Precious Minerals Inc.

We are a minerals exploration and development company holding interests in four exploration projects and currently do not claim to have any mineral reserves on any project. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol “WITM.” To find out more about Wits Basin Precious Minerals Inc. (OTCBB: WITM) visit our website at www.witsbasin.com.

Forward-Looking Statements and Risk Factors

Certain statements contained in this press release are forward-looking in nature and are based on the current beliefs and assumptions of our management. Words like “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” and similar expressions and their variants may be used to identify forward-looking statements. Such statements are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes.

The exploration for and development of mineral deposits involves significant financial risks, which even experience and knowledge may not eliminate, regardless of the amount of careful evaluation applied to a process. While the discovery of a mineral deposit may result in substantial rewards, few properties are ultimately developed into producing mines. Moreover, we cannot make any estimates regarding probable reserves and mineral resources in connection with any of our projects and any estimates relating to possible reserves are subject to significant risks. Therefore, no assurance can be given that any size of reserves or grades of reserves will be realized. If a discovery is made, the mineral deposit discovered, assuming recoverable, may differ from the reserves and mineral resources already discovered and recovered by others in the same region of the planned areas of exploration.

The cost of exploration and exploitation can be extensive and there is no assurance that we will have the resources necessary or the financing available to pursue projects we currently hold interests in or to acquire interests in other mineral exploration projects that may become available. The risks are numerous and 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-KSB, quarterly reports on Form 10-QSB and reports on Form 8-K.

Contact Information for Wits Basin Precious Minerals Inc.

Stephen King, President - (612) 490-3419

Vance White, CEO - (866) 214-WITM(9486); or

Redwood Consultants, LLC

Jens Dalsgaard, 415-884-0348

InvestorInfo@RedwoodConsultants.com