Unassociated Document

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F++9tCP7QD4t4o6ZW/kJ3xgwDfmcq7P9kPK8Vob3mfuiLvhtjuMG3WHW97903sAS 6om/l3hZLQeVr8YDM05jgw== 0001144204-10-020420.txt : 20100415 0001144204-10-020420.hdr.sgml : 20100415 20100415144745 ACCESSION NUMBER: 0001144204-10-020420 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 27 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100415 DATE AS OF CHANGE: 20100415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITS BASIN PRECIOUS MINERALS INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841236619 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12401 FILM NUMBER: 10751738 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: SUITE 900 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: (612)349-5277 MAIL ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: SUITE 900 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: ACTIVE IQ TECHNOLOGIES INC DATE OF NAME CHANGE: 20010702 FORMER COMPANY: FORMER CONFORMED NAME: METEOR INDUSTRIES INC DATE OF NAME CHANGE: 19960313 10-K 1 v181039_10k.htm Unassociated Document

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Year Ended December 31, 2009

Commission File Number: 1-12401

WITS BASIN PRECIOUS MINERALS INC.

(Exact Name of Small Business Issuer as Specified in its Charter)

MINNESOTA	84-1236619
(State or Other Jurisdiction of	(I.R.S. Employer Identification Number)
Incorporation or Organization)

900 IDS CENTER, 80 SOUTH EIGHTH STREET, MINNEAPOLIS, MINNESOTA 55402-8773

(Address of Principal Executive Offices)

Issuer’s telephone number including area code: (612) 349-5277

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.01 PAR VALUE

Title of Class

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ¨.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No x

The Registrant’s revenues for its most recent fiscal year: None.

The aggregate market value of the Registrant’s common stock held by non-affiliates as of June 30, 2009 was approximately $12,500,000, based on the closing sale price of $0.09 per share as reported on the OTCBB for the Company’s common stock on June 30, 2009.

On April 13, 2010, there were 169,112,367 shares of common stock issued and outstanding, which is the Registrant’s only class of voting stock.

Documents Incorporated by Reference: None.

WITS BASIN PRECIOUS MINERALS INC.

Annual Report on Form 10-K

For the Year Ended December 31, 2009

Table of Contents

		Page
PART I
Item 1.	Description of Business	4
Item 1A.	Risk Factors	13
Item 2.	Description of Properties	17
Item 3.	Legal Proceedings	17

PART II
Item 4.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7.	Financial Statements and Supplementary Data	25
Item 8.	Changes and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 8A(T).	Controls and Procedures	26
Item 8B.	Other Information	28

PART III
Item 9.	Directors, Executive Officers and Corporate Governance	29
Item 10.	Executive Compensation	30
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	35
Item 12.	Certain Relationships, Related Transactions and Director Independence	36
Item 13.	Principal Accountant Fees and Services	37
Item 14.	Exhibits and Financial Statement Schedules	38

Signatures		45

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains both historical statements and statements that are forward-looking in nature. Historical statements are based on events that have already happened. Certain of these historical events provide some basis to our management, with which assumptions are made relating to events that are reasonably expected to happen in the future. Management also relies on information and assumptions provided by certain third party operators of our projects as well as assumptions made with the information currently available to predict future events. These future event predictions, or forward-looking statements, include (but are not limited to) statements related to the uncertainty of the quantity or quality of probable ore reserves, the fluctuations in the market price of such reserves, general trends in our operations or financial results, plans, expectations, estimates and beliefs. You can identify forward-looking statements by terminology such as “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “continue,” “expect,” “intend,” “plan,” “predict,” “potential” and similar expressions and their variants. These forward-looking statements reflect our judgment as of the date of this Annual Report with respect to future events, the outcome of which is subject to risks, which may have a significant impact on our business, operating results and/or financial condition. Readers are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. We undertake no obligation to update forward-looking statements. The risks identified in PART I Item 1A, among others, may impact forward-looking statements contained in this Annual Report.

PART I

ITEM 1. BUSINESS

OVERVIEW

Wits Basin Precious Minerals Inc. (with its subsidiaries “we,” “us,” “our,” “Wits Basin” or the “Company”) is a minerals exploration and development company based in Minneapolis, Minnesota. As of December 31, 2009, we hold (i) a majority equity interest of approximately 94% of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) which owns a past producing gold mine in Colorado (the “Bates-Hunter Mine”), (ii) a 50% equity interest in China Global Mining Resources (BVI) Ltd., which owns a producing iron ore mine and processing plant in the People’s Republic of China, (the “PRC”), (iii) a 35% equity interest in Kwagga Gold (Barbados) Limited, which holds prospecting rights in South Africa (the “FSC Project”) and (iv) certain rights in the Vianey Concession in Mexico. The following is a summary of these projects:

On June 12, 2008, we transferred our right to purchase the Bates-Hunter Mine, a prior producing gold mine located in Central City, Colorado, to a newly created wholly owned subsidiary of ours, the Hunter Bates Mining Corporation (the “Hunter Bates”). Concurrent with this transfer, Hunter Bates completed the acquisition of the Bates-Hunter Mine. On September 29, 2009, Standard Gold, Inc., a Colorado corporation (“Standard Gold”) (formerly known as Princeton Acquisitions, Inc., a public shell corporation at the time) completed a reverse acquisition via a share exchange with Hunter Bates and all of its shareholders, whereby the holders of capital securities of Hunter Bates exchanged all of their capital securities, on a share-for-share basis, into similar capital securities of Standard Gold (the “Share Exchange”). Accordingly, the Share Exchange represented a change in control (reverse merger) and Hunter Bates became a wholly owned subsidiary of Standard Gold. We hold an aggregate of 21,513,544 shares of Standard Gold common stock (or approximately 94% of the issued and outstanding shares of common stock) and thus, Standard Gold is a majority owned subsidiary of ours. Standard Gold’s common stock is quoted on the OTCBB under the symbol “SDGR.”

On March 17, 2009, we entered into a joint venture with London Mining, Plc, a United Kingdom corporation (“London Mining”) for the purpose of acquiring the processing plant of Nanjing Sudan Mining Co. Ltd (“Sudan”) and the iron ore mine of Xiaonanshan Mining Co. Ltd (“Xiaonanshan”) (the Sudan and Xiaonanshan collectively are referred to as the “PRC Properties”). Pursuant to that certain Amended and Restated Subscription Agreement, dated March 17, 2009 by and between London Mining and the Company, London Mining purchased 100 ordinary A Shares of China Global Mining Resources (BVI) Ltd, a British Virgin Islands corporation and at the time a wholly owned subsidiary of ours (“CGMR (BVI)”) for $38.75 million, which A Shares constitute a 50% equity interest in CGMR (BVI). We hold the remaining 50% equity interest in the form of 100 ordinary B Shares. The A Shares carry a preference with respect to return of capital and distributions (A Shares are entitled to 99%) until London Mining receives an aggregate of $44.5 million in return of capital or distributions and certain other conditions are met. On March 17, 2009, CGMR (BVI), through its wholly owned subsidiary China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”), acquired the PRC Properties. At that time, we deconsolidated CGMR (BVI) as a subsidiary of ours.

We hold a 35% equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, a South African entity (“Kwagga Pty”), holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. From October 2003 through August 2005, we completed only two range-finding drillholes (our $2,100,000 investment to acquire the 35% equity was utilized to fund the drillholes) and we have not performed any further exploration activities since. On December 12, 2007, we entered into an agreement with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65% of Kwagga Barbados, whereby we may acquire all of AfriOre’s interest of Kwagga Barbados, which agreement required completion on or before June 30, 2009. Documentation has been submitted to obtain the consent of South Africa’s Minister of Minerals and Energy, who oversees the Department of Minerals and Energy (the “DME”) to allow for the sale of the controlling interest in Kwagga Pty to a U.S. company, all of which is still under review. We have a verbal agreement from AfriOre regarding an extension to obtain consent from the DME. Other than limited maintenance of the prospecting rights, no other activities will be conducted until consent is issued by the DME.

In October 2007, we executed an amendment to a formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia (“Journey”), and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico and a wholly owned subsidiary of Journey. Pursuant to the terms of the amendment, we own a 50% undivided beneficial interest in “located mineral claims” in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico (“Vianey”). Based on our further due diligence on the Vianey, we have determined that it is necessary to increase the size of the land package in order for this project to be a viable exploration endeavor. Inquiries and communications have been disseminated to the adjacent properties, regarding possible purchase of land, rights or some type of further joint venture to accomplish an increased footprint. Due to the limited possibility of return on capital and since we do not anticipate providing any significant funding for the foreseeable future, we have deemed this project immaterial to our project portfolio. If any significant event should occur relating to the Vianey after the date of this report, we will report it accordingly, otherwise this project will not be commented on in the future.

As of December 31, 2009, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations. As of the date of this Annual Report, we do not claim to have any mineral reserves at the Bates-Hunter Mine, the FSC Project or the Vianey.

OUR HISTORY

We were originally incorporated under Colorado law in December 1992 under the name Meteor Industries, Inc. In conjunction with our April 2001 merger with activeIQ Technologies Inc, we reincorporated under Minnesota law and changed our name to Active IQ Technologies, Inc. In June 2003, following our transaction to acquire the rights to the FSC Project, we changed our name to Wits Basin Precious Minerals Inc., in order to further associate our corporate name with our new business model of minerals exploration.

Effective May 1, 2003, we became an exploration stage company due to the sale of our prior business models and we will continue reporting as an exploration stage company until such time as one of our exploration projects provides recordable revenues or we otherwise complete an acquisition or joint venture with business models that have operating revenues.

OUR EXPLORATION PROJECTS

BATES-HUNTER MINE

Overview

On January 21, 2005, Wits Basin acquired an option to purchase all of the outstanding capital stock of the Hunter Gold Mining Corp. (a corporation incorporated under the laws of British Columbia, Canada) who held all of the assets of the Bates-Hunter Mine. On July 21, 2006, Wits Basin executed a stock purchase agreement to supersede the option agreement. On September 20, 2006, Wits Basin executed an Asset Purchase Agreement to purchase the Bates-Hunter Mine on different economic terms than previously agreed upon in the stock purchase agreement or option. On June 12, 2008, Wits Basin entered into a fifth amendment to the Asset Purchase Agreement to, among other changes, reflect its assignment of its rights in the Asset Purchase Agreement to Hunter Bates and thereby allowing Hunter Bates to complete the acquisition of the Bates-Hunter Mine. The acquisition of the assets (which included land, buildings, equipment, mining claims and permits) of the Bates-Hunter Mine was completed on June 12, 2008.

The Asset Purchase Agreement was financed through a limited recourse promissory note of Hunter Bates payable to Mr. Otten in the principal amount of Cdn$6,750,000 ($6,736,785 US as of June 12, 2008) and the issuance of 3,620,000 shares of Wits Basin common stock with a fair value of $0.205 per share (the closing sale price on June 11, 2008) totaling $742,100. Furthermore, the Asset Purchase Agreement requires the following additional compensation: (i) a 2% net smelter return royalty on all future production, with no limit; (ii) a 1% net smelter return royalty (up to a maximum payment of $1,500,000); and (iii) a fee of $300,000 to be paid in cash. Wits Basin incurred acquisition costs of $380,698.

The Bates-Hunter Mine is located about 35 miles west of Denver, Colorado and is located within the city limits of Central City. The Central City mining district lies on the east slope of the Front Range where elevations range from 8,000 feet in the east to 9,750 feet in the west. Local topography consists of gently rolling hills with local relief of as much as 1,000 feet.

The mine site is located in the middle of a residential district within the city limits of Central City and is generally zoned for mining or industrial use. The Bates-Hunter Mine shaft is equipped with an 85 foot tall steel headframe and a single drum hoist using a one inch diameter rope to hoist a two ton skip from approximately 1,000 feet deep. A water treatment plant has been constructed adjacent to the mine headframe. This is a significant asset given the mine site location and current gold prices.

Geology

The regional geology of the Central City district is not “simple” but the economic geology is classically simple. The Precambrian granites and gniesses in the area were intensely fractured during a faulting event resulting in the emplacement of many closely spaced and roughly parallel veins. The veins are the result of fracture filling by fluids that impregnated a portion of the surrounding gneisses and granites with lower grade gold concentrations “milling ore” and usually leaving a high grade “pay streak” of high grade gold sulphides within a quartz vein in the fracture. There are two vein systems present, one striking east-west and the other striking sub parallel to the more predominant east-west set. These veins hosted almost all of the gold in the camp. The veins vary from 2 to 20 feet in width and dip nearly vertical. Where two veins intersect, the intersection usually widens considerably and the grade also increases, sometimes to bonanza grades. In the Timmins camp, this same feature was described as a “blow out” and resulted in similar grade and thickness increases. The Bates vein in the area of the Bates-Hunter Mine has been reported to have both sets of veins and extremely rich “ore” where the two veins intersected. These veins persist to depth and consist of gold rich sulphides that include some significant base metal credits for copper and silver.

Previous Exploration Efforts

The following is based on the information from a report titled “Exploration and Development Plan for the Bates-Hunter Project,” prepared by Glenn R. O’Gorman, P. Eng., dated March 1, 2004.

Lode gold was first discovered in Colorado in 1859 by John H. Gregory. The first veins discovered were the Gregory and the Bates. This discovery started a gold rush into the area with thousands of people trying to stake their claims. The Central City mining district is the most important mining district in the Front Range mineral belt. Since 1859, more than 4,000,000 ounces of gold have been mined from this district. Over 25% of this production has come from the area immediately surrounding the Bates-Hunter Project. Although the Bates vein was one of the richest and most productive in the early history of the area, it was never consolidated and mined to any great depth.

The majority of production on the claims occurred during the period prior to 1900. Technology at that time was very primitive in comparison to today's standards. Hand steel and hand tramming was the technology of the day. The above limitations coupled with limited claim sizes generally restricted mining to the top few hundred feet on any one claim.

During the early 1900’s cyanidation and flotation recovery technologies were developed along with better hoists and compressed air operated drills. Consolidation of land was a problem. Production rates were still limited due to the lack of mechanized mucking and tramming equipment. Issues that were major obstacles prior to the 1900’s and 1930’s are easily overcome with modern technology.

Colorado legislated their own peculiar mining problem by limiting claim sizes to 500 feet in length by 50 feet wide and incorporated the Apex Law into the system as well. A typical claim was 100 to 200 feet long in the early days. This resulted in making it extremely difficult for any one owner to consolidate a large group of claims and benefit from economies of scale. The W.W.II Production Limiting Order # 208 effectively shut down gold mining in the area and throughout Colorado and the United States in mid 1942.

Historical production records indicate that at least 350,000 ounces of gold were recovered from about half of the Bates Vein alone to shallow depths averaging about 500 feet below surface.

GSR Goldsearch Resources drilled two reverse circulation holes on the property in 1990. The first hole did not intersect the Bates Vein. However, the second drilled beneath the Bates-Hunter shaft bottom intersected the Bates Vein at about 900 feet below surface. The drill cuttings graded 0.48 oz. Au/ton over 10 feet. This drillhole intersected three additional veins as well with significant gold assays.

Through August 2008, over 12,000 feet of drilling was accomplished, which provided detailed data, which has been added to the existing 3-D map of the region. Several narrow intervals of potential ore grade gold values were intersected, which require further exploration efforts to delineate any valuation.

Our Exploration Plans

With what has been compiled so far, including surface drill results, underground and surface geologic mapping and sampling, assay testing, detailed surface surveys of mineral claims and outcropping veins, research of structural geology of the vein systems and computer modeling with three-dimensional software, Standard Gold is continuing to define what possible next steps can be implemented and what those steps will require in funding. No further exploration activities will be conducted at the Bates-Hunter Mine until such time as Standard Gold can obtain sufficient funds. Standard Gold has taken measures to secure the property while it remains inactive.

KWAGGA GOLD (BARBADOS) LIMITED AND THE FSC PROJECT

Overview

By September 2004, we invested $2,100,000 to acquire a 35% equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, holds mineral exploration rights in South Africa (pursuant to an August 27, 2004 “Shareholders Agreement”). We refer to this as the “FSC Project” and it is located adjacent to the historic Witwatersrand Basin. In December 2007, we entered into a new agreement, the “Sale of Shares Agreement” with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65% of Kwagga Barbados, whereby we have the option to acquire all of AfriOre’s interest in Kwagga Barbados. Our ownership in Kwagga Barbados was facilitated through a transaction with Hawk Uranium Inc. (“Hawk”) in 2003. H. Vance White, an officer and director of Hawk served on our board of directors until July 10, 2009.

In order for us to acquire the remaining 65% interest pursuant to the Sale of Shares Agreement, all of the following must occur: (1) South Africa’s Minister of Minerals and Energy, who oversees the Department of Minerals and Energy (the “DME”), must consent in writing to the change in the controlling interest in Kwagga (Proprietary) as per South African law; (2) we must incur exploration expenditures in the aggregate amount of at least $1.4 million; and (3) we must pay to AfriOre an amount equal to $1.162 million within three months following the final date of the completion of the required $1.4 million exploration expenditures. The closing of this transaction will occur three business days following the receipt of the DME consent (provided certain other conditions have then been satisfied), at which time we will acquire the remaining 65% interest and simultaneously grant to AfriOre a security interest in that 65% interest as collateral for the performance of our obligations under the Sale of Shares Agreement. Such security interest will not be released by AfriOre until such time as we incur the exploration expenditures described above and make the $1.162 million payment to AfriOre. As additional consideration for entering into the Sale of Shares Agreement, AfriOre will be entitled to a 2% gross royalty on all sales of gold and any other minerals by us relating to the FSC Project. We may buy back 1% of the 2% gross royalty for a one-time cash payment of $2 million upon delivery of a bankable feasibility study.

Should consent be issued by the DME, then the 2004 Shareholders Agreement will be superseded by the Sale of Shares Agreement. Under the terms of the Sale of Shares Agreement, as amended, consent was to be obtained by the DME on or before June 30, 2009. We have continued its verbal discussion with AfriOre regarding an extension of the termination date of the Sale of Shares Agreement. Should consent be denied by the DME or should AfriOre not provide any further extensions of the termination date, then the Sale of Shares Agreement will lapse and the 2004 Shareholders Agreement shall remain in full force and effect. Furthermore, we have been in communications with the DME with respect to our application for such consent.

In November 2008, AfriOre informed us that they would not be providing any additional funding and that it was our responsibility to maintain the permits and land claims of the FSC Project. Therefore, in November 2008, we entered into a bridge financing arrangement with Hawk, whereby Hawk made a loan to the Company of $60,000 in consideration of a 90-day promissory note in order to provide temporary funding to Kwagga. We recorded these proceeds as an investment in Kwagga and will recognize 100% of the expenses (attributable to a loss in subsidiary) related to such permit and land claim maintenance expenditures. The Hawk loan was satisfied on December 24, 2009.

Previous Exploration Efforts

The geological model was developed by AfriOre, affiliates of AfriOre and academic geologists from Witwatersrand University.

In October 2003, AfriOre commissioned the first drillhole, which was completed on June 8, 2004. This drillhole, BH47, was drilled in the western structural block to a depth of 2,984 meters (approximately 9,800 feet) and intersected a well developed succession of lower Proterozoic rocks before it was terminated in a zone of shearing. Although BH47 was not successful in intersecting any gold bearing mineralization reefs to the depths drilled, it did confirm the existence of the overlying cover rock stratigraphies, similar to those in the main Witwatersrand Basin, thereby confirming the initial geological model.

The second drillhole, BH48 (which was completed in August 2005) was drilled to a depth of 2,559 meters (approximately 8,400 feet) and intersected over 600 meters of quartzites, below cover rocks which included a relatively thin succession of Transvaal Supergroup sedimentary rocks (160 meters) and Ventersdorp Supergroup lavas (132 meters) below the Karoo Supergroup rocks. The quartzites have been positively identified as Witwatersrand rocks, both through stratigraphic correlation and age dating analysis. Although the age dating determinations indicated an age of the quartzites in accordance with that of the Witwatersrand Supergroup, expert consultants engaged by AfriOre correlated the quartzites with the West Rand Group of the Witwatersrand Supergroup. Also identified in BH48 were a number of bands of pyrite mineralization which, while returning assays results with negligible amounts of gold, nevertheless were consistent with similar features encountered throughout the rocks in the main Witwatersrand Basin.

Our Exploration Plans

The FSC Project is significant because for the first time all the historical data previously held by independent sources has been acquired and interpreted together. Part of the data that AfriOre has acquired and compiled from independent sources includes:

Government aeromagnetic and gravimetric data.

An AfriOre commissioned detailed aeromagnetic survey covering 1531 km2.

66 regional drillholes of which 37 define the greater FSC basin and 7 intersected Witwatersrand rocks within the FSC basin.

785 line kilometers of seismic data.

Six potential sites for proposed future drilling have been identified for consideration. Based on inquiries made in December 2008, preliminary estimates for drilling a single 2,000 meter drillhole was estimated at $750,000. Also, it has been recommended that additional seismic and drillhole information be purchased from a third party to enhance the interpretation of the potential six exploration sites. Any of these costs would qualify for our minimum exploration expenditures of $1,400,000 required under the Sale of Shares Agreement. Therefore, in order to move this project to its next phase of exploration, we would need to raise at least $2,562,000 in dedicated funds. We will continue to seek financing arrangements from sources that have interests in the gold fields of South Africa in order to move this project to its next phase.

VIANEY MINE CONCESSION

In October 2007, we executed an amendment to the formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia (“Journey”) and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico and a wholly owned subsidiary of Journey. Pursuant to the terms of the amendment, we own a 50% undivided beneficial interest in “located mineral claims” in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico (“Vianey”). Through September 2007, we paid an aggregate of $600,000 and issued an aggregate of 2.6 million shares of our unregistered common stock (valued at $685,000) to Journey for our interest. The book value of our interest in Vianey was $0 at December 31, 2007. We recorded no expenditures during 2009 on this project.

Based on our further due diligence on the Vianey, we have determined that it is necessary to increase the size of the land package in order for this project to be a viable exploration endeavor. Inquiries and communications have been disseminated to the adjacent properties, regarding possible purchase of land, rights or some type of further joint venture to accomplish an increased footprint. Journey remains the operator of the project and has other specific tasks to be performed.

Due to the limited possibility of return on capital and since we do not anticipate providing any significant funding for the foreseeable future, we have deemed this project immaterial to our project portfolio. If any significant event should occur relating to the Vianey after the date of this report, we will report it accordingly, otherwise this project will not be commented on in the future.

TRANSACTIONS IN THE PEOPLE’S REPUBLIC OF CHINA

During 2007, we made a direct $5 million investment through one of our wholly owned subsidiaries to the sellers of the iron ore PRC Properties (the processing plant of Nanjing Sudan Mining Co. Ltd and the iron ore mine of Xiaonanshan Mining Co. Ltd), which secured our right to purchase these assets and provided the sellers with working capital. The original heads of agreement, that certain Equity and Asset Transfer Heads of Agreement, dated May 4, 2007, went through a series of amendments and assignments. As of December 31, 2008, we only held the rights to acquire these iron ore mining properties and, therefore, we continued to record the $5 million as an advanced payment for the eventual purchase of the iron ore properties until such time as we had some type of resolution.

On December 17, 2008, we created a new British Virgin Islands corporation and wholly owned subsidiary of ours under the name of China Global Mining Resources (BVI) Limited (“CGMR (BVI)”) to serve as the joint venture entity proposed with London Mining. On December 23, 2008, we sold our 100% equity ownership of China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”) to CGMR (BVI) for $4.8 million, whereby CGMR HK became a wholly owned subsidiary of CGMR (BVI). CGMR HK was assigned all of our rights to acquire the PRC Properties. Due to this sale occurring between two commonly controlled entities, no gain ($4.8 million) was recorded by the Company. We still owned 100% of both CGMR’s as of December 31, 2008.

On March 17, 2009, we entered into an amended and restated subscription agreement with London Mining (the “LM Subscription Agreement”), whereby they acquired a 50% equity interest in CGMR (BVI) by paying an aggregate of $38.75 million for 100 A Shares. We hold the remaining 50% equity interest in CGMR (BVI) in the form of 100 ordinary B Shares. All shares have equal voting rights and the board of directors was split equally between the two equity owners as well. Contemporaneously, CGMR (BVI) (through CGMR HK) completed the acquisition of the PRC Properties. Pursuant to the LM Subscription Agreement, we entered into a shareholders’ agreement with London Mining (the “LM Shareholders’ Agreement”) setting forth certain preferences of the A Shares and governance terms applicable to CGMR (BVI). The A Shares carry a preference with respect to return of capital and distributions until such time as an aggregate of $44.5 million (which includes the subscription amount of $38.75 million and $5.75 million in the form of a loan made to us) is returned or distributed to the holders of the A Shares (the “Repayment”). The A Shares preference entitles the holders of the A Shares to 99% of the distributions of CGMR (BVI) until Repayment, while the B Shares that we hold will receive a 1% distribution until such time London Mining’s investment is returned. After Repayment, London Mining will be entitled to 60% of the distributions and the Company 40% until the PRC Properties achieve an annual production output of 850,000 tons of iron ore. Upon achievement of such production, the respective holders of the A Shares and the B Shares, each as a class, will be entitled to 50% of the distributions. Additionally, London Mining is entitled under the LM Shareholders’ Agreement to a management fee in the amount of $5.5 million for the first year following the acquisition, and $4.5 million annually thereafter until Repayment. In the event Repayment occurs within three years, we may be entitled to receive a portion of the aggregate management fee paid to London Mining. Under the LM Shareholders’ Agreement, we will be required to indemnify London Mining in the event certain events occur prior to Repayment, including (i) certain payments made under the consulting agreement with Mr. Lu (the seller of the PRC Properties) that are to be deferred, (ii) failure to complete the acquisition of the Matang iron ore deposit located in the Anhui Province of the PRC, (iii) payments incurred in developing Matang in accordance with the business plan relating to the operation of the PRC Properties, or (iv) a material deviation from the business plan relating to the operation of the PRC Properties. Our indemnification, if any, would be satisfied by the transfer of a number of our B Shares, having a fair market value equal to the indemnified amount as determined under the LM Shareholders’ Agreement. The LM Shareholders’ Agreement further provides for transfer restrictions agreed between the parties, including rights of first refusal, drag along and tag along rights.

Subject to the provisions of the LM Shareholders’ Agreement, the Company has a 50% equity interest, equal voting rights and an equal representation on the board. Therefore, the Company can exercise influence over the operations and financial policies of the joint venture but does not exercise control.

CGMR (BVI)’s current activities relate to processes that will optimize the extraction levels at the Xiaonanshan iron ore open mine and to increase recoveries and concentrate grade at the Sudan processing plant. Furthermore, CGMR (BVI) has undertaken a program to define the existing resource and to acquire further deep mining rights at Xiaonanshan, to provide payments to the seller in accordance with the original acquisition agreement and is investigating its options in order to raise the funding necessary to assist in acquiring certain adjacent operations in order to form the basis for future expansion plans.

Effective with the consummation of the joint venture, the $5 million advance was not considered a partial payment on the iron ore properties purchase price but rather an advance still due back from the sellers. This accounting treatment, however, was subject to different interpretation by the joint venture partners and therefore, for the year ended December 31, 2009, the Company impaired the $5 million to $0.

INDUSTRY BACKGROUND

The exploration for and development of mineral deposits involves significant capital requirements. While the discovery of an ore body may result in substantial rewards, few properties are ultimately developed into producing mines. Some of the factors involved in determining whether a mineral exploration project will be successful include, without limitation:

competition;

financing costs;

availability of capital;

proximity to infrastructure;

the particular attributes of the deposit, such as its size and grade;

political risks, particularly in some emerging third world countries; and

governmental regulations, particularly regulations relating to prices, taxes, royalties, infrastructure, land use, importing and exporting of gold, environmental protection matters, property title, rights and options of use, and license and permitting obligations.

All of which leads to a speculative endeavor of very high risk. Even with the formation of new theories and new methods of analysis, unless the minerals are simply lying exposed on the surface of the ground, exploration will continue to be a “hit or miss” process.

PRODUCTS AND SERVICES

As of December 31, 2009, we hold (i) an equity interest of approximately 94% of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) which owns a past producing gold mine in Colorado (Bates-Hunter Mine), (ii) a 50% equity interest in China Global Mining Resources (BVI) Ltd., which owns a producing iron ore mine and processing plant in the PRC, (iii) a 35% equity interest in Kwagga Gold (Barbados) Limited, which holds prospecting rights in South Africa (FSC Project) and (iv) certain rights in the Vianey Concession in Mexico.

EXPLORATION AND DEVELOPMENT EXPENSES

If we acquire a project that has no revenue, exploration expenses will be charged to expense as incurred.

EMPLOYEES

As of December 31, 2009, we employ three individuals under the Wits Basin parent corporation – our chief executive officer, our president and our chief financial officer. Standard Gold (a majority owned subsidiary) employs one mine related employee at the Bates-Hunter Mine. None of our employees are represented by a labor union and we consider our employee relations to be good.

FINANCIAL INFORMATION IN INDUSTRY SEGMENTS

During the year ended December 31, 2009, our continuing operations included one reportable segment: that of minerals exploration.

AVAILABLE INFORMATION

We make available free of charge, through our Internet web site www.witsbasin.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material, or furnish it to the Securities and Exchange Commission. You can also request a free copy of the above filings by writing or calling us at:

Wits Basin Precious Minerals Inc.

Attention: Mark D. Dacko, Secretary

900 IDS Center, 80 South 8th Street

Minneapolis, Minnesota 55402-8773

(612) 349-5277

ITEM 1A. RISK FACTORS

RISKS RELATING TO OUR COMMON STOCK

TRADING OF OUR COMMON STOCK IS LIMITED.

Trading of our common stock is conducted on the National Association of Securities Dealers’ Over-the-Counter Bulletin Board, or “OTC Bulletin Board.” This has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

BECAUSE IT IS A “PENNY STOCK” IT CAN BE DIFFICULT TO SELL SHARES OF OUR COMMON STOCK.

Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our stock. Because of the rules, there is less trading in penny stocks. Also, many brokers choose not to participate in penny stock transactions. Accordingly, you may not always be able to sell our shares of common stock publicly at times and prices that you feel are appropriate.

A SIGNIFICANT NUMBER OF SHARES OF OUR COMMON STOCK ARE HELD IN RESERVE FOR VARIOUS AGREEMENTS AND THEIR ISSUANCE COULD DEPRESS THE PRICE OF OUR SECURITIES.

The issuance of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for you to sell our securities at times and prices that you feel are appropriate. As of April 13, 2010, we had 169,112,367 shares of common stock issued and outstanding. Furthermore, we have reserved for issuance (i) 15,643,500 shares of common stock issuable upon the exercise of outstanding stock options, (ii) 78,046,403 shares of common stock issuable upon the exercise of outstanding warrants and (iii) an aggregate of 29,513,304 shares of common stock issuable under outstanding convertible debt agreements.

RISKS RELATING TO OUR FINANCIAL CONDITION

WE CURRENTLY DO NOT HAVE ENOUGH CASH TO FUND OPERATIONS, DEBT REDUCTION OR POTENTIAL ACQUISITIONS DURING 2010.

As of April 14, 2010, we had only approximately $113,000 of cash and cash equivalents on hand. Since we do not expect to generate any revenue from operations in 2010, we will be required to raise additional capital in financing transactions in order to satisfy our expected cash expenditures. Included in the expected cash expenditures is approximately $13,500,000 in debt that will become due during 2010, assuming some or all of such debt is not converted into equity prior to such date. Accordingly, we will require additional funds during 2010.

We continue to seek additional opportunities relating to our mining operations, and our ability to seek out such opportunities, perform due diligence, and, if successful, acquire such properties or opportunities requires additional capital. We expect to raise such additional capital by selling shares of our capital stock or by borrowing money. However, we currently have only a limited number of available shares of common stock authorized for issuance, and will require shareholder approval to increase our authorized capitalization to raise such additional capital. Additionally, such additional capital may not be available to us at acceptable terms or at all. Further, if we increase our capitalization and sell additional shares of our capital stock, your ownership position in our Company will be subject to dilution. In the event that we are unable to obtain additional capital, we may be forced to cease our search for additional business opportunities, reduce our operating expenditures or to cease operations altogether.

WE HAVE VERY LIMITED ASSETS IN OPERATION.

After we sold all of our prior business models in 2003, we became an exploration stage company and do not anticipate having any revenues from operations until an economic mineral deposit is put into production or unless we complete other acquisitions or joint ventures with business models that produce such revenues. As of April 13, 2010, we hold (i) an equity interest of approximately 94% of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) which owns a past producing gold mine in Colorado (Bates-Hunter Mine), (ii) a 35% equity interest in Kwagga Gold (Barbados) Limited, which holds prospecting rights in South Africa (FSC Project) and (iii) certain rights in the Vianey Concession in Mexico. None of these properties may ever produce any significant mineral deposits.

With respect to our equity interest in CGMR (BVI), due to the disproportionate distributions stipulated in the LM Shareholders’ Agreement, our proportional 1% return on CGMR (BVI) assets utilized in the operations at the mine and processing plant, provides little return to the Company at this time and there can be no guarantees that it may ever result in significant returns to the Company.

WE ANTICIPATE INCURRING LOSSES FOR THE FORESEEABLE FUTURE.

Since becoming an exploration stage company in May 2003 through December 31, 2009, we have incurred an aggregate net loss of $67,654,919. We expect operating losses to continue for the foreseeable future and may never be able to operate profitably.

OUR INDEPENDENT AUDITORS HAVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

We have had net losses for each of the years ended December 31, 2009 and 2008, and we have an accumulated deficit as of December 31, 2009. Since the financial statements for each of these periods were prepared assuming that we would continue as a going concern, in the view of our independent auditors, these conditions raise substantial doubt about our ability to continue as a going concern. Furthermore, since we do not expect to generate any significant revenues from operations for the foreseeable future, our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. We believe that private placements of equity capital and debt financing may be adequate to fund our long-term operating requirements. We may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. We are continuing to pursue external financing alternatives to improve our working capital position. If we are unable to obtain the necessary capital, we may have to cease operations.

CERTAIN OF OUR AGREEMENTS REQUIRE PAYMENTS IN FOREIGN CURRENCIES AND ARE SUBJECT TO EXCHANGE RATE FLUCTUATIONS.

Certain of our acquisition agreements (including certain of those we hold in our subsidiaries) and other agreements we have entered require payments in foreign currencies, including the Canadian Dollar and the South African Rand. It is possible that we will enter into other agreements for future acquisitions or work relating to our various mining interests that will require payment in currencies other than the U.S. Dollar. Fluctuations in exchange rates, in particular between the U.S. Dollar and other currencies, can affect the actual amounts of these payments and potentially may be in excess of the amounts we have budgeted for payment of these fees and other payments.

RISKS RELATING TO OUR BUSINESS

WE WILL REQUIRE ADDITIONAL FINANCING TO CONTINUE TO FUND OUR CURRENT EXPLORATION PROJECT INTERESTS OR TO ACQUIRE INTERESTS IN OTHER EXPLORATION PROJECTS.

Substantial additional financing will be needed in order to fund beyond the current exploration programs underway or to potentially complete further acquisitions or complete other acquisitions or joint ventures with other business models. Our means of acquiring investment capital is limited to private equity and debt transactions. We have no significant sources of currently available funds to engage in additional exploration and development. Without significant additional capital, we will be unable to fund exploration of our current property interests or acquire interests in other mineral exploration projects that may become available. See “—Risks Relating to Our Financial Condition – We Currently Do Not Have Enough Cash to Fund Operations During 2010.”

OUR PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS IN MINERAL PRICES.

The profitability of the exploration projects could be significantly affected by changes in the market price of minerals. Demand for minerals can be influenced by economic conditions, attractiveness as an investment vehicle and the relative strength of the U.S. Dollar and local investment currencies. Other factors include the level of interest rates, exchange rates, inflation and political stability. The aggregate effect of these factors is impossible to predict with accuracy.

In particular, mine production and the willingness of third parties such as central banks to sell or lease gold affects the supply of gold. Worldwide production levels also affect mineral prices. In addition, the price of gold, silver and iron ore have on occasion been subject to very rapid short-term changes due to speculative activities. Fluctuations in gold prices may adversely affect the value of any discoveries made at the sites with which we are involved.

MINERAL EXPLORATION IS EXTREMELY COMPETITIVE.

There is a limited supply of desirable mineral properties available for claim staking, lease or other acquisition in the areas where we contemplate participating in exploration activities. We compete with numerous other companies and individuals, including competitors with greater financial, technical and other resources than we possess, in the search for and the acquisition of attractive mineral properties. Our ability to acquire properties in the future will depend not only on our ability to develop our present properties, but also on our ability to select and acquire suitable producing properties or prospects for future mineral exploration. We may not be able to compete successfully with our competitors in acquiring such properties or prospects.

THE NATURE OF MINERAL EXPLORATION IS INHERENTLY RISKY.

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 the process. Very few properties are ultimately developed into producing mines. Whether a gold or other mineral deposit will become commercially viable depends on a number of factors, including:

financing costs;

proximity to infrastructure;

the particular attributes of the deposit, such as its size and grade; and

governmental regulations, including regulations relating to prices, taxes, royalties, infrastructure, land use, importing and exporting and environmental protection.

The outcome of any of these factors may prevent us from receiving an adequate return on invested capital.

CERTAIN OF OUR DIRECTORS AND OFFICERS MAY HAVE CONFLICTS OF INTEREST WITH REGARD TO CERTAIN TRANSACTIONS TO WHICH WE OR OUR AFFILIATES MAY BE PARTIES.

Stephen D. King, our Chief Executive Officer, is a director of CGMR (BVI) and Dr. Clyde Smith, our President, is a representative on the CGMR (BVI) Management Committee. Additionally, Messrs. King and Smith serve as paid consultants to CGMR (BVI). As a result of Messrs. King and Smith’s affiliation with CGMR (BVI) and its subsidiaries, conflicts of interest may arise with the Company.

THE OPERATORS OF OUR EXPLORATION PROJECTS MAY NOT HAVE ALL NECESSARY TITLE TO THE MINING EXPLORATION RIGHTS.

We expect that Kwagga (Barbados), Kwagga (Proprietary), Journey and CGMR (BVI) will have good and proper right, title and interest in and to the respective mining exploration rights they currently own, have optioned or intend to acquire and that they will explore and develop. Such rights may be subject to prior unregistered agreements or interests or undetected claims or interests, which could materially impair our ability to participate in the development of our projects. The failure to comply with all applicable laws and regulations, including failure to pay taxes and to carry out and file assessment work, may invalidate title to portions of the properties where the exploration rights are held.

LAWS GOVERNING MINERAL RIGHTS OWNERSHIP HAVE CHANGED IN SOUTH AFRICA.

The South African mining industry has undergone a series of significant changes culminating in the enactment of the Mineral and Petroleum Resources Development Act No. 28 of 2002 (“the Act”) on May 1, 2004. The Act legislates the abolition of private mineral rights in South Africa and replaces them with a system of state licensing based on the patrimony over minerals, as is the case with the bulk of minerals in other established mining jurisdictions such as Canada and Australia.

Holders of old-order mining rights are required to apply for conversion of their old order rights into new order mining rights in terms of the Act. Once a new order right is granted, security of tenure is guaranteed for a period of up to 30 years, subject to ongoing compliance with the conditions under which the right has been granted. A mining right may be renewed for further periods of up to 30 years at a time, subject to fulfillment of certain conditions. We will be required to apply for new order rights before we can further explore in South Africa and at this time, can not estimate the costs involved to proceed.

DUE TO LEGISLATION ENACTED IN SOUTH AFRICA, KWAGGA (PROPRIETARY) WILL BE REQUIRED TO SELL A SUBSTANTIAL AMOUNT OF ITS STOCK, WHICH WOULD DILUTE OUR EQUITY POSITION IN KWAGGA.

In accordance with the Broad-Based Socio-Economic Empowerment Charter for the South African mining industry, Kwagga (Proprietary) must sell 26% of its capital stock at fair market value to a Black Economic Empowerment investor by 2014. Any investment by such a group will dilute our ownership of Kwagga (Proprietary) and, accordingly, the right to receive profits generated from the FSC Project, if any.

DOING BUSINESS IN CHINA

The Chinese economy differs from the economies of most developed countries in many respects, including:

the amount of government involvement;

the level of development;

the growth rate;

the control of foreign exchange; and

the allocation of resources.

The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us and CGMR (BVI). For example, CGMR (BVI)’s ability to make distributions may be adversely affected by government control over capital investments or changes in applicable tax regulations. The PRC government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO RECEIVE AND USE ANY REVENUES EFFECTIVELY.

Foreign exchange transactions by companies under China’s capital account continue to be subject to significant foreign exchange controls and require the approval of PRC governmental authorities. There may be restrictions for us to receive any funds from the PRC iron ore joint venture.

ITEM 2. PROPERTIES

Our corporate office is located at 900 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402-8773, in which we occupy approximately 160 square feet of office space, together with the use of related adjacent common areas, pursuant to a lease agreement that expires May 31, 2010, which requires monthly payments of $1,261. We believe that our current corporate facilities are adequate for our current needs.

On June 12, 2008, Hunter Bates completed the acquisition of the Bates-Hunter Mine located in Central City, Colorado, which includes a water treatment plant, headframe building and the land, financed through a limited recourse promissory note. Hunter Bates incurs no rent expenses at the mine site, but does incur the basic heat, light and water operating expenses. We do not claim to have any mineral reserves at the Bates-Hunter Mine and further development is contingent upon available funds.

ITEM 3. LEGAL PROCEEDINGS

We are not currently involved in any material legal proceedings out of the ordinary course of our business.

PART II

ITEM 4. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the OTCBB under the symbol “WITM.” As of April 13, 2010 the last closing bid price of our common stock as reported by OTCBB was $0.07 per share. The following table sets forth for the periods indicating the range of high and low bid prices of our common stock:

Period	High		Low

Quarter Ended March 31, 2008	$	0.33	$	0.18
Quarter Ended June 30, 2008	$	0.25	$	0.14
Quarter Ended September 30, 2008	$	0.21	$	0.10
Quarter Ended December 31, 2008	$	0.15	$	0.05

Quarter Ended March 31, 2009	$	0.13	$	0.05
Quarter Ended June 30, 2009	$	0.10	$	0.05
Quarter Ended September 30, 2009	$	0.08	$	0.03
Quarter Ended December 31, 2009	$	0.09	$	0.07

Quarter Ended March 31, 2010	$	0.09	$	0.05

The quotations from the OTCBB above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions.

RECORD HOLDERS

As of April 13, 2010, there were approximately 195 record holders of our common stock, excluding shareholders holding securities in “street name.” Based on securities position listings, we believe that there are approximately 3,100 beneficial holders of our common stock in “street name.”

DIVIDENDS

We have never paid cash dividends on our common stock and have no present intention of doing so in the foreseeable future. Rather, we intend to retain all future earnings to provide for the growth of our Company. Payment of cash dividends in the future, if any, will depend, among other things, upon our future earnings, requirements for capital improvements and financial condition.

RECENT SALES OF UNREGISTERED SECURITIES

In addition to the sales of unregistered securities that we reported in Quarterly Reports on Form 10-Q and Current Reports on Form 8-K during fiscal year ended 2009, we made the following sales of unregistered securities during the quarter ended December 31, 2009.

In November 2009, we issued 1,100,000 shares of our common stock to an affiliated foreign consultant for services related to the CGMR (BVI) joint venture. The fair value was $99,000.

In December 2009, in consideration of an extension on the maturity date from a note holder, we issued 300,000 shares of common stock. The fair value was $20,661.

During November and December 2009, we received notices to convert $128,645 of principal of the Platinum Long Term Growth V, LLC 10% Senior Secured Convertible Promissory Note into 2,195,329 shares of our common stock, conversion rates ranging from $0.0573 to $0.0595 per share.

From October to December 2009, through a private placement, we accepted subscriptions for 6,300,000 shares of our common stock at a price of $0.05 per share and received gross proceeds of $315,000 less offering costs of $31,821. As additional consideration, the Company entered into a private option with each subscriber, such that for each 200,000 shares of Wits Basin common stock they purchased in the private placement, they hold an option to purchase from Wits Basin 20,000 units (“Standard Gold Units”) of Standard Gold, at a price of $0.50 per Standard Gold Unit. Each Standard Gold Unit consists of one share of Standard Gold common stock and a warrant to purchase a share of Standard Gold common stock at an exercise price of $1.00 per share. Wits Basin purchased 630,000 Standard Gold Units from Standard Gold and is holding the Standard Gold Units in reserve should the option holders exercise their option.

Except as noted above, sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof and rules promulgated thereunder. Based on representations from the above-referenced investors, we have determined that such investors were “accredited investors” (as defined by Rule 501 under the Securities Act) and were acquiring the shares for investment and not distribution, and that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in this Annual Report. See “—Financial Statements.”

Readers are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with the “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this Annual Report.

Bates-Hunter Mine

Through August 2008, a total of approximately 12,000 feet of surface drilling has been accomplished on the Bates-Hunter Mine properties, which provided detailed data, which has been added to our existing 3-D map of the region. With the surface drilling program completed in August 2008, no further exploration activities will be conducted at the Bates-Hunter Mine until such time as sufficient funds have been acquired to resume exploration activities.

China Global Mining Resources

On March 17, 2009, we entered into a joint venture with London Mining, Plc, a United Kingdom corporation (“London Mining”) for the purpose of acquiring the processing plant of Nanjing Sudan Mining Co. Ltd (“Sudan”) and the iron ore mine of Xiaonanshan Mining Co. Ltd (“Xiaonanshan”) (the Sudan and Xiaonanshan collectively are referred to as the “PRC Properties”). Pursuant to that certain Amended and Restated Subscription Agreement, dated March 17, 2009 by and between London Mining and the Company, London Mining purchased 100 ordinary A Shares of China Global Mining Resources (BVI) Ltd, a British Virgin Islands corporation and at the time a wholly owned subsidiary of ours (“CGMR (BVI)”) for $38.75 million, which A Shares constitute a 50% equity interest in CGMR (BVI). We hold the remaining 50% equity interest in the form of 100 ordinary B Shares. The A Shares carry a preference with respect to return of capital and distributions until London Mining receives an aggregate of $44.5 million in return of capital or distributions and certain other conditions are met. On March 17, 2009, CGMR (BVI), through its wholly owned subsidiary China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”), acquired the PRC Properties. Due to the disproportionate distributions stipulated in the joint venture agreement and since the joint venture is struggling to have enough cash flow to make the required payments to the seller under the original terms of the purchase agreement, our proportional 1% interest has been impaired to $0 as of December 31, 2009.

CGMR (BVI)’s current activities relate to improving processes that will optimize the extraction levels at the Xiaonanshan iron ore open mine and to increase recoveries and concentrate grade at the Sudan processing plant. In the year ending 2009, the joint venture mined over 1 million tonnes of ore (since April 2009) and produced approximately 273,000 tonnes of magnetite concentrate at an average grade of 62% Fe. Furthermore, CGMR (BVI) has undertaken a program to define the existing resource and to acquire further deep mining rights at Xiaonanshan, to provide payments to the seller in accordance with the original acquisition agreement and is investigating its options in order to raise the funding necessary to assist in acquiring certain adjacent operations in order to form the basis for future expansion plans.

Kwagga Gold (Barbados)

We hold a 35% equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, a South African entity (“Kwagga Pty”), holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. From October 2003 through August 2005, we completed only two range-finding drillholes (our $2,100,000 investment to acquire the 35% equity was utilized to fund the drillholes) and we have not performed any further exploration activities since. On December 12, 2007, we entered into an agreement with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65% of Kwagga Barbados, whereby we may acquire all of AfriOre’s interest of Kwagga Barbados. We have submitted documentation to obtain the consent of South Africa’s Minister of Minerals and Energy, who oversees the Department of Minerals and Energy (the “DME”) to allow for the sale of the controlling interest in Kwagga Pty to a U.S. company, which is still under review. Other than limited maintenance of the prospecting rights, no other activities will be conducted until consent is issued by the DME. Furthermore, we have been in communications with the DME with respect to our application for such consent.

Vianey Mine Concession

Summary

As of December 31, 2009, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations. As of the date of this Report, we do not claim to have any mineral reserves at the Bates-Hunter Mine, the FSC Project or the Vianey.

In the future, we will continue to seek new areas for exploration and the rights that would allow us to be either owners or participants. These rights may take the form of direct ownership of mineral exploration or, like our interest in Kwagga Barbados, these rights may take the form of ownership interests in entities holding exploration rights. By completing the Share Exchange, we anticipate Standard Gold and Hunter Bates will operate as a separate gold-focused consolidated entity. Previously, our main focus was only in gold exploration projects, future projects will also involve other minerals, such as our entry into the Chinese iron ore properties.

Our principal office is located at 900 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402-8773. Our telephone number is (612) 349-5277 and our Internet address is www.witsbasin.com. Our securities trade on the Over-the-Counter Bulletin Board under the symbol “WITM.”

RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2009 COMPARED TO THE YEAR ENDED DECEMBER 31, 2008.

Revenues

We had no revenues from continuing operations for the years ended December 31, 2009 and 2008. Furthermore, we do not anticipate having any future revenues until an economic mineral deposit is discovered or unless we make further acquisitions or complete other mergers or joint ventures with business models that allow us to report such results.

Operating Expenses

General and administrative expenses were $3,103,517 for 2009 as compared to $7,631,564 for 2008. Of the $3,103,517 recorded for general and administrative expenses in 2009, approximately $1,306,000 relates to non-cash compensation charges for options, warrants and common stock issuances and/or modifications, approximately $479,000 relates to public relations services, consulting fees and shareowner services, approximately $465,000 relates to wages and salaries, we recorded approximately $325,000 in expenses related to the Share Exchange with Princeton Acquisitions and approximately $214,000 relates to our due diligence processes on the China mining properties (travel and visa requirements, site visits and significant costs with consultants and attorneys). Of the $7,631,564 recorded for general and administrative expenses in 2008, approximately $2,185,000 relates to our due diligence processes on the China mining properties (travel and visa requirements, site visits and significant costs with consultants and attorneys), $1,752,000 relates to public relations services, consulting fees and shareowner services, approximately $534,000 relates to wages and salaries and $2,210,000 relates to non-cash compensation charges for options, warrants and common stock issuances and/or modifications. We anticipate that our operating expenses will increase over the next fiscal year due to our continued plans to develop or obtain additional exploration projects.

Exploration expenses relate to the issuance of stock and warrants for acquiring mining rights and cash expenditures being reported on the work-in-process from the various project operators. Exploration expenses were $222,677 for 2009 as compared to $1,625,018 for 2008. Exploration expenses for 2009 relate to the Bates-Hunter Mine, our other international projects we are performing due diligence on and direct costs related to our prior attempt to sell 65% of the FSC Project to Communications DVR Inc. (“DVR”), a Canadian capital pool company. DVR terminated its intent to purchase our interest in June 2009. Exploration expenses for 2008 relate primarily to the expenditures at the Bates-Hunter Mine, which accounted for $1,412,154. For 2010, based on the scenario that dedicated funding is secured for any project, we anticipate that exploration expenses would increase over 2009 levels.

Depreciation for 2009 was $105,723 as compared to $65,142 for 2008, which represents straight-line depreciation of fixed assets purchased for work being performed at the Bates-Hunter Mine. We anticipate that depreciation expense will remain at current levels over the next fiscal year.

Immediately prior to the completion of the Share Exchange, pursuant to the terms of that certain Stock Purchase Agreement, dated September 29, 2009, by and among certain shareholders of Standard Gold common stock (collectively, the “Sellers”) and Wits Basin, Wits Basin purchased from the Sellers an aggregate of 1,383,544 shares of Standard Gold’s common stock for $262,500 and incurred $63,012 in associated legal and consulting fees. We recorded that aggregate $325,512 as merger transaction costs since the purchase of those 1,383,544 Standard Gold shares were required in order to effect the Hunter Bates reverse acquisition with Standard Gold.

Due to the disproportionate distributions stipulated in the joint venture agreement with London Mining and since the joint venture is struggling to produce enough cash flow to make the required payments to the seller under the original terms of the purchase agreement, the Company recorded an impairment charge of $5,770,814 on all of our assets attributable to CGMR (BVI) at December 31, 2009.

In 2008, we recorded $12,362 in losses related to certain assets that became damaged and un-repairable, which were being utilized for de-watering at the Bates-Hunter Mine site.

We recorded $18,252 and $18,012 in losses from equity investments in partially-owned affiliates for the years ended December 31, 2009 and 2008, respectively. We recorded a loss of $11,566 for the year ended December 31, 2009 for Kwagga Barbados and we recorded our 1% loss in CGMR (BVI) of $6,686 for the period from March 17, 2009 to September 30, 2009. In the fourth quarter of 2009, we impaired our entire investment in CGMR (BVI) and therefore, have not recorded our 1% of the joint venture loss, which would have made our investment negative at December 31, 2009.

Other Income and Expenses

Our other income and expense consists of interest income, interest expense, gains from deconsolidation of our wholly owned subsidiaries and non-cash foreign currency adjustments. Interest income was $19 for 2009 as compared to $813 for 2008. We anticipate that our interest income will remain on levels similar to 2009 levels.

Interest expense for 2009 was $6,417,726 and $3,292,448 for 2008, which includes non-cash charges for 2009 and 2008 of $5,013,452 and $1,958,844, respectively. The non-cash charges relate to the amortization of debt issuance costs, amortization of original issue discounts, amortization of discounts relating to warrants and beneficial conversion features, extensions to debt agreements and additional rights granted to the promissory note holders. We expect interest expense to continue to increase during 2010, at amounts greater than previously recorded due to our existing debt and our continued need for cash.

During the year ended December 31, 2008, various loans with China Gold, LLC were refinanced several times, primarily to terminate the conversion feature, combine the notes into one consolidated note, and extend the terms for an additional 13 months. The refinancings included the issuance of 39,200,000 warrants and were accounted for as an extinguishment of the old debt and a re-issuance of new debt, resulting in a net loss on extinguishment of $1,485,558.

In December 2008, we created a new British Virgin Islands corporation and wholly owned subsidiary of ours, CGMR (BVI), to serve as the joint venture entity with London Mining. On March 17, 2009, we entered into a subscription agreement and a shareholders’ agreement with London Mining, whereby they acquired a 50% equity interest in CGMR (BVI). We recorded a gain in the deconsolidation of CGMR (BVI) for the year ended December 31, 2009 of $1,461,078. The gain is comprised primarily of $1,073,578 in unpaid accrued liabilities assumed by the joint venture.

With the consummation of the Bates-Hunter Mine acquisition in June 2008, we are recording direct non-cash gains and losses due to our dealings with the recourse promissory note in the amount of Cdn$6,750,000. We recorded a loss of $901,739 for the year ended December 31, 2009, and a gain of $1,222,082 for the year ended December 31, 2008 due to the exchange rate between the US Dollar and the Canadian Dollar. We will continue to see gains and losses for foreign currency in future periods as long as the promissory note is outstanding.

Net Loss attributable to Non-Controlling Interest (NCI)

On January 1, 2009, the Company adopted guidance provided by the Financial Accounting Standards Board with regards to accounting for the non-controlling interest of a subsidiary. Such guidance establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and the accounting for the deconsolidation of a subsidiary. The guidance also clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest and requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. The Company recognized a loss of $25,945 for the non-controlling interest at December 31, 2009 relating to Standard Gold.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of an entity’s ability to secure enough cash to meet its contractual and operating needs as they arise. We have funded our operations and satisfied our capital requirements primarily through the sale of securities and debt financing. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. We had a working capital deficit of $8,656,847 at December 31, 2009, compared to $4,773,964 at December 31, 2008. Cash and equivalents were $1,109,544 at December 31, 2009, representing an increase of $878,815 from the cash and equivalents of $230,729 at December 31, 2008.

For the years ended December 31, 2009 and 2008, we had net cash used in operating activities of $1,964,522 and $5,134,235, respectively. The primary reasons for the significant decrease during 2009 is due too our lack of available capital. For 2009, we recorded interest expense of $322,719, we recorded $325,512 of expense related to merger of Standard Gold and expended $222,677 towards exploration efforts. During 2008, we recorded interest expense of $1.5 million, we recorded $2.1 million of expense directly related to acquisition of PRC properties and expended $1.4 million towards exploration efforts.

For the years ended December 31, 2009 and 2008, we had net cash used in investing activities of $390,000 and net cash provided by investing activities of $1,397,214, respectively. During 2009, we paid $390,000 to a vendor for services rendered with the PRC Properties purchase on behalf of CGMR (BVI). During 2008, we terminated the agreement for the nickel mine and received $1.85 million of the original $2 million invested as a partial refund and spent $364,680 for the Bates-Hunter Mine purchase.

For the years ended December 31, 2009 and 2008, we had net cash provided by financing activities of $3,233,337 and $3,837,269, respectively. During 2009, (i) through the sale of common stock (net of offering costs related to the private placements) and the exercise of options and warrants, we raised $283,179, (ii) we received cash proceeds of $5.3 million from debt financing, (iii) repaid $476,106 of debt and (iv) $2,000,000 was paid into a restricted escrow account to pay down debt owed to London Mining in early 2010. During 2008, (i) through the sale of common stock (net of offering costs related to the private placements) and the exercise of warrants, we raised $1.5 million, (ii) we received cash proceeds of $3.0 million from debt financing and (iii) repaid $555,000 of debt.

The following table summarizes the Company’s debt as of December 31, 2009:

Outstanding Amount		Interest Rate			Un-amortized Discounts		Accrued Interest		Maturity Date		Type
$	71,355		10.00	%	$	—	$	3,016	February 11, 2009(1)		Convertible (2)
$	50,000		10.00	%	$	—	$	1,319	February 11, 2009(1)		Convertible (2)
$	1,000,000		8.00	%	$	—	$	103,430	August 22, 2009(1)		Convertible (3)
$	117,391		10.00	%	$	—	$	24,492	February 15, 2010		Convertible (4)
$	110,000		10.00	%	$	—	$	7,959	February 15, 2010		Conventional
$	6,009,202		12.25	%	$	144,120	$	28,975	February 15, 2010		Conventional
$	84,628		10.00	%	$	25,372	$	24,390	February 26, 2010		Convertible (5)
$	100,000		12.25	%	$	—	$	10,888	February 26, 2010		Convertible (6)
$	276,667			(7)	$	33,333	$	—	March 16, 2010		Convertible (8)
$	50,000		10.00	%	$	—	$	2,877	March 8, 2010		Conventional
$	50,000		2.00	%(9)	$	—	$	1,585	June 30, 2010		Conventional
$	65,546		10.00	%	$	9,454	$	2,517	September 1, 2010		Convertible (2)
$	75,000		10.00	%	$	—	$	1,039	November 10, 2010		Conventional
$	3,094,196			(10)	$	1,905,804	$	—	February 14, 2011		Conventional
$	464,923		12.00	%	$	46,667	$	41,712	April 27, 2012		Convertible (5)
$	5,750,000			(11)	$	—	$	243,524	January 31, 2014		Conventional
$	6,189,768			(12)	$	—	$	—	December 31, 2015		Conventional
$	30,000			(13)	$	—	$	—		(14)	Conventional

Currently past due; original terms apply in the default period.

Convertible at the lesser of $0.18 per share or 85% of the lowest VWAP (volume-weighted average price) for the 10 trading days preceding the conversion notice date.

Convertible at $0.10 per share.

Convertible at the lesser of $0.18 per share or 85% of the lowest VWAP (volume-weighted average price) for the 10 trading days preceding the conversion notice date, with a floor of $0.01.

Convertible at $0.20 per share.

Convertible at the greater of (i) the current Fair Market Value (the closing sale price as reported on the date of conversion) and (ii) $0.05 per share.

Promissory note was issued with an initial $30,000 OID and further incurred a $40,000 OID and accrues no interest.

Convertible (at a rate equal to the greater of fair market value and $0.05 per share) into a maximum of 6,200,000 shares.

Effective January 1, 2010, interest rate increases to 10%.

10.

Promissory note was issued with an initial $1,000,000 OID.

11.

Interest at a rate equal to the prime rate plus 2% per annum (subject to a cap of 8%). As of December 31, 2009, 5.25%.

12.

Interest of 6% does not begin accruing until January 1, 2010.

13.

Zero percent interest with preferential repayment from any Chilean projects.

14.

Preferential repayment from any Chilean projects.

Summary

Our existing sources of liquidity will not provide enough cash to fund operations for the next twelve months. As of the date of this Report, we have estimated our cash needs over the next twelve months to be approximately $17,000,000 (which includes approximately $13,500,000 for repayment of debt, assuming some or all of such notes are not converted into equity prior to maturity). Additionally, should any projects or mergers be completed during 2010, additional funds will be required. We will continue our attempt to raise additional capital. Some of the possibilities available to us are through private equity transactions, to develop a credit facility with a lender or the exercise of options and warrants. However, such additional capital may not be available to us at acceptable terms or at all. In the event that we are unable to obtain additional capital, we would be forced to reduce operating expenditures and/or cease operations altogether.

Foreign Exchange Exposure

Since our entrance into the metals and minerals arena, we have had very limited dealings with foreign currency transactions, even though most of our transactions have been with foreign entities. Most of the funds requests have required US Dollar denominations. Even though we may not record direct losses due to our dealings with market risk, we have an associated reduction in the productivity of our assets.

Off-Balance Sheet Arrangements

During the year ended December 31, 2009, we did not engage in any off balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements of the Company, the accompanying notes and the report of independent registered public accounting firm are included as part of this Form 10-K beginning on page F-1, which follows the signature page.

ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 8A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

As of December 31, 2009, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2009, because of the identification of the material weaknesses in internal control over financial reporting described below. Notwithstanding the material weaknesses that existed as of December 31, 2009, our Chief Executive Officer and Chief Financial Officer have each concluded that the consolidated financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We continue to evaluate the potential steps to remediate such material weakness as described below.

Since we do not have a formal audit committee, our Board of Directors oversees the responsibilities of the audit committee. The Board is fully aware that there is lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of December 31, 2009.

As a result of our continued material weaknesses described below, management has concluded that, as of December 31, 2009, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.

Material Weakness in Internal Control over Financial Reporting

As disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2008, management identified certain material weaknesses in our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment, management continues to identify the following control deficiencies that represent material weaknesses at December 31, 2009, which were identified in previous years:

Management did not design and maintain effective control relating to the quarter end closing and financial reporting process due to lack of evidence of review surrounding various account reconciliations and properly evidenced journal entries. Due to the Company’s limited resources, the Company has insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in the Company’s global financial transactions. Numerous GAAP audit adjustments were made to the financial statements for the year ended December 31, 2009. This material weakness was identified in 2007 and 2008, and has not been corrected at this time due to resource constraints. Additionally, the Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process. Management continues to search for additional board members that are independent and can add financial expertise, in an effort to remediate part of this material weakness.

The Company’s small size and “one-person” office prohibits the segregation of duties and the timely review of financial data and banking information. The Company has very limited review procedures in place. This material weakness was not corrected during 2009. Management plans to establish a more formal review process by the board members in an effort to reduce the risk of fraud and financial misstatements.

During 2007, the Company entered into several material acquisition transactions without timely obtaining the appropriate signed agreements, stock certificates and board approval prior to releasing cash funds called for by the transaction. There were no formal policy changes made in 2008 or 2009 because no similar transactions were encountered during 2008 and 2009. Management believes the approval process currently in place is sufficient to alleviate any misappropriation of funds and will change procedures if and when circumstances indicate they are needed.

We understand that we continue to have internal control material weaknesses, but due to the Company’s limited funds and inability to add certain staff personnel, there were no changes to our internal control system in 2009. Management continues to discuss additional entity-level controls it can establish in an effort to address the current lack of segregation of duties. There were no additional material weaknesses noted during 2009.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended December 31, 2009, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

None.

PART III

ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the names of all directors and executive officers of the Company, their respective ages and all positions and offices with the Company held by each person as of April 13, 2010:

Name	Age	Positions with the Company
Stephen D. King	53	Chief Executive Officer and Director
Dr. Clyde L. Smith	73	President and Director
Mark D. Dacko	58	Chief Financial Officer and Secretary
Norman D. Lowenthal	72	Director
Joseph Mancuso	68	Director
Donald Stoica	52	Director

Stephen D. King was appointed Chief Executive Officer effective September 15, 2006 and has served as a director since July 8, 2004. Mr. King also served as our President from May 15, 2006 to September 15, 2006. Since April 2008, Mr. King has served as Chief Executive Officer and a director of Standard Gold, Inc., a majority owned subsidiary of the Company. Since March 2009, Mr. King has also served as the Chief Executive Officer and a director of CGMR (BVI) in which the Company holds a 50% equity interest. Since October 2000, Mr. King has served as President of SDK Investments, Inc., a private investment firm located in Atlanta, Georgia specializing in corporate finance and investing.

Dr. Clyde L. Smith was appointed President effective September 15, 2006 and was appointed to our board of directors on July 13, 2009. Since October 2009, Dr. Smith has also served as a director of Standard Gold, Inc., a majority owned subsidiary of the Company. Since 1970, Dr. Smith has been sole owner and operator of CL Smith Consultants, an independent geological consulting firm. 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. Dr. Smith 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.

Mark D. Dacko has served as our Chief Financial Officer and Secretary since March 2003 and he served as our Controller from February 2001 to March 2003. Mr. Dacko served as a board member from June 2003 until April 10, 2008. Since April 2008, Mr. Dacko has served as Chief Financial Officer and a director (until September 29, 2009) of Standard Gold, Inc., a majority owned subsidiary of the Company. Prior to joining the Company, Mr. Dacko served as company controller for various public reporting companies since November 1994. Mr. Dacko has no prior experience in the mineral exploration or mining industry.

Norman D. Lowenthal was appointed to our board of directors on September 4, 2003. Mr. Lowenthal is the past Chairman of the Johannesburg Stock Exchange, for the years 1997 to 2000. Since April 1997 to the present, he has served as a member of the Securities Regulation Panel of South Africa. Mr. Lowenthal was the Chairman of SSC Mandarin Financial Services Ltd for the period 2001 to 2007. Mr. Lowenthal is Vice-Chairman of the Taylor Companies, a private bank located in Washington, D.C., serving since 2002. Mr. Lowenthal has been involved in the mining industry since 1960. He has served as chairman of several listed companies in this field, including in particular, gold and diamond producing companies.

Joseph Mancuso was appointed to our board of directors on September 22, 2007. In 1977, Mr. Mancuso founded The Chief Executive Officers Club, Inc, a non-profit organization with chapters in the United States and abroad that is dedicated to the continuing education of entrepreneurial managers, and has served as its Chief Executive Officer since that time. In 1977, Mr. Mancuso also founded the Center for Entrepreneurial Management, Inc, a non-profit organization. Mr. Mancuso received a Ph. D. in Educational Administration from Boston University, an MBA from the Harvard Business School, and a degree in Electrical Engineering degree from Worcester Polytechnic Institute in Massachusetts.

Donald Stoica was appointed to our board of directors on April 10, 2008. Since October 2009, Mr. Stoica has also served as a director of Standard Gold, Inc., a majority owned subsidiary of the Company. In February 1999, Mr. Stoica founded SSR Engineering, Inc, which is a privately held corporation based in Anaheim, California that develops high performance radar systems for use in security, navigation, defense and related applications. Mr. Stoica has served as President and Chief Executive Officer of SSR Engineering since its inception. From 1975-1998, Mr. Stoica worked at Hughes Aircraft Company, including a Technical Director. Mr. Stoica received his B.S. in Electrical Engineering from California Polytechnic State University in Pomona, California and his Masters Degree in Electrical Engineering from the University of Southern California in Los Angeles, California. Mr. Stoica is also a principle in Pacific Dawn Capital LLC, a company which we have had various financing transactions with since 2005.

There is no family relationship between any director and executive officer of the Company.

CODE OF ETHICS

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and persons performing similar functions. The Code of Ethics is available on our website at www.witsbasin.com. If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the Code of Ethics to an executive officer or director, we will promptly disclose the nature of the amendment or waiver by filing with the SEC a current report on Form 8-K.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who own more than 10% of our outstanding common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish copies of these reports to us. Based solely on a review of the copies of the Forms 3, 4 and 5 and amendments that we have received, we believe that no such forms required during 2009 were filed late.

AUDIT COMMITTEE AND FINANCIAL EXPERT

The Company does not have a formal audit committee with a financial expert; therefore our Board of Directors as a group acts in the capacity as the audit committee. There were no audit committee meetings held during 2009. Financial information relating to quarterly reports was disseminated to all board members for review. The audited financial statements for the years ended December 31, 2009 and 2008 were provided to each member of the board in which any concerns by the members were directed to management and the auditors.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation of each name executive for the fiscal years ended December 31, 2009 and 2008 awarded to or earned by (i) each individual serving as our principal executive officer and principal financial officer of the Company and (ii) each individual that served as an executive officer of the Company at the end of such fiscal years who received compensation in excess of $100,000.

	Annual Compensation
							Option		All Other
Name and Principal Position	Year	Salary		Bonus			Awards (1)		Compensation			Total ($)

Chief Executive Officer
Stephen D. King	2009	$	60,000	$	—		$	—	$	423,819	(2)	$	483,819
	2008	$	60,000	$	—		$	373,198	$	367,500	(3)	$	800,698

President
Dr. Clyde Smith	2009	$	120,000	$	—		$	—	$	225,360	(4)	$	345,360
	2008	$	120,000	$	—		$	—	$	—		$	120,000

Chief Financial Officer
Mark D. Dacko	2009	$	135,000	$	25,000	(5)	$	—	$	—		$	160,000
	2008	$	130,875	$	—		$	123,867	$	—		$	254,742

(1)

The amounts shown are the aggregate grant date fair values of these awards computed in accordance with Financial Accounting Standards Board (“FASB”) guidance now codified as Accounting Standards Codification (“ASC”) FASB ASC Topic 718, “Stock Compensation” (formerly under FASB Statement No. 123(R)). The assumptions and methodologies used to calculate these amounts are discussed in Note 17 in the Notes to Financial Statements contained elsewhere in this Annual Report. The SEC’s disclosure rules previously required that we present stock award and option award information for 2008 based on the amount recognized during the corresponding year for financial statement reporting purposes with respect to these awards (which meant, in effect, that in any given year we could recognize for financial statement reporting purposes amounts with respect to grants made in that year as well as with respect to grants from past years that vested in or were still vesting during that year). However, recent changes in the SEC’s disclosure rules require that we now present the stock award and option award amounts in the applicable columns in the table above with respect to 2008 on a similar basis as the 2009 presentation using the grant date fair value of the awards granted during the corresponding year, regardless of the period over which the awards are scheduled to vest. Since this requirement differs from the SEC’s past disclosure rules, the amounts reported in the table above for stock awards and option awards for 2008 differ from the amounts previously reported in our Summary Compensation Table for that year. As a result, to the extent applicable, each named executive officer’s total compensation amount for 2008 may differ from the amount previously reported in our Summary Compensation Table for that year.

(2)

Includes the following compensation: (i) pursuant to the employment agreement with Mr. King, he is entitled to receive up to $75,000 annually in lieu of any employee benefits, of which $75,000 was paid during 2009, (ii) $165,000 paid to Corporate Resource Management, Inc, an entity wholly owned by Deb King, the spouse of Mr. King, pursuant to an amended and restated consulting agreement with Corporate Resource Management, executed in November 2008 relating to services provided to the Company, and (iii) $183,819 directly from CGMR (BVI) for consulting services. Since March 2009, Mr. King has served as the Chief Executive Officer and a director of CGMR (BVI), our joint venture entity with London Mining.

(3)

Includes the following compensation: (i) pursuant to the employment agreement with Mr. King, he is entitled to receive up to $75,000 annually in lieu of any employee benefits, of which $68,750 was paid during 2008, (ii) $153,750 paid to Corporate Resource Management, Inc, an entity wholly owned by Deb King, the spouse of Mr. King, pursuant to an amended and restated consulting agreement with Corporate Resource Management, executed in November 2008 relating to services provided to the Company and (iii) $145,000 (calculated using the Black Scholes pricing model) related to the extension of two warrants held by Mr. King’s spouse, such extension was negotiated as part of his employment agreement.

(4)

Dr. Smith received $225,360 directly from CGMR (BVI) for consulting services.

(5)

Mr. Dacko was awarded an annual bonus for 2009, which was paid in 2010.

EXECUTIVE EMPLOYMENT AGREEMENTS

We have entered into employment agreements with certain of our executives which include provisions that entitle those executives to receive severance payments in specified cases of termination without cause or change of control of the Company. In the event that our executives qualify for severance payments, such payments would be made on a monthly basis.

Stephen D. King

On May 29, 2008, we entered into an employment agreement with Mr. King, our Chief Executive Officer. The term of the agreement is for a period of three years, with automatic one-year renewals, subject to either party’s right to terminate upon 30-day written notice. Mr. King is entitled to a base salary of $5,000 per month, and is eligible for an annual bonus at the discretion of the Company’s compensation committee. Mr. King is further entitled to up to $75,000 annually in lieu of any employee benefits, such amount to be payable in monthly installments and to be used by Mr. King in his discretion. In the event Mr. King is terminated by the Company for any reason other than death or for “Cause” (as defined in the agreement), he will be entitled to receive his accrued and unpaid compensation to the time of the termination plus: (i) in the event the termination occurs prior to the first anniversary of the agreement, $56,250 in cash; (ii) in the event the termination occurs on or after the first anniversary of the agreement but prior to the second anniversary, $112,500 in cash; (iii) in the event the termination occurs on or after the second anniversary of the agreement but prior to the third anniversary, $168,750 in cash; or (iv) in the event the termination occurs on or after the third anniversary of this agreement, $225,000 in cash. The agreement includes standard confidentiality provisions, as well as a non-competition and non-solicitation provision that runs for three months in the event his employment with the Company is terminated prior to the first anniversary of the agreement, and increases by a period of three months for each additional year of service under the agreement to a maximum of one year in the event the agreement is terminated on or following the three-year anniversary of the agreement.

Pursuant to the agreement on May 29, 2009, we issued Mr. King a ten-year option to purchase 2,000,000 shares of our common stock at an exercise price of $0.20 per share. The option shall vest in three equal annual installments commencing on the first anniversary of the date of grant. The vesting of the option shall accelerate (i) at such time the closing price of the Company’s common stock (as quoted on the OTCBB or an exchange) remains at or above $1.00 per share for 30 trading days, (ii) upon Mr. King’s death, (iii) upon the occurrence of a change of control or (iv) upon the Company’s termination of Mr. King’s employment for any reason other than Cause (and there was no acceleration due to (i) through (iv) as of December 31, 2009). Effective May 29, 2008, Mr. King transferred the option agreement into the name of his spouse, Deborah King.

Furthermore and in consideration of the parties’ entry into the employment agreement, the Company entered into an Amended and Restated Stock Option Agreement (the “Amended Option Agreement”) with Deborah King dated May 29, 2008, amending the terms of an option agreement originally entered into with Mr. King dated March 9, 2007 (the “Original Option”) but subsequently transferred to Deborah King on March 12, 2007. The Amended Option Agreement amends the terms of the option to purchase 3,000,000 shares of our common stock at an exercise price of $1.02 per share to change the vesting schedule to provide for vesting in three equal annual installments commencing March 9, 2008. Additionally, the Amended Option Agreement provides that the vesting of the option shall accelerate (i) at such time the closing price of the Company’s common stock (as quoted on the OTCBB or an exchange) remains at or above $1.00 per share for 30 trading days, (ii) upon Mr. King’s death, (iii) upon the occurrence of a change of control or (iv) upon the Company’s termination of Mr. King’s employment for any reason other than Cause (there was no acceleration due to (i) through (iv) as of December 31, 2009).

Mark D. Dacko

On April 10, 2008, we entered into an employment agreement with Mr. Dacko, our Chief Financial Officer. The term of the agreement is for a period of three years, with automatic one-year renewals, subject to either party’s right to terminate upon 30-day written notice. Mr. Dacko is entitled to a base salary of $11,250 per month and is eligible for an annual bonus at the discretion of the Company’s compensation committee. In the event Mr. Dacko’s employment is terminated by the Company without “Cause” (as defined in the agreement) or he voluntarily terminates his employment within 6 months following a “Change in Control” (as defined in the agreement), he will be entitled to receive his accrued and unpaid compensation to the time of the termination plus a severance payment equal to his base salary for 9 months, payable in accordance with the Company’s normal payroll over such period. The agreement includes standard confidentiality provisions, as well as a one-year non-solicitation provision.

Pursuant to the agreement dated April 10, 2008, we issued to Mr. Dacko a ten-year stock option to purchase up to 600,000 shares of our common stock at an exercise price of $0.21, the closing price of the Company’s common stock on the day prior to the grant. The option shall vest in equal quarterly installments of 50,000 shares over three years, with the first 50,000 vesting on April 10, 2008.

Except as reported above, we have not entered into any severance or change of control provisions with any of our executive officers.

OUTSTANDING EQUITY AWARDS TABLE

No options were exercised by our named executive officers during the year ended December 31, 2009. The following table sets forth information of outstanding option awards held by named executive officers as of December 31, 2009.

Name	Number of Securities Underlying Unexercised Options Exercisable			Number of Securities Underlying Unexercised Options Unexercisable			Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options			Option Exercise Price		Option Exercise Date
Stephen King (1)		250,000	(2)		—			—		$	0.40	07/08/14
		250,000	(3)		—			—		$	0.26	05/02/15
		200,000	(4)		—			—		$	0.15	10/20/15
		2,000,000	(5)		1,000,000	(5)		—		$	1.02	03/09/17
		666,667	(6)		1,333,333	(6)		—		$	0.20	05/29/18
Clyde Smith		1,200,000	(7)		300,000	(7)		—		$	0.31	09/15/16
		300,000	(8)		—			200,000	(8)	$	0.31	09/15/16
Mark Dacko		40,000	(9)		—			—		$	2.75	02/05/11
		350,000	(10)		—			—		$	0.56	07/09/13
		125,000	(11)		—			—		$	0.23	12/29/14
		250,000	(3)		—			—		$	0.26	05/02/15
		200,000	(4)		—			—		$	0.15	10/20/15
		350,000	(12)		250,000	(12)		—		$	0.21	04/10/18

(1)

All options have been transferred into the name of Mr. King’s spouse.

(2)

Options vested in portions of 125,000, 62,500 and 62,500 on July 8, 2004, January 8, 2005 and July 8, 2005, respectively.

(3)

Options vested in their entirety on May 2, 2005.

(4)

Options vested in their entirety on October 20, 2005.

(5)

Effective with Mr. King’s May 29, 2008 employment agreement, the options vest in equal portions of 1,000,000 annually commencing on March 9, 2008 pursuant to that certain Amended and Restated Option Agreement, which provides for acceleration to the vesting schedule of the remaining options under certain conditions.

(6)

Options vest in portions of 666,667, 666,667 and 666,666 annually commencing on May 29, 2009, with any portion subject to acceleration immediately upon completion of certain material events.

(7)

Options vest in equal portions of 300,000 annually commencing on September 15, 2006.

(8)

Options vest in equal portions of 100,000 annually commencing on September 15, 2007 subject to the achievement of objective criteria determined by the Board of Directors from time to time with respect to each year prior to the commencement of such year.

(9)

Options vested in portions of 10,000, 15,000 and 15,000 on May 5, 2001, February 5, 2002 and February 5, 2003, respectively.

(10)

Options vested in portions of 175,000, 87,500 and 87,500 on July 9, 2003, January 9, 2004 and July 9, 2004.

(11)

Options were granted by our Board of Directors for Mr. Dacko’s voluntary deferment of salary for a six-month period during 2004. Options vested December 29, 2004.

(12)

Options vest in equal quarterly installments of 50,000 shares commencing on April 10, 2008.

DIRECTOR COMPENSATION

Members of our board who are also employees of ours receive no compensation for their services as directors. Non-employee directors are reimbursed for all reasonable and necessary costs and expenses incurred in connection with their duties as directors. In addition, we issue options to our directors as determined from time to time by the Board.

In consideration of Mr. Mancuso’s agreement to serve on the board, and his future service on the board, on September 24, 2007, we awarded Mr. Mancuso a ten-year option to purchase up to 2,000,000 shares of our common stock at an exercise price of $0.30 per share, the closing price of our common stock on the prior business day. The option vests in equal biannual installments of 250,000 shares each over four years, the first installment vested March 24, 2008.

In consideration of Mr. Stoica’s agreement to serve on the board, and his future service on the board, on April 10, 2008, we awarded Mr. Stoica a ten-year option to purchase up to 400,000 shares of our common stock at an exercise price of $0.21 per share, the closing price of our common stock on the prior business day. The option vests in equal semiannual installments of 100,000 shares each over two years, with the first installment vesting June 30, 2008.

The following table sets forth the compensation earned by each of our non-employee directors for the years ended December 31, 2009 and 2008:

Name	Year	Option Awards (1)		Fees Earned or Paid in Cash		All Other Compensation		Total
Norman D. Lowenthal	2009	$	—	$	—	$	—	$	—
	2008	$	—	$	—	$	—	$	—

Joseph Mancuso	2009	$	—	$	—	$	—	$	—
	2008	$	—	$	—	$	—	$	—

Donald S. Stoica	2009	$	—	$	—	$	—	$	—
	2008	$	82,578	$	—	$	—	$	82,578

(1)

Amount reflects the aggregate grant date fair value for stock option awards granted during the applicable year computed in accordance with FASB ASC Topic 718. The Company calculates fair value in accordance with the assumptions identified in Note 17 to our financial statements for the year ended December 31, 2009 included elsewhere in this Annual Report.

ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following information sets forth the number and percentage of shares of the Company’s common stock owned beneficially, as of April 13, 2010, by any person, who is known to the Company to be the beneficial owner of 5% or more of the Company’s common stock, and, in addition, by each director and each executive officer of the Company, and by all directors and executive officers as a group. Information as to beneficial ownership is based upon statements furnished to the Company by such persons.

Name and Address	Amount of Beneficial Ownership (1)			Percentage of Class

Stephen D. King		7,033,334	(2)		4.0
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Mark D. Dacko		1,415,000	(3)		*
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Clyde L. Smith		2,000,000	(4)		1.2
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Norman D. Lowenthal		1,000,000	(5)		*
Private Bag X60
Saxonwold, 2132 South Africa
Joseph Mancuso		1,277,200	(6)		*
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Donald S. Stoica		7,608,976	(7)		4.4
80 South 8th Street, Suite 900
Minneapolis, MN 55402
All directors and officers as a group		20,334,510			11.0
(6 persons)

* represents less than 1%.

(1)

Except as otherwise indicated, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned.

(2)

Includes 5,033,334 shares issuable upon the exercise of options that are currently exercisable or will be exercisable within 60 days and 2,000,000 shares issuable upon exercise of certain warrants. All options and warrants have been transferred into the name of Mr. King’s spouse.

(3)

Represents shares issuable upon the exercise of options that are currently exercisable or will be exercisable within 60 days.

(4)

Represents shares issuable upon the exercise of options that are currently exercisable. Effective March 10, 2010, the Company’s board of directors, with the recommendation of the Company’s compensation committee, reduced the exercise price of Dr. Smith’s 2,000,000 options from $0.31 to $0.20 per share and accelerated the remaining unvested 500,000 options to be vested.

(5)

Includes 700,000 shares issuable upon the exercise of options that are currently exercisable and 100,000 shares issuable upon exercise of certain warrants.

(6)

Includes 1,250,000 shares issuable upon the exercise of options that are currently exercisable. All options have been transferred into the name of Mr. Mancuso’s daughter.

(7)

Includes 400,000 shares issuable upon the exercise of options that are currently exercisable. Also includes 4,502,309 shares of common stock and 2,666,667 shares issuable upon the exercise of certain warrants held by Pacific Dawn Capital, LLC, of which Mr. Stoica is a principal.

EQUITY COMPENSATION

The following table sets forth certain information regarding equity compensation plan information as of December 31, 2009:

					Number of securities
					remaining available for
					future issuance under
					equity compensation
	Number of securities to		Weighted-average		plans (excluding
	be issued upon exercise		exercise price of		securities reflected in
Plan category	of outstanding options		outstanding options		column (a))
	(a)				(b)
Equity compensation plans approved by security holders		5,343,500	$	0.39		1,214,000

Equity compensation plans not approved by security holders		10,300,000	$	0.51		450,000	(1)
Total		15,643,500	$	0.47		1,664,000

(1) These 450,000 securities were added to the 2000 Director Stock Option Plan in July 2003 (a Plan previously approved by shareholders) but not yet presented for shareholder approval.

ITEM 12.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The following describes certain relationships and related transactions that we have with persons deemed to be affiliates of ours. We believe that each of the transactions described below were on terms at least as favorable to our Company as we would have expected to negotiate with unaffiliated third parties.

Stephen D. King

Stephen D. King is our Chief Executive Officer and a member of our Board of Directors.

Pursuant to certain secured convertible promissory notes with Pacific Dawn Capital, LLC and Andrew Green entered into during 2005, Mr. King, who only served as a board member at that time, provided personal guaranties for the repayment of these notes. In exchange for the guaranties, we issued two warrants to purchase up to an aggregate of 2,000,000 shares of our common stock, with an exercise price of $0.15 per share. Mr. King subsequently assigned both of the warrants to his spouse. The warrants had expiration dates of October 13 and November 4, 2007. In October 2007, our board of directors authorized an extension of the expiration dates, granting a one-year extension. In September 2008, our board of directors authorized an additional extension of the expiration dates, granting a two-year extension, until October 13 and November 4, 2010. The warrant modifications resulted in non-cash compensation expense of $145,000 and $139,054 for the years ended December 31, 2008 and 2007, respectively.

Since March 2009, Mr. King has served as the Chief Executive Officer and a director of CGMR (BVI) CGMR (BVI), our joint venture entity with London Mining. During 2009, Mr. King received $183,819 directly from CGMR (BVI) for consulting services in 2009.

Corporate Resource Management, Inc.

On November 12, 2008, we entered into an amended and restated consulting agreement with Corporate Resource Management, Inc, a Minnesota corporation (“CRM”). CRM is an entity wholly owned by Deborah King, the spouse of Stephen D. King (our Chief Executive Officer and a member of our Board of Directors). CRM provides the Company with investment banking services relating to the purchase and sale of mining related assets. Pursuant to the agreement, CRM is entitled to a fee of $13,750 per month, plus reimbursement of normal out-of-pocket expenses. The term of the agreement is for one year, with automatic renewals unless either party provides notice of termination. Each party has the right to terminate the agreement with a 30-day written notice, provided that CRM is entitled to a $75,000 termination fee if the agreement is terminated by the Company without cause. The amended agreement superseded in its entirety the terms of the prior consulting agreement with CRM dated May 15, 2006. Pursuant to the amendment, the Company eliminated a provision for potential payment of commissions of up to 2% of the value of any asset transactions completed during the term of the agreement and for a period of one year following termination. For the years ended December 31, 2009 and 2008, we paid $165,000 and $153,750, respectively, pursuant to the terms of the consulting agreement.

Clyde Smith

Clyde Smith is our President and a member of our Board of Directors. Dr. Smith received $225,360 directly from CGMR (BVI) for consulting services in 2009.

DIRECTOR INDEPENDENCE

In determining whether the members of our Board are independent, we have elected to use the definition of “independence” set forth by Section 121 of the Listing Standards for the American Stock Exchange (“AMEX”), although we are not currently listed on AMEX, whereby a majority of the members of a listed company’s board of directors must qualify as “independent” as determined by the board. Consistent with these considerations, and after review of all relevant transactions or relationships between each director, or any of his family members, and Wits Basin Precious Minerals Inc.’s senior management, the Board has determined that only Joseph Mancuso is currently independent within the meaning of the applicable listing standard of AMEX.

ITEM 13.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our Board of Directors ratified the engagement of Carver Moquist & O’Connor, LLC to audit our financial statements for the year ended December 31, 2008 and again ratified the engagement of Moquist Thorvilson Kaufmann Kennedy & Pieper LLC (formerly known as Carver Moquist & O’Connor, LLC) (“MTK”) to audit our financial statements for the year ended December 31, 2009.

AUDIT FEES:

The aggregate fees billed for professional services rendered by MTK for the audit of the Company's annual financial statements and review of financial statements included in the Company's Form 10-K and 10-Q for 2009 and 2008, and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $142,724 for the year ended December 31, 2009 and $102,890 for the year ended December 31, 2008.

AUDIT RELATED FEES:

There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company's financial statements.

TAX FEES:

There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

ALL OTHER FEES:

There were no other fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

At present, we do not have an audit committee, but rather our entire Board of Directors performs the functions of the audit committee. Our Board approves each engagement for audit or non-audit services that we engage our independent auditor to provide those services. The Board has not established any pre-approval policies or procedures that would allow our management to engage our independent auditor to provide any specified services with only an obligation to notify the audit committee of the engagement for those services. None of the services provided by our independent auditors for fiscal 2009 was obtained in reliance on the waiver of the pre-approval requirement afforded in SEC regulations.

ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of this Annual Report on Form 10-K, or are incorporated herein by reference.

3.1	Amended and Restated Articles of Incorporation, effective September 24, 2007, (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 27, 2007).

3.2	By-Laws (incorporated by reference to Exhibit 3.2 to Form 10-KSB for the year ended December 31, 2004).

4.1	Form of Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Company’s Form S-2 filed on November 26, 2003 (File No. 333-110831)).

4.2	Warrant dated February 11, 2008 to Purchase 2,500,000 Shares of the Company’s common stock issued in favor of Platinum Long Term Growth V, LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 20, 2008).

4.3	Warrant dated July 1, 2009 in favor of Hawk Uranium Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 9, 2009).

4.4**

Warrant dated December 14, 2009 to purchase 16,000,000 Shares of the Company’s common stock issued in favor of Kenglo One Ltd.

4.5**

Amended and Restated Warrant dated December 17, 2009 to purchase 882,000 Shares of the Company’s common stock issued in favor of China Gold, LLC.

4.6**

Amended and Restated Warrant dated December 17, 2009 to purchase 38,200,000 Shares of the Company’s common stock issued in favor of China Gold, LLC.

4.7**

Warrant dated December 17, 2009 to purchase 1,600,000 Shares of the Company’s common stock issued in favor of China Gold, LLC.

4.8**

Warrant dated December 17, 2009 to purchase 2,000,000 Shares of the Company’s common stock issued in favor of Pioneer Holdings, LLC.

4.9**

Warrant dated December 17, 2009 to purchase 3,000,000 Shares of the Company’s common stock issued in favor of Pioneer Holdings, LLC.

4.10**

Warrant dated December 17, 2009 to purchase 2,000,000 Shares of the Company’s common stock issued in favor of Pioneer Holdings, LLC.

10.1	1999 Employee Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 18, 2006).

10.2	2000 Director Stock Option Plan, as amended (incorporated by reference to Exhibit 4.1 to Company’s Form S-8 filed November 19, 2003 (File No. 333-110590)).

10.3	2001 Employee Stock Option Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed January 18, 2006).

10.4	2003 Director Stock Option Plan (incorporated by reference to Exhibit 4.2 to Company’s Form S-8 filed November 19, 2003 (File No. 333-110590)).

10.5	2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 15, 2007).

10.6	Shareholders Agreement by and among AfriOre International (Barbados) Limited, the Company, and Kwagga Gold (Barbados) Limited, dated August 27, 2004 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 1, 2004).

10.7	Amendment to Shareholders Agreement by and among AfriOre International (Barbados) Limited, the Company, and Kwagga Gold (Barbados) Limited, dated August 30, 2004 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed September 1, 2004).

10.8	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. (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed June 30, 2006).

10.9	Employment Offer Letter by and among the Company and Dr. Clyde L. Smith dated September 14, 2006 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed September 18, 2006).

10.10

Employee Stock Option Vesting Correction Letter by and among the Company and Dr. Smith dated September 21, 2006 (incorporated by reference to Exhibit 10.1 of the Company’s Amendment to Form 8-K filed September 21, 2006).

10.11

Asset Purchase Agreement by and among the Company and Hunter Gold Mining Corporation, a British Columbia corporation, Hunter Gold Mining Inc., a Colorado corporation, Central City Consolidated Mining Corp., a Colorado corporation and George Otten, a resident of Colorado, dated September 20, 2006, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 25, 2006).

10.12

Joint Venture Agreement dated December 18, 2006, by and among the Company, Journey Resources Corp., and Minerales Jazz S.A. De C.V. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed December 19, 2006).

10.13

Stock Option Agreement between the Company and Stephen D. King dated March 9, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 15, 2007).

10.14

Convertible Notes Purchase Agreement dated April 10, 2007 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 16, 2007).

10.15

Amendment to Convertible Notes Purchase Agreement, dated June 19, 2007, by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 25, 2007).

10.16

Form of Secured Convertible Note of the Company to be issued pursuant to Convertible Notes Purchase Agreement dated April 10, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 16, 2007).

10.17

Equity Transfer Heads of Agreement dated May 4, 2007 by and among China Global Mining Resources Limited, Lu Benzhao, Lu Nan and Jin Yao Hui (incorporated by reference to Exhibit 10.45 to Form 10-K for the year ended December 31, 2007).

10.18

Equity Transfer Heads of Agreement dated May 4, 2007 by and among China Global Mining Resources Limited, Lu Benzhao, Lu Nan, Nanjing Sudan Mining Co., Ltd., Maanshan Zhaoyuan Mining Co., Ltd. and Xiaonanshan Mining Co. Ltd (incorporated by reference to Exhibit 10.46 to Form 10-K for the year ended December 31, 2007).

10.19

Amendment to Joint Venture Agreement dated October 31, 2007 by and among the Company, Journey Resources Corp., and Minerales Jazz S.A. De C.V., whereby we issued 1,600,000 shares of common stock in lieu of the $400,000 exploration work payment (incorporated by reference to Exhibit 10.3 to Form 10-QSB for the quarter ended September 30, 2007).

10.20

Letter Agreement dated October 31, 2007 by and among the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 5, 2007).

10.21

Sale of Shares Agreement between and among the Company, AfriOre International (Barbados) Limited and Kwagga Gold (Barbados) Limited, dated December 12, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 18, 2007).

10.22

Operating Agreement between the Company and Kwagga Gold (Proprietary) Limited, dated December 12, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 18, 2007).

10.23

Fourth Amendment to Asset Purchase Agreement dated January 14, 2008 by and among the Company, Central City Mining Corp., George Otten, Hunter Gold Mining Corp. and Hunter Gold Mining Inc (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 6, 2008).

10.24

Note and Warrant Purchase Agreement dated February 11, 2008 by and between the Company and Platinum Long Term Growth V, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 20, 2008).

10.25

10% Senior Secured Convertible Promissory Note of the Company dated February 11, 2008 in the principal amount of $1,020,000 issued in favor of Platinum Long Term Growth V, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 20, 2008).

10.26

Updated Payment Schedule dated January 25, 2008 by and between the Company, China Global Mining Resources Limited (BVI) and Lu Ben-Zhao (incorporated by reference to Exhibit 10.7 to Form 10-Q for the quarter ended March 31, 2008).

10.27

Iron Ore Contract Amendment dated March 14, 2008 by and between the Company, China Global Mining Resources Limited (BVI) and Lu Ben-Zhao +++ (incorporated by reference to Exhibit 10.8 to Form 10-Q for the quarter ended March 31, 2008).

10.28

Supplement Agreement to the Assets Transfer and the Liabilities of Breach executed on March 14, 2008 by and between the Company, China Global Mining Resources Limited (BVI) and Lu Ben-Zhao (incorporated by reference to Exhibit 10.9 to Form 10-Q for the quarter ended March 31, 2008).

10.29

Employment Agreement with Mark Dacko dated April 10, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 15, 2008).

10.30

Letter Amendment entered into with China Gold, LLC dated May 20, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 21, 2008).

10.31

Employment Agreement between the Company and Stephen D. King dated May 29, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 4, 2008).

10.32

Stock Option Agreement between the Company and Stephen D. King dated May 29, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 4, 2008).

10.33

Amended and Restated Stock Option Agreement between the Company and Deborah King dated May 29, 2008 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 4, 2008).

10.34

Fifth Amendment to Asset Purchase Agreement by and among the Company, Hunter Gold Mining Corp, Hunter Gold Mining Inc., George E. Otten and Central City Consolidated, Corp. d/b/a Central City Consolidated Mining Co., (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 18, 2008).

10.35

Limited Recourse Promissory Note of Hunter Bates Mining Corp issued in favor of George E. Otten (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 18, 2008).

10.36

Deed of Trust and Security Agreement of Hunter Bates Mining Corp issued in favor of Gilpin County Public Trustee (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 18, 2008).

10.37

Letter Amendment entered into with China Gold, LLC dated July 24, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 30, 2008).

10.38

Equity Transfer Agreement (for the Nanjing Sudan Mining Co., Ltd.) by and among Lu Benzhoa, Lu Tinglan and Maanshan Global Mining Resources Limited, dated August 11, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 22, 2008).

10.39

Equity Transfer Agreement (for the Maanshan Xiaonanshan Mining Co., Ltd.) by and among Lu Benzhoa, Lu Tinglan and Maanshan Global Mining Resources Limited, dated August 11, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 22, 2008).

10.40

Equity Transfer Agreement (for the Maanshan Zhaoyuan Mining Co., Ltd.) by and among Lu Benzhoa, Lu Tinglan and Maanshan Global Mining Resources Limited, dated August 11, 2008 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 22, 2008).

10.41

Consulting Agreement dated August 11, 2008 by and between Wits Basin (BVI) Ltd. (f/k/a China Global Mining Resources Limited, a British Virgin Islands corporation) and Mr. Lu Benzhao (incorporated by reference to Exhibit 10.55 to Form 10-K for the year ended December 31, 2008).

10.42

Convertible Promissory Note of the Company dated August 22, 2008 in the principal amount of $1,000,000 issued in favor of London Mining, Plc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 29, 2008).

10.43

Secured Promissory Note of the Company dated October 28, 2008 in the principal amount of $441,000 issued in favor of China Gold, LLC (incorporated by reference to Exhibit 10.10 to Form 10-Q for the quarter ended September 30, 2008).

10.44

Assignment and Amendment Agreement On The Equity Transfer Of Sudan between Lu Benzhao, Lu Tinglan, Maanshan Global Mining Resources Limited, China Global Mining Resources Limited and the Company dated October 29, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 4, 2008).

10.45

Supplementary and Amendment Agreement On The Equity Transfer Of XNS between Lu Benzhao, Lu Tinglan, Maanshan Global Mining Resources Limited, China Global Mining Resources Limited and the Company dated October 29, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 4, 2008).

10.46

Amendment No. 2 to Convertible Notes Purchase Agreement dated November 10, 2008 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.11 to Form 10-Q for the quarter ended September 30, 2008).

10.47

Amended and Restated Promissory Note of the Company dated November 10, 2008 in the principal amount of $9,800,000 issued in favor of China Gold, LLC (incorporated by reference to Exhibit 10.12 to Form 10-Q for the quarter ended September 30, 2008).

10.48

Amended and Restated Consulting Agreement by and between the Company and Corporate Resource Management, Inc dated November 12, 2008 (incorporated by reference to Exhibit 10.13 to Form 10-Q for the quarter ended September 30, 2008).

10.49

Promissory Note of the Company dated November 12, 2008 in the principal amount of $60,000 issued in favor of Hawk Uranium Inc (incorporated by reference to Exhibit 10.14 to Form 10-Q for the quarter ended September 30, 2008).

10.50

Amendment No. 3 to Convertible Notes Purchase Agreement dated December 22, 2008 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 29, 2008).

10.51

Second Amended and Restated Promissory Note of the Company dated December 22, 2008 in the principal amount of $9,800,000 issued in favor of China Gold, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 29, 2008).

10.52

Amended and Restated Security Agreement dated December 22, 2008 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 29, 2008).

10.53

Second Amended and Restated Pledge Agreement dated December 22, 2008 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 29, 2008).

10.54

Transfer Agreement Relating to the Entire Issued Share Capital of China Global Mining Resources Limited (Hong Kong) dated December 23, 2008 by and between the Company and China Global Mining Resources (BVI) Limited (incorporated by reference to Exhibit 10.68 to Form 10-K for the year ended December 31, 2008).

10.55

Agreement on Amendment dated January 13, 2009 by and between Wits Basin (BVI) Ltd. (f/k/a China Global Mining Resources Limited, a British Virgin Islands corporation) and Mr. Lu Benzhao (incorporated by reference to Exhibit 10.69 to Form 10-K for the year ended December 31, 2008).

10.56

Novation Agreement dated January 13, 2009 by and between Wits Basin (BVI) Ltd. (f/k/a China Global Mining Resources Limited, a British Virgin Islands corporation), China Global Mining Resources (BVI) Limited and Mr. Lu Benzhao (incorporated by reference to Exhibit 10.70 to Form 10-K for the year ended December 31, 2008).

10.57

Subscription Agreement by and between the Company and London Mining Plc, dated March 17, 2009 (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2009).

10.58

Shareholders Agreement by and between the Company and London Mining Plc, dated March 17, 2009 (incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2009).

10.59

Loan Agreement between the Company and London Mining Plc in the principal amount of $5,750,000, dated March 17, 2009 (incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2009).

10.60

Convertible Debenture between Cabo Drilling (America) Inc. and the Company and Hunter Bates Mining Corporation dated April 27, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 1, 2009).

10.61

Deed of Trust to Public Trustee, Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing Statement and Fixture Filing from Hunter Bates Mining Corporation to The Public Trustee of Gilpin County, Colorado for the benefit of Cabo Drilling (America) Inc. dated April 27, 2009 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 1, 2009).

10.62

Letter Agreement with Hawk Uranium Inc dated July 1, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 10, 2009).

10.63

Form of unsecured promissory note of the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 15, 2009).

10.64

Stock Purchase Agreement dated September 29, 2009 by and among certain Shareholders of Princeton Acquisitions, Inc., and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 8, 2009).

10.65**

Loan Agreement between the Company and Kenglo One Ltd., dated December 14, 2009.

10.66**

Secured Promissory Note between the Company and Kenglo One Ltd. in the principal amount of $5,000,000, dated December 14, 2009.

10.67**

Security Agreement between the Company and Kenglo One Ltd. in the principal amount of $5,000,000, dated December 14, 2009.

10.68**

Private Option Agreement between the Company and Kenglo One Ltd., dated December 14, 2009.

10.69**

Amendment No. 4 to Convertible Notes Purchase Agreement dated December 17, 2009 by and between the Company and China Gold, LLC.

10.70**

Third Amended and Restated Promissory Note of the Company dated December 17, 2009 in the principal amount of $6,153,321 issued in favor of China Gold, LLC.

10.71**

Second Amended and Restated Security Agreement dated December 17, 2009 by and between the Company and China Gold, LLC.

10.72**

Third Amended and Restated Pledge Agreement dated December 17, 2009 by and between the Company and China Gold, LLC.

10.73**

Amended and Restated 10% Senior Secured Convertible Promissory Note of the Company dated December 17, 2009 in the principal amount of $117,391 issued in favor of China Gold, LLC.

10.74**

Amended and Restated 10% Senior Secured Promissory Note of the Company dated December 17, 2009 in the principal amount of $110,000 issued in favor of China Gold, LLC.

10.75**

Letter agreement dated December 17, 2009 with Pioneer Holdings, LLC with respect projects in Chile.

21**	Subsidiaries of the Registrant.

23.1**

Consent of Moquist Thorvilson Kaufmann Kennedy & Pieper LLC.

24**	Power of Attorney (included on the signature page hereto).

31.1**

Certification by Chief Executive Officer.

31.2**

Certification by Chief Financial Officer.

32.1**

Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Filed herewith electronically

+++ Confidential treatment granted as to certain portions of this exhibit pursuant to Rule 24b-2 of the Exchange Act of 1934, as amended.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		WITS BASIN PRECIOUS MINERALS INC.
		(“COMPANY”)

Dated: April 15, 2010	By:	/s/ Stephen D. King
		Stephen D. King
		Chief Executive Officer

Each person whose signature to this Annual Report appears below hereby constitutes and appoints Stephen D. King and Mark D. Dacko as his or her true and lawful attorney-in-fact and agent, with full power of substitution, to sign on his or her behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Annual Report and any and all instruments or documents filed as part of or in connection with this Annual Report or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitutes, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company, in the capacities and dates indicated.

Name	Title	Date

/s/ Stephen D. King	Chief Executive Officer and Director	April 15, 2010
Stephen D. King	(principal executive officer)

/s/ Dr. Clyde Smith	President and Director	April 14, 2010
Dr. Clyde Smith

/s/ Mark D. Dacko	Chief Financial Officer and Secretary	April 15, 2010
Mark D. Dacko	(principal financial and accounting officer)

/s/ Norman D. Lowenthal	Director	April 14, 2010
Norman D. Lowenthal

/s/ Joseph Mancuso	Director	April 14, 2010
Joseph Mancuso

/s/ Donald S. Stoica	Director	April 13, 2010
Donald S. Stoica

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents

		Page
Report of Independent Registered Public Accounting Firm of Moquist Thorvilson Kaufmann Kennedy & Pieper LLC		F-2
Consolidated Balance Sheets as of December 31, 2009 and 2008		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2009 and 2008		F-4
Consolidated Statements of Shareholders’ Deficit for the Years Ended December 31, 2009 and 2008		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009 and 2008		F-9
Notes to Consolidated Financial Statements		F-11

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Wits Basin Precious Minerals Inc. and subsidiaries (an exploration stage company)

We have audited the accompanying consolidated balance sheets of Wits Basin Precious Minerals Inc. and subsidiaries (an exploration stage company) as of December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders’ deficit and cash flows for the years ended December 31, 2009 and 2008, and the period from May 1, 2003 (inception of exploration stage) to December 31, 2009. Wits Basin Precious Minerals Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wits Basin Precious Minerals Inc. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years ended December 31, 2009 and 2008, and the period from May 1, 2003 (inception of exploration stage) to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had net losses for the years ended December 31, 2009 and 2008 and had an accumulated deficit at December 31, 2009. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Moquist Thorvilson Kaufmann Kennedy & Pieper LLC

Minneapolis, Minnesota

April 15, 2010

F-2

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	1,109,544		$	230,729
Prepaid expenses		10,986			89,813
Total current assets		1,120,530			320,542

Property, plant and equipment, net		1,536,408			2,047,222
Mineral properties and development costs		5,660,726			5,255,635
Advance payments on equity investments		—			5,000,000
Restricted cash escrowed for debt repayment		2,000,000			—
Investment in partially-owned equity affiliates		44,853			41,988
Debt issuance costs, net		546,381			7,514
Total assets	$	10,908,898		$	12,672,901

Liabilities and Shareholders’ Deficit
Current liabilities:
Short-term notes payable, net of original issue discount	$	315,000		$	212,140
Current portion of convertible notes payable, net of original issue discount		1,915,587			1,871,628
Current portion of long-term notes payable		6,009,202			204,248
Accounts payable		214,626			252,215
Accrued interest		529,326			121,617
Other accrued expenses		793,636			2,432,658
Total current liabilities		9,777,377			5,094,506

Long-term liabilities:
Convertible note payable, long-term portion		314,923			—
Long-term notes payable, net of discount		15,033,964			13,493,131
Other liability		205,933			—
Total liabilities		25,332,197			18,587,637

Commitments and contingencies

Shareholders’ deficit:
Common stock, $0.01 par value, 300,000,000 shares authorized: 166,182,703 and 142,180,749 shares issued and outstanding at December 31, 2009 and 2008, respectively		1,661,827			1,421,807
Additional paid-in capital		67,362,825			59,910,010
Warrants outstanding		7,243,688			7,961,908
Accumulated deficit		(22,932,460	)		(22,932,460	)
Deficit accumulated during the exploration stage, subsequent to April 30, 2003		(67,654,919	)		(52,276,001	)
Total Wits Basin shareholders’ deficit		(14,319,039	)		(5,914,736	)
Non-controlling interest		(104,260	)		—
Total shareholders’ deficit		(14,423,299	)		(5,914,736	)
Total liabilities and shareholders’ deficit	$	10,908,898		$	12,672,901

The accompanying notes are an integral part of these consolidated financial statements.

F-3

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

							May 1, 2003 (inception)
	December 31,						To Dec. 31,
	2009			2008			2009
Revenues	$	—		$	—		$	—
Operating expenses:
General and administrative		3,103,517			7,631,564			29,569,085
Exploration expenses		222,677			1,625,018			12,213,436
Depreciation and amortization		105,723			65,142			647,179
Merger transaction costs		325,512			—			1,564,131
Loss on impairment of assets		5,770,814			—			7,870,814
Stock issued as penalty		—			—			2,152,128
Loss on sale of mining properties		—			—			571,758
Loss on disposal of assets		—			12,362			13,995
Loss from equity investments in partially-owned affiliates		18,252			18,012			36,264
Total operating expenses		9,546,495			9,352,098			54,638,790
Loss from operations		(9,546,495	)		(9,352,098	)		(54,638,790	)

Other income (expense):
Other income (expense), net		19			813			104,296
Interest expense		(6,417,726	)		(3,292,448	)		(13,707,307	)
Loss on debt extinguishment, net		—			(1,485,558	)		(1,485,558	)
Gain on deconsolidation of subsidiary, net		1,461,078			—			1,461,078
Foreign currency gains (losses)		(901,739	)		1,222,082			320,343
Total other income (expense)		(5,858,368	)		(3,555,111	)		(13,307,148	)
Loss from operations before income taxes and discontinued operations		(15,404,863	)		(12,907,209	)		(67,945,938	)
Income tax benefit (provision)		—			—			243,920
Loss from continuing operations		(15,404,863	)		(12,907,209	)		(67,702,018	)

Discontinued operations:
Gain from discontinued operations		—			—			21,154
Loss after discontinued operations		(15,404,863	)		(12,907,209	)		(67,680,864	)
Net loss attributable to non-controlling interest		25,945			—			25,945
Net loss attributable to Wits Basin	$	(15,378,918	)	$	(12,907,209	)	$	(67,654,919	)

Basic and diluted net loss per common share attributable to Wits Basin:
Continuing operations	$	(0.10	)	$	(0.10	)	$	(0.79	)
Discontinued operations		—			—			—
Net loss per common share attributable to Wits Basin	$	(0.10	)	$	(0.10	)	$	(0.79	)

Basic and diluted weighted average common shares outstanding		152,024,653			129,674,425			85,450,923

The accompanying notes are an integral part of these consolidated financial statements.

F-4

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

					Additional
	Common stock				paid-in
	Shares		Amount		capital		Warrants
BALANCE, December 31, 2007		113,982,533	$	1,139,825	$	51,147,313	$	5,710,383

Issuance of 7,781,666 shares of common stock in private placements from $0.15 to $0.25 per share (net of offering costs of $68,130)		7,781,666		77,817		992,827		154,598
Exercise of warrants with cash (net of $1,500 of costs)		6,000,000		60,000		1,087,655		(949,155	)
Cash-less exercise of warrants		3,770,931		37,709		629,150		(666,859	)
Issuance of 3,620,000 shares of common stock and a warrant to purchase 100,000 shares of common stock in connection with purchase of Bates-Hunter Mine		3,620,000		36,200		705,900		16,019
Issuance and modification of warrants related to extensions and extinguishment of convertible debt and notes payable, including recording a beneficial conversion feature		—		—		496,633		4,200,382
Conversion of $197,650 of principal on convertible notes payable into common stock, including additional beneficial conversion charges for conversion price reductions totaling $294,994		2,573,030		25,730		466,914		—
Common stock issued in lieu of cash for debt, interest, and accrued expenses		532,589		5,326		111,636		—
Issuance of 2,920,000 shares of common stock and 6,000,000 warrants to consultants for services and exploration rights		2,920,000		29,200		544,400		963,966
Exercise of Right-to-Purchase option provided under the terms of 2006 note payable with a price modification in 2008		1,000,000		10,000		50,000		—
Stock option/warrant compensation expense		—		—		2,065,156		145,000
Warrants that expired during 2008 without exercise		—		—		1,612,426		(1,612,426	)
Net loss attributable to Wits Basin		—		—		—		—
Net loss attributable to non-controlling interest		—		—		—		—
BALANCE, December 31, 2008		142,180,749		1,421,807		59,910,010		7,961,908

Conversion of $621,842 of principal and $1,897 of accrued interest on convertible notes payable into common stock, including additional beneficial conversion charges for conversion price reductions totaling $1,825,372		12,583,076		125,831		2,323,280		—
Issuance of 6,300,000 shares of common stock in private placements at $0.05 per share, net of offering costs of $31,821 and net of $97,759 allocated to a liability tied to an option to purchase Standard Gold’s common stock		6,300,000		63,000		122,420		—

F-5

					Additional
	Common stock				paid-in
	Shares		Amount		capital			Warrants
Issuance of 500,000 shares of common stock related to Bates-Hunter Mine Limited Recourse Promissory Note under a standstill agreement		500,000		5,000		35,000			—
Issuance of common stock and modification of warrants related to extensions of convertible debt and notes payable		300,000		3,000		17,661			114,029
Issuance of warrants and modifications to existing warrants and beneficial conversion charge with obtaining new debt		—		—		12,604			1,898,806
Issuance of common stock in lieu of cash payments for management services fees due to Hawk Uranium earned during 2008 and 2009		3,218,878		32,189		256,510			—
Issuance of 1,100,000 shares to a consultant for services provided to CGMR (BVI)		1,100,000		11,000		88,000			—
Stock option/warrant compensation expense		—		—		1,306,298			—
Warrants that expired during 2009 without exercise		—		—		2,731,055			(2,731,055	)
Equity adjustments in our majority owned subsidiary (Standard Gold):
Increase in equity due to Standard Gold issuing common stock to 3rd parties		—		—		598,911			—
Decrease in equity from Wits Basin purchasing additional Standard Gold common stock		—		—		(38,924	)		—
Net loss attributable to Wits Basin		—		—		—			—
Net loss attributable to non-controlling interest		—		—		—			—
BALANCE, December 31, 2009		166,182,703	$	1,661,827	$	67,362,825		$	7,243,688

The accompanying notes are an integral part of these consolidated financial statements.

F-6

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	Accumulated deficit			Deficit accumulated (1)			Non-controlling interest		Total
BALANCE, December 31, 2007	$	(22,932,460	)	$	(39,368,792	)	$	—	$	(4,303,731	)

Issuance of 7,781,666 shares of common stock in private placements from $0.15 to $0.25 per share (net of offering costs of $68,130)		—			—			—		1,225,242
Exercise of warrants with cash (net of $1,500 of costs)		—			—			—		198,500
Cash-less exercise of warrants		—			—			—		—
Issuance of 3,620,000 shares of common stock and a warrant to purchase 100,000 shares of common stock in connection with purchase of Bates-Hunter Mine		—			—			—		758,119
Issuance and modification of warrants related to extensions and extinguishment of convertible debt and notes payable, including recording a beneficial conversion feature		—			—			—		4,697,015
Conversion of $197,650 of principal on convertible notes payable into common stock, including additional beneficial conversion charges for conversion price reductions totaling $294,994		—			—			—		492,644
Common stock issued in lieu of cash for debt, interest, and accrued expenses		—			—			—		116,962
Issuance of 2,920,000 shares of common stock and 6,000,000 warrants to consultants for services and exploration rights		—			—			—		1,537,566
Exercise of Right-to-Purchase option provided under the terms of 2006 note payable with a price modification in 2008		—			—			—		60,000
Stock option/warrant compensation expense										2,210,156
Warrants that expired during 2008 without exercise		—			—			—		—
Net loss attributable to Wits Basin		—			(12,907,209	)		—		(12,907,209	)
Net loss attributable to non-controlling interest		—			—			—		—
BALANCE, December 31, 2008		(22,932,460	)		(52,276,001	)		—		(5,914,736	)

Conversion of $621,842 of principal and $1,897 of accrued interest on convertible notes payable into common stock, including additional beneficial conversion charges for conversion price reductions totaling $1,825,372		—			—			—		2,449,111
Issuance of 6,300,000 shares of common stock in private placements at $0.05 per share, net of offering costs of $31,821 and net of $97,759 allocated to a liability tied to an option to purchase Standard Gold’s common stock		—			—			—		185,420

F-7

	Accumulated deficit			Deficit accumulated (1)			Non-controlling interest			Total
Issuance of 500,000 shares of common stock related to Bates-Hunter Mine Limited Recourse Promissory Note under a standstill agreement		—			—			—			40,000
Issuance of common stock and modification of warrants related to extensions of convertible debt and notes payable		—			—			—			134,690
Issuance of warrants and modifications to existing warrants and beneficial conversion charge with obtaining new debt		—			—			—			1,911,410
Issuance of common stock in lieu of cash payments for management services fees due to Hawk Uranium earned during 2008 and 2009		—			—			—			288,699
Issuance of 1,100,000 shares to a consultant for services provided to CGMR (BVI)		—			—			—			99,000
Stock option/warrant compensation expense		—			—			—			1,306,298
Warrants that expired during 2009 without exercise		—			—			—			—
Equity adjustments in our majority owned subsidiary (Standard Gold):
Increase in equity due to Standard Gold issuing common stock to 3rd parties		—			—			(117,239	)		481,672
Decrease in equity from Wits Basin purchasing additional Standard Gold common stock		—			—			38,924			—
Net loss attributable to Wits Basin		—			(15,378,918	)		—			(15,378,918	)
Net loss attributable to non-controlling interest		—			—			(25,945	)		(25,945	)
BALANCE, December 31, 2009		(22,932,460	)	$	(67,654,919	)	$	(104,260	)	$	(14,423,299	)

(1)

Deficit accumulated during the exploration stage, subsequent to April 30, 2003.

The accompanying notes are an integral part of these consolidated financial statements.

F-8

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							May 1, 2003
							(inception) to
	December 31,						Dec. 31,
	2009			2008			2009
OPERATING ACTIVITIES:
Net loss	$	(15,404,863	)	$	(12,907,209	)	$	(67,680,864	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization		105,723			65,142			647,179
Loss (gain) on disposal of miscellaneous assets		—			12,362			(51,585	)
Loss from investment in partially-owned equity affiliate		18,252			18,012			36,264
Loss (gain) on sale of mining projects		—			—			571,758
Gain on deconsolidation of subsidiary, net		(1,461,078	)		—			(1,461,078	)
Loss (gain) on foreign currency		901,739			(1,222,082	)		(320,343	)
Issuance of common stock and warrants for exploration rights		—			185,282			5,885,372
Issuance of common stock and warrants for services		99,000			246,797			2,447,737
Amortization of prepaid consulting fees related to issuance and modifications of warrants and issuance of common stock		55,109			1,086,121			6,649,899
Amortization of debt issuance costs		127,132			76,374			378,844
Amortization of original issue discount & beneficial conversion feature		4,886,320			1,882,470			8,965,680
Compensation expense related to stock options and warrants		1,306,298			2,210,156			4,799,278
Loss on debt extinguishment		—			1,485,558			1,485,558
Issuance of common stock and warrants for interest expense		40,000			—			1,213,420
Loss on impairment of assets		5,770,814			—			7,870,814
Issuance of common stock as penalty related to private placement		—			—			2,152,128
Contributed services by an executive		—			—			274,500
Non-cash loss on nickel property (exploration)		—			150,000			150,000
Gain from discontinued operations		—			—			(21,154	)
Changes in operating assets and liabilities:
Accounts receivable, net		—			—			18,017
Prepaid expenses		23,718			20,583			(209,761	)
Accounts payable		(37,589	)		22,923			144,345
Accrued expenses		1,604,903			1,533,276			4,225,660
Net cash used in operating activities		(1,964,522	)		(5,134,235	)		(21,828,332	)

INVESTING ACTIVITIES:
Purchases of property and equipment		—			(28,106	)		(143,629	)
Purchase of Bates-Hunter Mine (acquisition costs)		—			(364,680	)		(364,680	)
Advance to partially-owned equity affiliate		(390,000	)		(60,000	)		(450,000	)
Proceeds from sale of mining projects		—			—			220,820
Proceeds from sale of miscellaneous assets		—			—			89,639
Purchases of investments		—			—			(2,244,276	)
Refunds and (advance payments) on equity investments		—			1,850,000			(5,150,000	)
Net cash provided by (used in) investing activities		(390,000	)		1,397,214			(8,042,126	)

F-9

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

							May 1, 2003
							(inception) to
	December 31,						Dec. 31,
	2009			2008			2009

FINANCING ACTIVITIES:
Payments on short-term and long-term debt		(476,106	)		(555,000	)		(3,790,751	)
Restricted cash escrowed for debt repayment		(2,000,000	)		—			(2,000,000	)
Cash proceeds from issuance of common stock, net of offering costs		283,179			1,285,242			7,977,228
Cash proceeds from exercise of stock options		—			—			199,900
Cash proceeds from exercise of warrants		—			198,500			6,724,547
Cash proceeds from short-term debt		760,000			2,976,000			16,115,000
Cash proceeds from long-term debt		4,500,000			—			5,150,000
Capital contributed by non-controlling interest		231,672			—			231,672
Debt issuance costs		(65,408	)		(67,473	)		(324,634	)
Net cash provided by financing activities		3,233,337			3,837,269			30,282,962

INCREASE IN CASH AND EQUIVALENTS		878,815			100,248			412,504
CASH AND EQUIVALENTS, beginning of period		230,729			130,481			697,040
CASH AND EQUIVALENTS, end of period	$	1,109,544		$	230,729		$	1,109,544

Supplemental cash flow information:
Cash paid for interest	$	322,719		$	1,472,805		$	1,871,580
Cash paid for income taxes	$	—		$	—		$	—

Disclosure of non-cash investing and financing activities:
Issuance of common stock, warrants and options for prepaid consulting fees	$	—		$	1,105,487		$	5,807,065
Issuance of common stock in lieu of cash for debt, interest, accounts payable and accrued expenses	$	288,699		$	116,962		$	444,661
Conversion of debt principal and accrued interest to common stock	$	623,739		$	197,650		$	821,389
Issuance of debt and warrants for financing costs	$	600,591		$	—		$	600,591
Debt paid through issuance of Standard Gold stock	$	250,000		$	—		$	250,000
Current liabilities converted to debt	$	1,472,043		$	180,107		$	1,652,150
Issuance of common stock and warrants for purchase of Bates-Hunter Mine	$	—		$	758,119		$	758,119
Long-tern debt incurred for purchase of Bates-Hunter Mine	$	—		$	6,156,250		$	6,156,250
Accrued expenses incurred in connection with purchase of Bates-Hunter Mine	$	—		$	307,500		$	307,500
Short-term debt refinanced into long-term debt	$	5,284,041		$	9,800,000		$	15,084,041

The accompanying notes are an integral part of these consolidated financial statements.

F-10

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

NOTE 1 – NATURE OF BUSINESS

Wits Basin Precious Minerals Inc. (with its subsidiaries “we,” “us,” “our,” “Wits Basin” or the “Company”) is a minerals exploration and development company based in Minneapolis, Minnesota. As of December 31, 2009, we hold (i) an equity interest of approximately 94% of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) which owns a past producing gold mine in Colorado (the “Bates-Hunter Mine”), (ii) a 50% equity interest in China Global Mining Resources (BVI) Ltd., which owns a producing iron ore mine and processing plant in the People’s Republic of China, (the “PRC”), (iii) a 35% equity interest in Kwagga Gold (Barbados) Limited, which holds prospecting rights in South Africa (the “FSC Project”) and (iv) certain rights in the Vianey Concession in Mexico. The following is a summary of these projects:

Standard Gold, Inc.

On June 12, 2008, we transferred our right to purchase the Bates-Hunter Mine, a prior producing gold mine located in Central City, Colorado, to a newly created wholly owned subsidiary of ours, the Hunter Bates Mining Corporation (the “Hunter Bates”). Concurrent with this transfer, Hunter Bates completed the acquisition of the Bates-Hunter Mine. On September 29, 2009, Standard Gold, Inc., a Colorado corporation (“Standard Gold”) (formerly known as Princeton Acquisitions, Inc., a public shell corporation at the time) completed a reverse acquisition via a share exchange with Hunter Bates and all of its shareholders, whereby the holders of capital securities of Hunter Bates exchanged all of their capital securities, on a share-for-share basis, into similar capital securities of Standard Gold (the “Share Exchange”). Accordingly, the Share Exchange represented a change in control (reverse merger) and Hunter Bates became a wholly owned subsidiary of Standard Gold. We hold an aggregate of 21,513,544 shares of Standard Gold common stock as of December 31, 2009 (or approximately 94% of the issued and outstanding shares of common stock) and Standard Gold is now a majority owned subsidiary of ours. Standard Gold’s common stock is quoted on the OTCBB under the symbol “SDGR.”

China Global Mining Resources (BVI) Ltd.

On March 17, 2009, we entered into a joint venture with London Mining, Plc, a United Kingdom corporation (“London Mining”) for the purpose of acquiring the processing plant of Nanjing Sudan Mining Co. Ltd (“Sudan”) and the iron ore mine of Xiaonanshan Mining Co. Ltd (“Xiaonanshan”) (the Sudan and Xiaonanshan collectively are referred to as the “PRC Properties”). Pursuant to that certain Amended and Restated Subscription Agreement, dated March 17, 2009 by and between London Mining and the Company, London Mining purchased 100 ordinary A Shares of China Global Mining Resources (BVI) Ltd, a British Virgin Islands corporation and at the time a wholly owned subsidiary of ours (“CGMR (BVI)”) for $38.75 million, which A Shares constitute a 50% equity interest in CGMR (BVI). We hold the remaining 50% equity interest in the form of 100 ordinary B Shares. The A Shares carry a preference with respect to return of capital and distributions until London Mining receives an aggregate of $44.5 million in return of capital or distributions and certain other conditions are met (99% to London Mining and 1% to Wits Basin). On March 17, 2009, CGMR (BVI), through its wholly owned subsidiary China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”), acquired the PRC Properties. At that time, we deconsolidated CGMR (BVI) as a subsidiary of ours.

F-11

Kwagga Gold (Barbados) Limited

We hold a 35% equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, a South African entity (“Kwagga Pty”), holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. From October 2003 through August 2005, we completed only two range-finding drillholes (our $2,100,000 investment to acquire the 35% equity was utilized to fund the drillholes) and we have not performed any further exploration activities since. On December 12, 2007, we entered into an agreement with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65% of Kwagga Barbados, whereby we may acquire all of AfriOre’s interest of Kwagga Barbados. We have submitted documentation to obtain the consent of South Africa’s Minister of Minerals and Energy, who oversees the Department of Minerals and Energy (the “DME”) to allow for the sale of the controlling interest in Kwagga Pty to a U.S. company, which is still under review. Other than limited maintenance of the prospecting rights, no other activities will be conducted until consent is issued by the DME.

Vianey Mine Concession

As of December 31, 2009, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations. As of the date of this financial statement, we do not claim to have any mineral reserves at the Bates-Hunter Mine, the FSC Project or the Vianey.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2009, we incurred losses from continuing operations of $15,404,863. At December 31, 2009, we had an accumulated deficit of $90,587,379 and a working capital deficit of $8,656,847. Our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt to meet short and long-term operating requirements. We believe that private placements of equity capital and debt financing may be adequate to fund our long-term operating requirements. We may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. We are continuing to pursue external financing alternatives to improve our working capital position. If we are unable to obtain the necessary capital, we may have to cease operations.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Wits Basin Precious Minerals Inc., and our majority owned subsidiary of Standard Gold, Inc. (and its wholly owned subsidiaries). All significant intercompany transactions and balances have been eliminated in consolidation.

F-12

Foreign Currencies

All dollar amounts expressed in this financial statement are in US Dollars ($), unless specifically noted, as certain transactions are denominated in the Canadian Dollar (“Cdn$”).

Cash and Cash Equivalents

We include as cash equivalents: (a) certificates of deposit, and (b) all other investments with maturities of three months or less, which are readily convertible into known amounts of cash. We maintain our cash in high-quality financial institutions. The balances, at times, may exceed federally insured limits.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives as follows:

		Years
Buildings		20
Equipment		2-7

Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. As items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income.

Mineral Properties

Mineral property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. No properties have reached the development stage at this time. Exploration, mineral property evaluations, option payments, related acquisition costs for mineral properties acquired under an option agreement, general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. When reserves are determined for a property and a bankable feasibility study is completed, subsequent exploration and development costs on the property would be capitalized. If a project were to be put into production, capitalized costs would be depleted on the unit of production basis.

Management reviews the net carrying value of each mineral property as changes may materialize with a property or at a minimum, on an annual basis. Where information and conditions suggest impairment, estimated future net cash flows from each property are calculated using estimated future prices, proven and probable reserves and value beyond proven and probable reserves, and operating, capital and reclamation costs on an undiscounted basis. If it is determined that the future cash flows are less than the carrying value, a write-down to the estimated fair value is made with a charge to loss for the period. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.

Management's estimates of gold prices, recoverable reserves, probable outcomes, operating capital and reclamation costs are subject to risks and uncertainties that may affect the recoverability of mineral property costs.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior undetected agreements or transfers and title may be affected by such defects.

F-13

Investment in partially-owned equity affiliates

Investments in companies over which the Company exercises significant influence, but does not consolidate are accounted for using the equity method, whereby the investment is carried at the Company's original cost plus its proportionate share of undistributed earnings/losses. The excess carrying value of the Company's investment over its underlying equity in the net assets is included in the consolidated balance sheet as “Investment in Partially-Owned Equity Affiliates.”

Long-Lived Assets

We will periodically evaluate the carrying value of long-lived assets to be held and used, including but not limited to, mineral properties, capital assets and intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. During 2009, the Company impaired its equity investment in China Global Mining Resources (see Note – 9 Investment in partially-owned equity affiliates for further information). There were no impairment charges during the year ended December 31, 2008.

Segment Reporting

We have a single operating segment of minerals exploration.

Revenue Recognition and Deferred Revenue

As of December 31, 2009, none of our projects provided any revenues and we do not expect them to generate revenues for the foreseeable future. Due to the disproportionate distributions stipulated in the joint venture agreement with London Mining regarding the CGMR (BVI) entity and the requirement to retire London Mining’s entire initial investment prior to any such distribution, the likelihood of our proportional 1% interest having any recordable revenue for the foreseeable future seems unlikely.

Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock Based Compensation

The Company recognizes the cost of stock-based compensation arrangements in the statement of operations on a straight line basis over the service periods of the awards. The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model.

Off Balance Sheet Arrangements

As of December 31, 2009, we did not have any off-balance sheet activities (including the use of structured finance or special purpose entities) or any trading activities in non-exchange traded commodity contracts that have a current or future effect on our financial condition, changes in the financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that are material to our investors.

F-14

Financial Instruments

The carrying amounts for all financial instruments approximates fair value. The carrying amounts for cash and cash equivalents, accounts payable and accrued liabilities approximated fair value because of the short maturity of these instruments. The fair value of short-term debt approximated the carrying amounts based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk. The fair value of long-term debt was assumed to approximate the carrying amount as most of the debt was incurred recently.

Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the periods presented. Diluted net loss per common share is determined using the weighted average number of common shares outstanding during the periods presented, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of options, warrants and conversion of convertible debt. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

Income Taxes

Income taxes are provided for using the asset and liability method of accounting. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period.

Current accounting guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties has been recorded at December 31, 2009 and 2008. In accordance with the guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes and any related penalties will be put into their respective accounts. The Company's remaining open tax years subject to examination include the years ended December 31, 2005 through 2009.

The Company has recorded a full valuation allowance against the net deferred tax assets due to the uncertainty of realizing the related benefits.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance codifying generally accepted accounting principles in the United States (“GAAP”). While the guidance was not intended to change GAAP, it did change the way the Company references these accounting principles in the Notes to the Consolidated Financial Statements. This guidance was effective for interim and annual reporting periods ending after September 15, 2009. The Company’s adoption of this authoritative guidance as of September 30, 2009 changed how it references GAAP in its disclosures.

In June 2009, the FASB issued authoritative guidance that eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires on-going qualitative reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. This guidance is effective for fiscal years beginning after November 15, 2009. The Company does not expect the adoption of this authoritative guidance to have any current impact on the consolidated financial statements.

F-15

NOTE 3 – PREPAID EXPENSES

Prepaid expenses consist of two components: prepaid consulting fees and other prepaid expenses. The prepaid consulting fees include cash and calculated amounts from the issuance of common stock, warrants or options to consultants for various services that we do not have the internal infrastructure to perform. The amortization periods coincide with terms of the agreements. The other prepaid expenses contain amounts we have prepaid for general and administrative purposes and are being expensed as utilized.

During 2008, we entered into five consulting agreements with unaffiliated third party consultants and issued: (i) an aggregate of 2,020,000 shares of un-registered common stock, with an aggregate value of $378,600 based on the closing sale price of our common stock on the issuance date and (ii) two two-year warrants to purchase up to an aggregate of 5,000,000 shares of common stock, with exercise prices from $0.01 to $0.20 per share (valued at $726,887 using the Black-Scholes pricing model).

Components of prepaid expenses at December 31 are as follows:

	2009		2008
Prepaid consulting fees	$	—	$	55,109
Other prepaid expenses		10,986		34,704
	$	10,986	$	89,813

NOTE 4 – ACQUISITION OF BATES-HUNTER MINE

On June 12, 2008, Wits Basin entered into a fifth amendment to that certain Asset Purchase Agreement dated September 20, 2006 by and among Wits Basin and the Sellers (Hunter Gold Mining Corp, a British Columbia corporation, Hunter Gold Mining Inc., a Colorado corporation, George E. Otten, a resident of Colorado and Central City Consolidated, Corp. d/b/a Central City Consolidated Mining Co., a Colorado corporation) to, among other changes, reflect the assignment by Wits Basin of its rights in the Asset Purchase Agreement to Hunter Bates.

Pursuant to the terms of the Asset Purchase Agreement, Wits Basin and Hunter Bates completed the acquisition of the Bates-Hunter Mine properties, which included land, buildings, equipment, mining claims and permits, financed through a limited recourse promissory note of Hunter Bates payable to Mr. Otten (on behalf of all of the Sellers) in the principal amount of Cdn$6,750,000 ($6,736,785 US as of June 12, 2008) and Wits Basin issued 3,620,000 shares of its common stock with a fair value of $742,100. We also incurred acquisition costs of $380,698. Additionally, the following net smelter royalties were granted: (i) a two percent net smelter return royalty on all future production, with no limit and (ii) a one percent net smelter return royalty (up to a maximum payment of $1,500,000).

A summary of the total purchase price is as follows:

Promissory note payable	$	6,736,785
Common stock issued		742,100
Acquisition costs		380,698
Less discounts on the note		(580,534	)
Total purchase price	$	7,279,049

The following table summarizes the initial allocation of the purchase price, in US Dollars, of the assets acquired in the transaction along with the subsequent changes to the underlying assets based on a more formal assessment of fair market value. These changes had no material effect on depreciation. The US Dollar values reflect a discount ($580,534) relating to the Otten recourse note being non-interest bearing until January 1, 2010.

F-16

	December 31,
	2009		2008
Land	$	329,280	$	610,423
Buildings		1,206,954		1,330,902
Equipment		82,089		82,089
Mining claims		5,657,383		5,252,292
Mining permits		3,343		3,343
Total purchase price	$	7,279,049	$	7,279,049

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

Prior to our acquisition of the Bates-Hunter Mine in June 2008, we made purchases of various pieces of equipment necessary to operate and de-water the Bates-Hunter Mine property. After the acquisition, we now have additional assets of land, buildings and other additional equipment all related to the Bates-Hunter Mine. Depreciation on allowable assets is calculated on a straight-line method over the estimated useful life, presently ranging from two to twenty years. Components of our property, plant and equipment are as follows:

	December 31,
	2009			2008
Land	$	329,280		$	610,423
Buildings		1,206,954			1,330,902
Equipment		199,694			199,694
Less accumulated depreciation		(199,520	)		(93,797	)
	$	1,536,408		$	2,047,222

NOTE 6 – MINERAL PROPERTIES AND DEVELOPMENT COSTS

As noted in Note 4, a more formal valuation assessment was done with the Hunter-Bates Mine purchase in 2009. Our initial allocation of the purchase price to the mining claims and permits acquired in the Bates-Hunter Mine transaction has been adjusted accordingly to the final valuation study. Since the purchase, we have not commenced any mining operations due to the lack of funding and therefore, we have not recorded any amortization expense and we have determined that no impairment has occurred for the period ended December 31, 2009. Components of our mineral properties and development costs are as follows:

	December 31,
	2009		2008
Mining claims (1)	$	5,657,383	$	5,252,292
Mining permits (2)		3,343		3,343
	$	5,660,726	$	5,255,635

(1)

We acquired some surface rights and some mining rights to 22 parcels located in Gilpin County, Colorado.

(2)

We acquired various mining, special use, water discharge, stormwater and drilling permits, all of which require renewal at various times.

NOTE 7 – ADVANCE PAYMENTS ON EQUITY INVESTMENTS

During 2007, we made a direct $5 million investment through one of our wholly owned subsidiaries to the sellers of the iron ore PRC Properties, which secured our right to purchase these assets and provided the sellers with working capital. The original heads of agreement, that certain Equity and Asset Transfer Heads of Agreement dated May 4, 2007, went through a series of amendments and assignments. On March 17, 2009, we entered into a joint venture with London Mining, whereby the joint venture acquired the PRC Properties from the sellers. The joint venture vehicle was our previously wholly owned subsidiary of China Global Mining Resources (BVI) Ltd, a British Virgin Islands corporation.

F-17

As of December 31, 2008, we only held the rights to acquire these iron ore mining properties and, therefore, we continued to record the $5 million as an advanced payment for the eventual purchase of the iron ore properties until such time as we had some type of resolution. Effective with the consummation of the joint venture on March 17, 2009, we still considered this $5 million advance to be an advance still due back from the sellers and not a partial payment on the purchase of the iron ore properties. We have since decided, due to the voluminous amendments and transfers of rights and the joint venture’s delay in making the additional payments required to the seller under the purchase agreement, that the re-payment of this $5 million, in any event, will be a long-term event. Since we could not obtain certification as to the assurance of the repayment, we made the assessment that an impairment was appropriate and therefore, we impaired this original advance to $0 at December 31, 2009.

NOTE 8 – RESTRICTED CASH ESCROWED FOR DEBT REPAYMENT

On December 16, 2009, London Mining negotiated terms with us to reduce our outstanding debt with London Mining. In connection with the agreement, we paid $2,000,000 to be held in escrow until final terms were negotiated on which debt to apply it against. The funds were released out of an escrow account held by legal counsel of London Mining on January 7, 2010.

NOTE 9 – INVESTMENT IN PARTIALLY-OWNED EQUITY AFFILIATES

Kwagga Gold (Barbados) Limited

We hold a 35% interest in Kwagga Barbados which is accounted for under the equity method. Kwagga Gold (Proprietary) Limited, a wholly owned subsidiary of Kwagga Barbados, holds the mineral exploration rights in the FSC Project. Through December 31, 2007, our previous investment of $2,100,000 was impaired to $0.

In an effort to maintain the permits and land claims of the FSC Project, we entered into a bridge financing arrangement with Hawk Uranium, Inc. (“Hawk”) in 2008, whereby Hawk made a loan to us of $60,000, which was then advanced to Kwagga Barbados. AfriOre, the majority owner (65%) of Kwagga Barbados, has decided not to commit any further resources to this project at this time. Under current accounting guidance, we will recognize 100% of this $60,000 advance as a loss from investments in partially-owned affiliates to coincide with the funds being dispersed by Kwagga Barbados over time. Since the losses relate to exploration activities, an integral part of our operations, the losses are shown in operations under the caption, “Loss from equity investments in partially-owned affiliates.”

Other than maintenance of property and prospecting rights and our submission to the DME, no other exploration activities will be conducted until a consent is issued by the DME. For the year ended December 31, 2009, the Company recognized a net unrealized gain of $2,865 and for the year ended December 31, 2008, the Company recognized a loss of $18,012.

China Global Mining Resources (BVI) Ltd.

On December 17, 2008, we created a new British Virgin Islands corporation and wholly owned subsidiary of ours under the name of China Global Mining Resources (BVI) Limited (“CGMR (BVI)”) to serve as the joint venture entity with London Mining. On December 23, 2008, we sold our 100% equity ownership of China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”) to CGMR (BVI) for $4.8 million, whereby CGMR HK became a wholly owned subsidiary of CGMR (BVI). CGMR HK was assigned all of our rights to acquire the PRC iron ore properties of the Sudan, Xiaonanshan and Matang. Due to this sale occurring between two commonly controlled entities, no gain ($4.8 million) was recorded by the Company. As of December 31, 2008, we owned 100% of both CGMR’s.

F-18

On March 17, 2009, we entered into an amended and restated subscription agreement with London Mining (the “LM Subscription Agreement”), whereby they acquired a 50% equity interest in CGMR (BVI) by paying an aggregate of $38.75 million for 100 A Shares. We hold the remaining 50% equity interest in CGMR (BVI) in the form of 100 ordinary B Shares. All shares have equal voting rights and the board of directors was split equally between the two equity owners as well, subject to the terms of a shareholders’ agreement with London Mining (the “LM Shareholders’ Agreement”). Contemporaneously, CGMR (BVI) (through CGMR HK) completed the acquisition of the PRC Properties. Pursuant to the LM Subscription Agreement, we entered into the LM Shareholders’ Agreement setting forth certain preferences of the A Shares and governance terms applicable to CGMR (BVI). The A Shares carry a preference with respect to return of capital and distributions until such time as an aggregate of $44.5 million (which includes the subscription amount of $38.75 million and $5.75 million in the form of a loan made to us) is returned or distributed to the holders of the A Shares (the “Repayment”). The A Shares preference entitles them to 99% of the distributions of CGMR (BVI) until Repayment, while the B Shares that we hold will receive a 1% distribution, after which time London Mining will be entitled to 60% of the distributions and the Company 40% until the PRC Properties achieve an annual production output of 850,000 tons of iron ore. Upon achievement of such production, the respective holders of the A Shares and the B Shares, each as a class, will be entitled to 50% of the distributions. Additionally, London Mining is entitled under the LM Shareholders’ Agreement to a management fee in the amount of $5.5 million for the first year following the acquisition, and $4.5 million annually thereafter until Repayment. In the event Repayment occurs within three years, we may be entitled to receive a portion of the aggregate management fee paid to London Mining. Under the LM Shareholders’ Agreement, we will be required to indemnify London Mining in the event certain events occur prior to Repayment, including (i) certain payments made under the consulting agreement with Mr. Lu that are to be deferred, (ii) payments incurred in developing Matang, (iii) failure to complete the acquisition of Matang in accordance with the business plan relating to the operation of the PRC Properties, or (iv) a material deviation from the business plan relating to the operation of the PRC Properties. Our indemnification, if any, would be satisfied by the transfer of a number of our B Shares, having a fair market value equal to the indemnified amount as determined under the LM Shareholders’ Agreement. The LM Shareholders’ Agreement further provides for transfer restrictions agreed between the parties, including rights of first refusal, drag along and tag along rights.

In conjunction with the joint venture and under the current accounting guidance for Noncontrolling Interests in Consolidated Financial Statements, we deconsolidated CGMR (BVI) and recorded our retained interest at fair value, estimated to be $387,500. As part of the deconsolidation process, an intercompany note receivable of $4.8 million is no longer eliminated in the consolidated financial statements. Therefore, the $4.8 million unrecognized gain mentioned above is, in effect, realized due to CGMR (BVI) no longer being controlled by the Company. However, due to the distribution ordering rules contained in the aforementioned LM Shareholders’ Agreement, collectability of the $4.8 million note receivable cannot be reasonably assured and will be allowed for as a doubtful account until collection can be reasonably assured. When the fair value of the retained interest ($387,500) is compared to the historical carrying value (negative $1,073,578), the deconsolidation results in a gain of $1,461,078. The $4.8 million note receivable will continue to be carried on the Company’s books at $0, until collectability of the amount can be more reasonably assured.

The Company has a 50% equity interest, equal voting rights and an equal representation on the board. Therefore, the Company can exercise significant influence over the operations and financial policies of the joint venture but does not exercise control. Accordingly, the investment is accounted for under the equity method of accounting. However, because of the aforementioned preferential distribution allocation of 99% to 1%, the Company will continue to record only their 1% proportionate share of income and losses until the preferential distribution to LM is entirely made. Additionally, in 4th quarter 2009, the Company made the determination to impair their entire investment in CGMR (BVI) for the following reasons: (i) the joint venture has a current 2009 loss, (ii) the joint venture missed a significant additional purchase price payment due the seller because of cash flow shortages from operations and (iii) the Company is not certain when, and if they will receive their limited distribution of 1%. Therefore, the Company has impaired the fair value of their retained interest of $387,500 less allocated losses of $6,686 for the period from March 17, 2009 to September 30, 2009 for a net impairment of $380,814. The Company has discontinued recording any further operating losses in 4th quarter 2009 and beyond since their basis cannot go below zero.

F-19

The following table summarizes our investment in partially-owned equity affiliates:

Balance at December 31, 2007	$	—
Advance to Kwagga		60,000
Losses recorded during 2008 from Kwagga		(18,012	)
Balance at December 31, 2008		41,988
Current year advances		—
Net loss recorded during 2009 from Kwagga		(11,566	)
2009 unrealized foreign currency gain		14,431
Loss recorded for CGMR (BVI) activity from March 17, 2009 to September 30, 2009		(6,686	)
Deconsolidation of CGMR (BVI) & HK		387,500
Impairment of CGMR (BVI) & HK		(380,814	)
Balance at December 31, 2009	$	44,853

NOTE 10 – DEBT ISSUANCE COSTS

We recorded debt issuance costs with respect to legal services and promissory notes relating to debt issued during 2009 and 2008. The following table summarizes the amortization of debt issuance costs:

	December 31,
	2009			2008
Debt issuance costs, net, beginning of period	$	7,514		$	16,415
Add: additional debt issuance costs		665,999			67,473
Less: amortization of debt issuance costs		(127,132	)		(76,374	)
Debt issuance costs, net, end of period	$	546,381		$	7,514

NOTE 11 – SHORT-TERM NOTES PAYABLE

The following table summarizes the Company’s short-term notes payable:

	December 31,
	2009		2008
Loan from former board member; $60,000 face amount net of unamortized discount of $7,860 at December 31, 2008; interest rate of 10%, paid in full in 2009.	$	—	$	52,140

Original Platinum V secured loan; interest rate of 10%; accrued interest of $7,959 and $5,349 at December 31, 2009 and 2008, respectively; due February 15, 2010.		110,000		110,000

Promissory note of $50,000 issued as a debt issuance cost; interest rate of 10%, accrued interest of $2,877 at December 31, 2009; secured by personal guaranty of Mr. King, our Chief Executive Officer; due March 8, 2010.		50,000		—

Unsecured loan of $50,000; original interest rate of 2%, lender extended maturity date in exchange of new interest rate of 10% effective January 1, 2010; accrued interest of $1,585 and $564 at December 31, 2009 and 2008, respectively; due June 30, 2010.		50,000		50,000

Unsecured promissory note of $75,000 issued as a debt issuance cost; interest rate of 10%; accrued interest of $1,039 at December 31, 2009; due November 10, 2010.		75,000		—

Unsecured $30,000 loan; interest rate of 0%, repayment of loan is tied to any potential future projects conducted in Chile including, (i) a 50/50 distribution of earnings, profits and/or cash for the first $540,000 in aggregate distributions and, (ii) a 2% non-dilutive net smelter right to the lender (subject to the Company’s right to repurchase at terms to be agreed upon).		30,000		—
Totals	$	315,000	$	212,140

F-20

The weighted average interest rate at December 31, 2009 was 9%.

Summary

The following table summarizes the short-term notes payable balances:

Balance at December 31, 2007	$	234,220
Add: gross proceeds of 2008		966,000
Add: refinancing of China Gold Promissory Notes		9,800,000
Less: original issue discount at time of issuance		(10,000	)
Less: value assigned to warrants		(308,116	)
Add: amortization of original issue discount		304,430
Less: principal payments		(565,000	)
Less: refinancing of short-term China Gold Notes into long-term		(10,209,394	)
Balance at December 31, 2008		212,140
Add: gross proceeds of 2009		580,000
Less: original issue discount		(35,000	)
Less: value assigned to warrants and re-pricing of warrants		(463,770	)
Add: amortization of original issue discount		506,630
Less: principal payments		(485,000	)
Balance at December 31, 2009	$	315,000

NOTE 12 – CONVERTIBLE NOTES PAYABLE

The following table summarizes the Company’s convertible notes:

	December 31,
	2009			2008
London Mining unsecured convertible loan; interest rate 8%; accrued interest of $103,430 and $23,653 at December 31, 2009 and 2008, respectively; convertible at $0.10 per share; due August 22, 2009, currently past due, original terms apply in the default period.	$	1,000,000		$	1,000,000

Original $1.02 million Platinum secured convertible loan net of unamortized discount of $0 and $60,722 at December 31, 2009 and 2008, respectively; stated interest rate of 10%; accrued interest of $28,827 and $48,072 at December 31, 2009 and 2008, respectively; see following description for other terms and changes.		238,746			761,628

Cabo $511,590 secured convertible debenture net of unamortized discount of $46,667 at December 31, 2009; stated interest rate of 12% with an initial effective rate of 18.5%; accrued interest of $41,712 at December 31, 2009; convertible at $0.20 per share; $150,000 payments due April 28, 2010 and 2011 with balance due April 28, 2012. The debenture is secured by the Hunter-Bates Mine.		464,923			—

Burnham $310,000 unsecured convertible loan net of unamortized discount of $33,333 at December 31, 2009; stated interest rate of 0% with an initial effective rate of 58.8%; convertible at the greater of fair market value or $0.05; due March 16, 2010; see following description for additional information.		276,667			—

Other convertible notes; see following description for terms and changes.		250,174			110,000
Totals		2,230,510			1,871,628
Less current portion		(1,915,587	)		(1,871,628	)
Long-term portion	$	314,923		$	—

F-21

Platinum V Senior Secured Convertible Promissory Note

On February 13, 2008, we entered into a Note and Warrant Purchase Agreement (the “Platinum Agreement”) dated February 11, 2008 with Platinum Long Term Growth V, LLC (“Platinum”), pursuant to which we issued to Platinum a 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 with an original maturity date of February 11, 2009 (the “Platinum Note”). The Platinum Note is convertible at any time into shares of our common stock at an initial conversion price of $0.18 per share. The conversion price is further subject to weighted-average anti-dilution adjustments in the event we issue equity or equity-linked securities at a price below the then-applicable conversion price. After August 11, 2008, if the seven trailing trading day volume-weighted average price (“VWAP”) of our common stock is less than $0.30 per share (as appropriately adjusted for any splits, combinations or like events relating to the common stock), the holder shall have the option to: (i) require us to prepay in cash all or any portion of the Platinum Note at a price equal to 115% of the aggregate principal amount to be repaid together with accrued and unpaid interest (“Option 1”) or (ii) demand that all or a portion of the Platinum Note be converted into common stock at a conversion price equal to the lesser of the then-applicable conversion price or 85% of the lowest VWAP for the 10 trading days preceding such demand (“Option 2”).

Pursuant to the Platinum Agreement, we issued Platinum a five-year warrant to purchase up to 2.5 million shares of our common stock at an exercise price of $0.35 per share, which contains a cashless exercise provision beginning any time after August 11, 2008, and further provides for a weighted-average anti-dilution adjustment to the exercise price in the event we issue equity or equity-linked securities at a price below the then-applicable exercise price.

As additional consideration pursuant to the terms of the Platinum Agreement, we agreed to accelerate the vesting of a previously issued warrant (to MHG Consultant LLC, an affiliate of Platinum) to purchase up to 3 million shares of our common stock that was transferred to Platinum at closing, such that the remaining 2.25 million unvested shares underlying such warrant became immediately vested and exercisable. We provided Platinum piggy-back registration rights relating to the shares of common stock issuable upon conversion of the Note and exercise of the warrants. The Platinum Agreement and other transaction documents contain standard representations, warranties, and covenants of the parties.

The recording of the Platinum Note is considered to be conventional convertible debt and resulted in the proceeds of the loan being allocated based on the relative fair value of the debt and warrants. Using the Black-Scholes pricing model to value the 2.5 million warrant issued with the loan and the accelerated vesting of the 2.25 million warrant transferred from MHG to Platinum during the three month period ended March 31, 2008, the relative fair value allocated to the warrants and recorded as a debt discount was $523,367. Furthermore, due to the reduced relative fair value assigned to the convertible debt, the debt had a beneficial conversion feature that was “in-the-money” on the commitment date which totaled $496,633.

F-22

In June 2009, Platinum sold its rights to the Platinum Agreement, including the Platinum Note (along with its $110,000 10% Senior Secured Promissory Note, as described in Note 11 – Short-term Notes Payable), to China Gold. China Gold then resold an aggregate of $400,000 out of its Platinum Note during the remainder of 2009, which retained the original terms as the Platinum Note. On December 17, 2009, we entered into amendments with China Gold on the Platinum Note, whereby the maturity date was amended to be due and payable on demand on or after February 15, 2010 and limited the conversion price, as adjusted, with a floor price of $0.01 per share.

China Gold’s remaining convertible principal balance on its portion of the original Platinum Note is $117,391 (along with $24,492 of accrued interest) as of December 31, 2009.

Of the aggregate $400,000 China Gold sold out of the Platinum Note (in three tranches: $100,000, which was fully converted by December 31, 2009, $150,000 and $150,000) there remains a convertible balance of (i) $71,355 (along with $3,016 of accrued interest) and (ii) $50,000 (along with $1,319 of accrued interest) as of December 31, 2009.

The sale to China Gold by Platinum of its secured convertible note, results in China Gold holding a security interest in all assets of the Company, Hunter Bates and Gregory Gold (a wholly owned subsidiary of Hunter bates), subject to certain priority liens and matters of record.

During the year ended December 31, 2009, we received notices from all holders of the Platinum Note to convert $621,842 of principal and $1,897 of interest into 12,583,076 shares of our common stock at conversion rates from $0.04029 to $0.07300 (a) resulting in additional beneficial conversion charges of $1,825,372 (b).

During the year ended December 31, 2008, we received notices from the holder of the Platinum Note to convert $197,650 of principal into 2,573,030 shares of our common stock at conversion prices from $0.051000 to $0.092905 (a) resulting in beneficial conversion charges of $294,994 (b).

(a)

The conversion prices were calculated pursuant to Option 2 that became effective after August 11, 2008 as described above.

(b)

Because the reset feature occurred resulting in additional shares being issued, an additional beneficial conversion charge was recorded as interest expense and credited to additional paid in capital.

As of December 31 2009, all discounts to the debt for the issuance of warrants and initial beneficial conversion feature have been fully amortized to interest expense.

Burnham Securities and Broadband Capital Management

In April 2008, we engaged Burnham Securities and Broadband Capital Management through respective letter agreements to collectively provide financial advisory and investment banking services to assist in raising the finances for the acquisitions of the PRC Properties, with both companies sharing an equal percentage of the service fee due from a successful closing. At the closing of the joint venture with London Mining on March 17, 2009, Burnham received a partial payment for services rendered. Broadband was not compensated at such time, with an accrued balance to be paid by the joint venture entity, CGMR (BVI).

On September 16, 2009, Burnham Securities, Broadband Capital and the Company executed a termination agreement (the “Broadband Termination Agreement”), pursuant to which we were required to make a $350,000 payment and issue 7,500,000 shares of our unregistered common stock to Broadband Capital in full settlement of our obligations under their April 2008 letter agreement with Broadband Capital, and we received from Broadband Capital a release of any claims and further obligations under the letter agreement with it. Pursuant to the Broadband Termination Agreement, we redeemed the 7,500,000 shares with a payment of $150,000 on December 21, 2009.

F-23

In order to satisfy the $350,000 payment, CGMR (BVI) paid $110,000 in cash and we borrowed $240,000 from Burnham Securities in consideration of an unsecured convertible promissory note with Burnham Securities (the “Burnham Convertible Note”). The Burnham Convertible Note (i) has a face value of $270,000, requiring the recording of a discount fee of $30,000 (which was fully amortized to interest expense by December 16, 2009), (ii) bears no interest, (iii) is convertible (at a rate equal to the greater of fair market value and $0.05 per share) into a maximum of 6,200,000 shares of our common stock, and (iv) since the Burnham Convertible Note was not paid by December 16, 2009, the principal amount increased to $310,000 and become payable upon demand at any time after March 16, 2010. We recorded an additional $40,000 discount fee on December 16, 2009 and will amortize over the remainder of the note period.

Since the fair market value of our common stock was greater than $0.05 per share on the date of issuance, no beneficial conversion charge existed.

Other Third Parties

As of December 31, 2009, other convertible notes consist of the following: total of $285,000 net of unamortized discounts of $34,826; stated interest rates of 10% to 12.25%; accrued interest of $37,795; convertible at $0.01 to $0.08 per share; all notes are due in 2010.

As of December 31, 2008, other convertible notes consist of the following: total of $110,000; stated interest rate of 10%; accrued interest of $11,651; convertible at $0.20 per share; due March 31, 2009.

Summary of All Convertible Notes

The following table summarizes the convertible notes balances:

Balance at December 31, 2007	$	9,843,283
Add: gross proceeds of 2008		2,020,000
Less: value assigned to original beneficial conversion feature and warrants		(1,020,000	)
Less: value assigned to additional beneficial conversion feature and warrants		(314,994	)
Add: amortization of original issue discount and beneficial conversion feature		1,340,989
Less: conversion of principal to common stock		(197,650	)
Less: principal payments		—
Less: refinancing of the four China Gold Notes		(9,800,000	)
Balance at December 31, 2008		1,871,628
Add: gross proceeds received during 2009		545,000
Add: conversion of accrued expenses to principal		489,828
Less: original issue discount at time of issuance of notes		(130,000	)
Less: conversion of principal to common stock		(621,842	)
Less: value assigned to additional beneficial conversion feature and warrants		(2,052,697	)
Add: amortization of original issue discount and beneficial conversion feature		2,128,593
Less: principal payments		—
Balance at December 31, 2009, net of remaining discounts of $114,826		2,230,510
Less: current portion		(1,915,587	)
Long-term portion at December 31, 2009	$	314,923

Convertible debt has the following scheduled annual maturities for the years ending December 31:

2010	$	1,983,746
2011		150,000
2012		211,590
2013		—
2014		—
Thereafter		—
Total	$	2,345,336

F-24

NOTE 13 – OTHER ACCRUED EXPENSES

The Company has recorded a number of expenses relating to its transactions for the acquisition of various global mining properties, consulting agreements and general and administrative expenses. The following table summarizes the ending balances of other accrued expenses by relevant transaction:

	December 31,
	2009		2008
China related transactions (1)	$	39,473	$	1,115,234
Bates-Hunter Mine (2)		360,185		790,519
Hawk Uranium’s management services agreements (3)		—		200,000
FSC Project		123,849		96,804
Other expenses		270,129		230,101
	$	793,636	$	2,432,658

(1)

The decrease from December 31, 2008 to December 31, 2009 is due primarily to the deconsolidation of CGMR (BVI). See Note 9 – Investments in Partially-Owned Equity Method Affiliates, China Gold Mining Resources (BVI) Limited for details.

(2)

The decrease from December 31, 2008 to December 31, 2009 is due primarily to the issuance of a convertible debenture to Cabo Drilling (America) Inc., in satisfaction of an outstanding payable totaling $451,590.

(3)

Effective July 3, 2009, the Company and Hawk entered into a Letter Agreement relating to the payment by the Company of certain management services fees owed to Hawk and the extension of a promissory note issued by the Company in favor of Hawk. H. Vance White is an officer and director of Hawk and served as our Chairman of our Board of Directors until June 10, 2009. Pursuant to the Letter Agreement, we agreed to issue Hawk 3,218,878 unregistered shares of our common stock to satisfy in full an aggregate of $200,000 in management services fees that were payable to Hawk pursuant to the terms of certain management services agreements entered into with Hawk in August 2007 and January 2008.

NOTE 14 – LONG-TERM NOTES PAYABLE

The following table summarizes the Company’s long-term notes payable:

	December 31,
	2009			2008
Note payable - Otten	$	6,189,768		$	5,139,637

Note payable – China Gold		6,009,202			8,557,742

Note payable – London Mining		5,750,000			—

Note payable - Kenglo		3,094,196			—
Totals		21,043,166			13,697,379
Less current portion		(6,009,202	)		(204,248	)
Long-term portion	$	15,033,964		$	13,493,131

F-25

Long-term limited recourse promissory note – Otten

On June 12, 2008, Hunter Bates completed the acquisition of the Bates-Hunter Mine properties, which included land, buildings, equipment, mining claims and permits, financed through a limited recourse promissory note of Hunter Bates payable to Mr. George Otten (on behalf of all of the Sellers) in the principal amount of Cdn$6,750,000 (the “Otten Note”). The Otten Note required an initial payment of Cdn$250,000 due by December 1, 2008, which was subsequently extended multiple times. On June 1, 2009, the parties entered into a standstill letter agreement, whereby the Sellers agreed they would not, prior to August 1, 2009, take any enforcement actions or exercise any rights of default under the Otten Note and extend the initial payment of Cdn$250,000 to July 31, 2009. In consideration for entering into the standstill agreement, two principal payments of Cdn$12,500 were made in June and July 2009. By November 13, 2009, the complete Cdn$250,000 payment was recorded against the Otten Note by paying the remaining balance of $225,000. As of December 31, 2009, the outstanding principal balance is Cdn$6,500,000 (approximately $6,189,768 US).

Commencing on April 1, 2010, a quarterly installment of accrued interest plus a Production Revenue Payment (as defined below) becomes payable. The Otten Note is interest-free until January 1, 2010, and from such date shall bear interest at a rate of 6% per annum, with a maturity date of December 31, 2015. The Otten Note balance reflected a discount (valued at $580,534 and is fully amortized to interest expense as of December 31, 2009) relating to the recourse note being non-interest bearing until the first payment in 2010. Hunter Bates’ payment obligations under the Otten Note is secured by a deed of trust relating to all of the property acquired in favor of Gilpin County Public Trustee for the benefit of Mr. Otten. Hunter Bates is required to make quarterly principal repayments (each a “Production Revenue Payment”) beginning April 1, 2010, which payment(s) shall equal:

For all calendar quarters March 31, 2010 to December 31, 2012, 75% of the profit realized by Hunter Bates for the immediately preceding calendar quarter, and

For calendar quarters ending after December 31, 2012, the greater of (a) 75% of the profit realized by Hunter Bates for the relevant calendar quarter and (b) Cdn$300,000.

Furthermore, if Hunter Bates has not been obligated to make a Production Revenue Payment by December 31, 2012, then beginning on April 1, 2013 and continuing on each payment date until Hunter Bates has become obligated to make a Production Revenue Payment, Hunter Bates shall make principal repayments in the amount of Cdn$550,000. Upon Hunter Bates becoming obligated to make a Production Revenue Payment at anytime after April 1, 2013, Hunter Bates shall make Production Revenue Payments in accordance with #2 above.

The following table summarizes the Otten long-term limited recourse promissory note in US Dollars:

Otten limited recourse note converted into US Dollar equivalent	$	6,736,785
Less: initial discount for imputed interest of the Otten limited recourse note		(580,534	)
Less: unrealized foreign currency gain from the Otten limited recourse note		(1,222,082	)
Add: amortization of imputed interest discount		205,468
Balance at December 31, 2008		5,139,637
Add: unrealized foreign currency loss from the Otten limited recourse note		916,170
Add: amortization of original issue discount		375,067
Less: principal payments		(241,106	)
Balance		6,189,768
Less: current portion		—
Balance at December 31, 2009	$	6,189,768

F-26

Second Amended and Restated Promissory Note with China Gold, LLC

On December 22, 2008, we entered into Amendment No. 3 to Convertible Notes Purchase Agreement (“Amendment No. 3”) with China Gold. Pursuant to Amendment No. 3, the parties consolidated that certain Secured Promissory Note dated October 28, 2008 in the principal amount of $441,000 and that certain Amended and Restated Promissory Note dated November 10, 2008 in the principal amount of $9.8 million into a Second Amended and Restated Promissory Note in the aggregate principal amount of $10,421,107 (the “Consolidated Note”), which reflected the outstanding principal and accrued interest under the existing notes. This refinancing was accounted for as an extinguishment of debt, which resulted in a discount to the Consolidated Note of $1,894,948 in December 2008. The discount is being amortized over the life of the Consolidated Note through February 15, 2010, using the effective interest method.

Pursuant to the Consolidated Note, we received an extension on the maturity dates relating to the prior notes from December 31, 2008 to February 15, 2010. The Consolidated Note accrues interest at a rate of 12.25% per annum with the principal and interest due on demand at any time on or after February 15, 2010.

On March 17, 2009 and contemporaneously with the closing of the joint venture with London Mining, we: (i) made a prepayment to China Gold under the Consolidated Note in the amount of $5.6 million, which included principal of $5,284,041 and accrued interest of $315,959 (China Gold returned $100,000 of the $5.6 million to us resulting in a net amount of $5,184,041 being applied to the outstanding principal balance) and (ii) reduced the exercise price of two warrants to purchase up to an aggregate of 40,082,000 shares of our common stock issued to China Gold to $0.075 per share (from $0.15 and $0.11 under the respective warrants) in consideration for China Gold consenting to a security interest granted to London Mining for a loan made to the Company, which resulted in an additional fair value of $86,200 recorded as a discount to the remaining debt, which is being amortized over the remaining term of the debt to interest expense.

In June 2009, September 2009 and November 2009, we received an additional $100,000, $150,000 and $150,000, respectively, from China Gold under the terms of the existing Consolidated Note.

On December 17, 2009, we entered into Amendment No. 4 (“Amendment No. 4”) to the Convertible Notes Purchase Agreement, pursuant to which the parties (i) consolidated certain loan obligations of ours with China Gold into a Third Amended and Restated Promissory Note dated December 17, 2009 in the principal amount of $6,153,322 (the “Third Amended Note”), which reflected the outstanding principal and interest under such consolidated loan obligations, (ii) amended and modified certain security agreements between the parties to consolidate the security interests of China Gold, (iii) extend and make certain other modifications to Platinum Note and the short-term Platinum $110,000 note, and (iv) reflect certain other agreements between the parties in consideration of certain accommodations made to us by China Gold, from time to time, including without limitation China Gold’s consent to our grant to Kenglo (see further details below) of a security interest that was pari passu to that of China Gold.

Pursuant to Amendment No. 4, the parties consolidated our payment obligations under that certain Second Amended and Restated Promissory Note dated December 22, 2008 in the principal amount of $10,421,107 (the “Prior Note”) and certain other loans made by China Gold to us in the aggregate principal amount of $400,000 into the Third Amended Note. The Third Amended Note accrues interest at a rate equal to 12.25% per annum with the principal and interest due on demand at any time on or after February 15, 2010. The Prior Note and the other loan obligations were cancelled as of the issuance of the Third Amended Note.

China Gold’s security interest under the Purchase Agreement was principally governed by the terms of that certain Amended and Restated Security Agreement dated December 22, 2008 (the “Prior Security Agreement”) and that certain Second Amended and Restated Pledge Agreement dated December 22, 2008 (the “Prior Pledge Agreement”). With the acquisition of the February Note and July Note from a third-party lender in April 2009, China Gold also acquired a security interest in certain other assets of the Wits Basin, Hunter Bates and Gregory Gold, principally pursuant to the terms of that certain Security Agreement dated February 11, 2008 by and between China Gold (as a successor-in-interest), Wits Basin, Hunter Bates and Gregory Gold (the “Platinum Security Agreement”). Pursuant to Amendment No. 4, the parties consolidated the security interests held by China Gold under the Prior Security Agreement and Prior Pledge Agreement with those held pursuant to the Platinum Security Agreement into that certain Second Amended and Restated Security Agreement (the “Amended Security Agreement”) and Third Amended and Restated Pledge Agreement (the “Amended Pledge Agreement”), each dated December 17, 2009 and entered into by and between China Gold, Wits Basin, Hunter Bates and Gregory Gold, resulting in a security interest in all assets of Wits Basin, Hunter Bates and Gregory Gold, subject to certain priority liens and matters of record. Pursuant to the Amended Pledge Agreement, Wits Basin pledged its equity interest in 18,584,544 shares of Standard Gold (constituting approximately 81% of the equity interest in Standard Gold), its 35% equity interest in Kwagga Gold (Barbados) Ltd., and its 50% equity interest in CGMR (BVI), and Hunter Bates pledged its 100% equity interest in Gregory Gold. Pursuant to the terms of a consent to the Kenglo financing as referenced above, China Gold agreed to permit Wits Basin to grant a similar security interest to Kenglo that is pari passu to the security interests set forth in the Amended Security Agreement and Amended Pledge Agreement.

F-27

As consideration for entering into Amendment No. 4 and certain other accommodations that China Gold made to the Company from time to time, including without limitation China Gold’s consent to the Company’s grant to Kenglo of a security interest that is pari passu to the security interest held by China Gold to secure China Gold’s right to repayment of approximately $6,500,000 in obligations of the Company, the Company issued China Gold a five-year warrant to purchase 1,600,000 shares of the Company’s common stock at an exercise price of $0.01, and agreed to modify the terms of that certain warrant to purchase 38,200,000 shares of the Company’s common stock issued on November 10, 2008 (the “November Warrant”) and that certain warrant to purchase 882,000 shares of the Company’s common stock issued on October 28, 2008 (the “October Warrant”) to reduce the exercise price of such Warrants from $0.075 per share to $0.01 per share. The October Warrant was further modified to extend the expiration date from October 28, 2010 to October 28, 2013 as originally intended by the parties. The fair value of the warrants issued, extended and repriced were valued at $400,591 and was recorded as a debt issuance cost in connection with the Kenglo One promissory note more fully discussed below.

As of December 31, 2009, the outstanding principal balance of the China Gold note is $6,153,322 with an unamortized discount balance of $144,120.

Promissory Note with London Mining Plc

Pursuant to the LM Subscription Agreement, London Mining made a loan to us in the aggregate amount of $5.75 million (the “WB Loan Agreement”). The WB Loan Agreement provides for interest at a rate equal to the prime rate plus 2% per annum (subject to a cap of 8%), and the obligation matures on the earlier of January 31, 2014 or upon termination of the LM Shareholders’ Agreement. We used the proceeds of the loan to make: (i) a $5.6 million payment towards our obligation under the China Gold Consolidated Note (as described above) and (ii) reductions in our accounts payable. As of December 31, 2009, the note has accrued interest of $243,524 with an interest rate of 5.25%.

Promissory Note with Kenglo One, Ltd.

On December 14, 2009, we entered into a loan agreement with Kenglo One, Ltd. (“Kenglo”) whereby we issued to Kenglo a secured promissory note in the face amount of $5,000,000 (the “Kenglo Note”) in consideration of a loan of $4,000,000. The Kenglo Note was issued with an original issue discount of $1,000,000, and otherwise bears no interest. The maturity date of the Kenglo Note is February 14, 2011.

As additional consideration for the loan, we issued Kenglo (i) a five-year warrant to purchase 16,000,000 shares of our common stock at an exercise price of $0.10 per share (the “Kenglo Warrant”) and (ii) a third-party option to purchase from Wits Basin 1,299,000 shares of common stock of Standard Gold, Inc. held by the Company at a price per share of $1.00. The Kenglo Warrant contains standard anti-dilution rights, and includes a net exercise right on behalf of Kenglo. The fair value of the warrant was $868,215 based on the Black Scholes pricing model and is being amortized over the term of the loan.

As of December 31, 2009, the outstanding principal balance of the Kenglo Note is $5,000,000 with an unamortized discount balance of $1,905,804.

F-28

Summary

The following table summarizes the long-term notes payable balances:

Balance at December 31, 2007	$	—
Second Amended and Restated China Gold Note		10,421,107
Less: discount on China Gold Note		(1,894,948	)
Otten limited recourse note converted into US Dollar equivalent		6,736,786
Less: discount for imputed interest of the Otten limited recourse note		(580,535	)
Less: unrealized foreign currency gain from the Otten limited recourse note		(1,222,082	)
Add: amortization of OID		237,051
Balance at December 31, 2008		13,697,379
Add: gross proceeds received during 2009		10,784,041
Add: current liabilities converted to principal		982,215
Less: original issue discount		(1,000,000	)
Less: discount value assigned to re-pricing of warrants		(1,062,589	)
Less: unrealized foreign currency loss from the Otten limited recourse note		916,170
Add: amortization of original issue discount		2,251,097
Less: principal payments		(5,525,147	)
Balance, net of remaining discounts of $2,049,924		21,043,166
Less: current portion		(6,009,202	)
Balance at December 31, 2009	$	15,033,964

Long-term debt has the following scheduled annual maturities for the years ending December 31:

2010	$	6,153,322
2011		5,000,000
2012		—
2013		2,095,000
2014		7,845,000
Thereafter		1,999,768
Total	$	23,093,090

NOTE 15 – OTHER LIABILITY

During 2009, the Company in connection with a private placement offering of our common stock and a debt financing transaction, granted the participating investors certain options to purchase Standard Gold (majority owned subsidiary) equity securities from the Company. The Standard Gold options were used as incentives to entice the investors to invest in the Company. The following options were granted:

Kenglo Promissory Note (see Note 14 – Long-term Notes Payable) – includes an option to purchase from the Company 1,299,000 shares of common stock of Standard Gold, Inc. at a price of $1.00 per share.

Private Placement of Wits’ Common Stock (see Note 18 – Shareholders’ Equity) – includes an option to purchase from the Company 630,000 units of Standard Gold, Inc. at a price of $0.50 per unit. Each unit consists of one share of Standard Gold’s common stock and a warrant to purchase a share of Standard Gold common stock at an exercise price of $1.00 per share.

F-29

Since these Standard Gold options were not directly and closely related to the equity of the Company, the estimated total fair value for both of these options was $205,933 and was recorded as a liability classified as “Other Liability” in the balance sheet. This liability will reverse through the statement of operations upon exercise of the options or when the options expire in five years.

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Operating Leases

We currently occupy approximately 160 square feet of office space, together with the use of related adjacent common areas, in Minneapolis, Minnesota pursuant to a lease agreement that expires May 31, 2010. Under the lease, we are required to make monthly payments of $1,261 through May 2010. Total rent expense under the operating lease for the years ended December 31, 2009 and 2008, was $15,746 and $15,140, respectively. Future minimum operating lease commitments for 2010 is approximately $6,305.

NOTE 17 – LEGAL MATTERS

The Company is subject to legal proceedings in the normal course of business. Management believes these proceedings will not have a material adverse effect on the financial statements.

NOTE 18 – SHAREHOLDERS’ EQUITY

Common Stock Issuances

During fiscal 2008, we issued the following shares of our unregistered common stock:

(1)

We issued 5,000,000 shares through the exercise of warrants at prices ranging from $0.01 to $0.15 per share and we received net proceeds of $188,500.

(2)

We entered into agreements with six third party consultants for services in public and investor relations and issued an aggregate of 2,920,000 shares at prices ranging from $0.14 to $0.27 per share, valued at $573,600.

(3)

We issued an aggregate of 272,321 shares in lieu of cash payments for debt and accrued expenses totaling $62,908.

(4)

We issued 3,620,000 shares at $0.205 per share pursuant to the acquisition of the Bates-Hunter Mine totaling $742,100.

(5)

We issued 1,000,000 shares pursuant to Pacific Dawn Capital’s right-to-purchase option, re-priced to $0.06 per share and we received net proceeds of $60,000.

(6)

Through private placements:

(a)

We sold 6,456,666 shares of our common stock at $0.15 per share, resulting in net proceeds of $900,894;

(b)

We sold 125,000 shares of our common stock at $0.20 per share, resulting in net proceeds of $24,348; and

(c)

We sold 1,200,000 units (which included one common share and one warrant) at $0.25 per share, resulting in net proceeds of $300,000.

(7)

Platinum Long Term Growth V, LLC received an aggregate of 7,604,229 shares as follows:

(a)

We issued Platinum 260,268 shares at $0.20 per share in lieu of its interest payment due on June 30, 2008 under its senior secured convertible promissory note (valued at $52,053);

(b)

We issued Platinum 1,000,000 shares through the exercise of a warrant at $0.01 per share and we received net proceeds of $10,000;

(c)

Platinum exercised certain warrants and received 3,770,931 shares of our common stock by surrendering 266,333 of its available shares to pay for the exercise, via the cashless exercise provision; and

F-30

(d)

Platinum converted $197,650 of its senior secured convertible promissory note into 2,573,030 shares at conversion rates ranging from $0.051 to $0.093.

During fiscal 2009, we issued the following shares of our unregistered common stock:

(1)

In June 2009, pursuant to a standstill agreement with the sellers of the Bates-Hunter Mine, we issued 500,000 shares of our common stock to Mr. Otten, as partial compensation for an agreement not to pursue any enforcement actions with respect to our delay in making a Cdn$250,000 principal payment. The fair value of our common stock was $40,000.

(2)

In July 2009, we issued Hawk 3,218,878 shares of our common stock to satisfy in full an aggregate of $250,000 in management services fees plus accrued interest that were payable to Hawk pursuant to the management services agreements. We valued the issuance at $288,699.

(3)

We issued 1,100,000 shares of our common stock to a consultant for services related to the CGMR (BVI) joint venture. The fair value of our common stock was $99,000.

(4)

In consideration of an extension on the maturity date from a note holder, we issued 300,000 shares of common stock. The fair value of our common stock was $20,661.

(5)

During the year, we received notices to convert $623,739 of principal and interest of the original Platinum Long Term Growth V, LLC 10% Senior Secured Convertible Promissory Note and notes recently sold to secondary lenders into 12,583,076 shares of our common stock, conversion rates ranging from $0.04029 to $0.073 per share.

(6)

During 2009, in a private placement, we accepted subscriptions for 6,300,000 shares of our common stock at a price of $0.05 per share and received gross proceeds of $315,000. As additional consideration, the Company entered into a private option with each subscriber, such that for each 200,000 shares of Wits Basin common stock they purchased in the private placement, they hold an option to purchase from Wits Basin 20,000 units (“Standard Gold Units”) of Standard Gold, at a price of $0.50 per Standard Gold Unit. Each Standard Gold Unit consists of one share of Standard Gold common stock and a warrant to purchase a share of Standard Gold common stock at an exercise price of $1.00 per share. Wits Basin purchased 630,000 Standard Gold Units from Standard Gold and is holding the Standard Gold Units in reserve should the option holders exercise their option.

Stock Purchase Warrant Grants

For warrants granted to non-employees in exchange for services, we recorded the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the services is more reliably measurable.

During fiscal 2008, we granted the following warrant issuances:

(1)

Relating to the acquisition of the Bates-Hunter Mine:

(a)

We entered into a common stock purchase agreement with Kenneth Swaisland who previously assigned us certain rights relating to the Bates-Hunter Mine and held the right to receive a warrant to purchase up to 1 million shares of our common stock, which would be granted upon closing of our purchase of the Bates-Hunter Mine. That purchase agreement allowed him the right-to-purchase 125,000 shares of our unregistered common stock at $0.20 per share and provided for the issuance of a new three-year warrant to purchase up to 875,000 shares of our common stock at $0.20 per share in exchange for the termination of his right to receive the 1 million share warrant and thereby provide the Company with cash. In February 2008, Mr. Swaisland purchased the 125,000 shares for $25,000 and we finalized the agreement by issuing a three-year warrant to purchase up to 875,000 shares with an exercise price of $0.20 per share. Since the ratio of shares to warrants exceeded our customary terms pursuant to other private placements that we have conducted, we allocated only 125,000 of the 875,000 warrant to the purchase price of the 125,000 shares. The balance of the 750,000 warrant was valued (utilizing the same assumptions for the 125,000 allocated portion of the warrant issued) at $185,282 and was recorded as a non-cash mining expense, as were all previous transactions with Mr. Swaisland that related to the Bates-Hunter Mine. We received net proceeds of $24,348 (less the $652 of offering costs), which were allocated between the common stock and the 125,000 share warrant based on the relative fair value of the securities at the time of issuance; and

F-31

(b)

We issued a two-year warrant to purchase up to 100,000 shares of our common stock at $0.20 per share to an unaffiliated third party as compensation for introductions relating to the Bates-Hunter Mine, negotiated during 2006. The fair value of the warrant totaled $16,019 and was recorded as an acquisition cost.

(2)

We issued two-year warrants to two consultants to purchase an aggregate of 5,000,000 shares of common stock as follows: a warrant to purchase up to 1,000,000 shares at $0.20 per share, which includes a cash-less exercise provision, valued at $126,887 and a warrant to purchase up to 4,000,000 at $0.01 per share, valued at $600,000, which was exercised for $40,000.

(3)

We issued a five-year warrant to purchase up to 1,200,000 shares of our common stock through a private placement of units of our securities (each unit consisting of one share of our common stock and a five-year warrant to purchase one share of common stock at an exercise price of $0.25 per share). The fair value of the warrant totaled $143,398.

(4)

Relating to loans made to the Company:

(a)

We entered into a Note and Warrant Purchase Agreement with Platinum Long Term Growth V, LLC, pursuant to a 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 and issued a five-year warrant to purchase up to 2,500,000 shares of our common stock at an exercise price of $0.35 per share, which contains a cashless exercise provision and further provides for a weighted-average anti-dilution adjustment to the exercise price in the event we issue equity or equity-linked securities at a price below the then-applicable exercise price. The fair value of the warrant totaled $262,135;

(b)

In consideration of a $160,000 loan, we issued a two-year warrant to purchase up to 160,000 shares of our common stock at $0.15 per share, which includes a cash-less exercise provision. The fair value of the warrant totaled $22,297;

(c)

In consideration of a $50,000 loan, we issued a two-year warrant to purchase up to 50,000 shares of our common stock at $0.20 per share. The fair value of the warrant totaled $7,139;

(d)

In consideration of a $100,000 loan, we issued a two-year warrant to purchase up to 100,000 shares of our common stock at $0.15 per share, which includes a cashless exercise provision. The fair value of the warrant totaled $9,674;

(e)

In consideration of a secured loan of $441,000, we issued a two-year warrant to purchase up to 882,000 shares of our common stock at $0.11 per share. The fair value of the warrant totaled $62,063;

(f)

We entered into a second amendment with China Gold, LLC relating to the Convertible Notes Purchase Agreement, whereby the four Notes were cancelled and we issued an Amended and Restated Promissory Note in the aggregate principal amount of $9,800,000 and in consideration we issued a five-year warrant to purchase up to 39,200,000 shares of the our common stock at an exercise price of $0.15 per share. The fair value of the warrant totaled $3,528,000;

(g)

In consideration of a $60,000 loan, we issued a five-year warrant to purchase up to 250,000 shares of our common stock at $0.125 per share to Hawk Uranium, Inc. The fair value of the warrant totaled $16,842; and

(h)

In consideration of extensions on maturity dates from various note holders, we issued:

(i)

a warrant to purchase up to 200,000 shares of our common stock at $0.20 per share for the maturity date extension on a $110,000 loan;

(ii)

a warrant to purchase up to 100,000 shares of our common stock at $0.15 per share for the maturity date extension on a $50,000 loan; and

(iii)

the aggregate fair value of the warrants totaled $31,000.

During fiscal 2009, we granted the following warrant issuances:

(1)

In consideration of a maturity date extension pursuant to the November 2008 $60,000 loan from Hawk, we issued a five-year warrant to purchase up to 50,000 shares of our common stock at $0.20 per share, which includes a cash-less exercise provision. The fair value of the warrant totaled $2,903.

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(2)

In consideration of an additional extension to the Hawk loan in #1 above, we issued to Hawk a five-year warrant to purchase up to 150,000 shares of common stock at an exercise price of $0.15 per share. The fair value of the warrant totaled $10,217.

(3)

In consideration of our issuance of a secured promissory note in the face amount of $5,000,000, we issued a five-year warrant to purchase up to 16,000,000 shares of our common stock at $0.10 per share. The fair value of the warrant totaled $868,215.

(4)

In consideration of China Gold, LLC providing, from time to time, accommodations to debt instruments, we issued a five-year warrant to purchase up to 1,600,000 shares of common stock at an exercise price of $0.01 per share. The fair value of the warrant totaled $144,000.

(5)

In consideration of certain loan accommodations made to us by Pioneer Holdings, LLC, an affiliate of China Gold, LLC, from time to time, we issued to Pioneer five-year warrants to purchase an aggregate of 7,000,000 shares of common stock at an exercise price of $0.01 per share. The aggregate fair value of the warrants totaled $630,000.

Using the Black-Scholes pricing model, the following assumptions were used to calculate the fair value of the stock purchase warrants granted, for which the fair value of the services were not more reliably measurable: (i) during 2009: dividend yield of 0%, risk-free interest rate of 1.9% to 2.8%, expected life equal to the contractual life between two and five years, and volatility of 145% to 149% and (ii) during 2008: dividend yield of 0%, risk-free interest rate of 2.0% to 3.1%, expected life equal to the contractual life between two and five years, and volatility of 147% to 152%.

The following table summarizes information about the Company’s warrants:

	Number			Weighted Average Exercise Price		Range of Exercise Price		Weighted Remaining Contractual Life
Outstanding at December 31, 2007		27,430,238		$	0.53	$	0.01 – $7.15

Granted		50,617,000			0.15		0.01 – 0.35
Cancelled or expired		(6,258,800	)		1.39		0.12 – 7.15
Exercised (1)		(10,037,264	)		0.02		0.01 – 0.15
Outstanding at December 31, 2008		61,751,174			0.21		0.01 – 1.50

Granted		24,800,000			0.07		0.01 – 0.20
Cancelled or expired		(8,504,771	)		0.50		0.20 – 1.50
Exercised		—			—		—
Outstanding at December 31, 2009		78,046,403		$	0.06	$	0.01 – $0.35	3.9 years

Warrants exercisable at December 31, 2009		78,046,403		$	0.06	$	0.01 – $0.35

(1) Pursuant to a cashless exercise provision, Platinum surrendered 266,333 of its available shares to pay for its cashless exercise of 3,770,931 shares, with an exercise price of $0.01 per share, during 2008.

Option Grants

We have five stock option plans: the 1999 Stock Option Plan, the 2000 and 2003 Director Stock Option Plans, the 2001 Employee Stock Option Plan and the 2007 Stock Incentive Plan. Stock options, stock appreciation rights, restricted stock and other stock and cash awards may be granted under the plans. In general, options vest over a period ranging from immediate vesting to five years and expire 10 years from the date of grant. Additionally, we have two non-plans, each titled “Non-Plan Stock Options” which are outside of the five plans listed above. As of December 31, 2009, an aggregate of 21,250,000 shares of our common stock were originally available to be granted under our plans and non-plans as determined by the board of directors, of which 1,664,000 are available for future issuances.

F-33

On April 10, 2008, we entered into an employment agreement and stock option agreement with our Chief Financial Officer, Mark D. Dacko, whereby we issued Mr. Dacko a ten-year stock option to purchase up to 600,000 shares of our common stock at an exercise price of $0.21, the closing price on the day prior to the grant. The option shall vest in equal quarterly installments of 50,000 shares over three years, with the first 50,000 vesting on April 10, 2008.

On April 10, 2008, we appointed Donald S. Stoica, to serve as a member of our board of directors. In consideration of Mr. Stoica’s agreement to serve on the board, we awarded Mr. Stoica a ten-year option to purchase up to 400,000 shares of our common stock at an exercise price of $0.21 per share, the closing price on the prior business day. The option vests in equal semiannual installments of 100,000 shares each over two years, with the first installment vesting June 30, 2008.

On May 29, 2008, we entered into an employment agreement and a stock option agreement with Stephen D. King, whereby we issued Mr. King a ten-year option to purchase up to 2,000,000 shares of our common stock at an exercise price of $0.20 per share (the “2008 Option”). The 2008 Option shall vest in three equal annual installments commencing on the first anniversary of the date of the grant. Effective May 29, 2008, Mr. King transferred the 2008 Option into the name of his spouse, Deborah King. As further consideration of the employment agreement, we entered into an amended and restated stock option agreement with Mrs. King to purchase up to 3,000,000 shares of our common stock at an exercise price of $1.02 per share (the “2007 Option”), amending the terms of an option agreement originally entered into with Mr. King dated March 9, 2007, but subsequently transferred to Mrs. King on March 12, 2007. The 2007 Option amends the terms of the vesting schedule, whereby the vesting is reduced from six years to provide for vesting in three equal annual installments commencing March 9, 2008. The vesting of both the 2008 Option and the 2007 Option shall accelerate (i) at such time the closing price of our common stock (as quoted on the OTCBB or an exchange) remains at or above $1.00 per share for 30 trading days, (ii) upon Mr. King’s death, (iii) upon the occurrence of a change of control or (iv) upon our termination of Mr. King’s employment for any reason other than Cause.

No stock options were granted in 2009.

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for employee stock awards. Compensation expense for employee stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance based awards, the Company recognizes the expense when the performance condition is probable of being met.

In determining the compensation cost of the options granted during fiscal 2008, the fair value of each option grant had been estimated on the date of grant using the Black-Scholes pricing model and the weighted average assumptions used in these calculations are summarized below:

	2009		2008
Risk-free interest rate		N/A		3.13%
Expected volatility factor		N/A		150% - 151%
Expected dividend		N/A		—
Expected option term		N/A	10 years

The weighted average Black-Scholes fair value of options granted during 2008 was $0.20. We recorded $1,306,298 and $2,065,156 related to employee stock compensation expense for the years ended December 31, 2009 and 2008, respectively, relating to share options granted and modifications to existing options. All stock compensation expense is included in general and administrative expense. There was no tax benefit from recording this non-cash expense due to our income tax valuation allowance and due to a portion of the options being incentive stock options. The compensation expense had a $0.01 and $0.02 per share impact on the loss per share for the years ended December 31, 2009 and 2008, respectively. As of December 31, 2009, approximately $796,000 of total unrecognized compensation expense is expected to be recognized over a period of approximately two years.

F-34

The following table summarizes information about the Company’s stock options:

	Number of Options			Weighted Average Exercise Price
Options outstanding - December 31, 2007		13,659,500		$	0.53

Granted		3,000,000			0.20
Canceled or expired		(16,000	)		4.25
Exercised		—			—
Options outstanding - December 31, 2008		16,643,500			0.47

Granted		—			—
Canceled or expired		(1,000,000	)		0.43
Exercised		—			—
Options outstanding - December 31, 2009		15,643,500		$	0.47

Options exercisable - December 31, 2009		11,560,167		$	0.48

The following tables summarize information about stock options outstanding at December 31, 2009:

	Options Outstanding
Range of Exercise Prices	Number Outstanding		Weighted Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$0.15 to $0.30		7,025,000	6.9 years	$	0.23	$	—
$0.31 to $0.43		3,850,000	5.5 years	$	0.36	$	—
$0.56 to $1.02		4,706,000	4.0 years	$	0.87	$	—
$2.75 to $3.00		62,500	1.2 years	$	2.84	$	—
$0.15 to $3.00		15,643,500	5.7 years	$	0.47	$	—

	Options Exercisable
Range of Exercise Prices	Number Exercisable		Weighted Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$0.15 to $0.30		4,441,667	7.2 years	$	0.23	$	—
$0.31 to $0.43		3,350,000	5.8 years	$	0.37	$	—
$0.56 to $1.02		3,706,000	3.0 years	$	0.83	$	—
$2.75 to $3.00		62,500	1.2 years	$	2.84	$	—
$0.15 to $3.00		11,560,167	5.4 years	$	0.48	$	—

(1) The aggregate intrinsic value in the table represents the difference between the closing stock price on December 31, 2009 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on December 31, 2009. No options were exercised during 2009 or 2008.

F-35

NOTE 19 – RELATED PARTY TRANSACTIONS

Stephen D. King

Stephen D. King is our Chief Executive Officer and a member of our Board of Directors.

Corporate Resource Management, Inc.

Hawk Uranium Inc.

H. Vance White is an officer and director of Hawk and served as our Chairman of our Board of Directors until June 10, 2009.

In August 2007, we entered into a management services agreement with Hawk, which agreement expired on December 31, 2007 and required a $100,000 payment, which was accrued but not paid as of December 31, 2008. In January 2008, we entered into a new management services agreement with Hawk, which agreement expired on December 31, 2008 and required a $100,000 payment, which was also accrued but not paid as of December 31, 2008.

In November 2008, we entered into a bridge financing arrangement with Hawk, whereby Hawk made a loan to the Company of $60,000 in consideration of a 90-day promissory note, which bore interest at a rate of 10%. The proceeds of the financing are being expressly used to maintain the permits and land claims of the FSC Project. In consideration of the loan, we issued a five-year warrant to purchase up to 250,000 shares of our common stock. In March 2009, we received an extension until April 20, 2009 on the maturity date and for such extension we reduced the exercise price of the five-year warrant from $0.125 per share to $0.0625 per share. The Hawk loan was satisfied on December 24, 2009.

F-36

On July 3, 2009, the Company and Hawk entered into a Letter Agreement relating to the payment by the Company of management services fees owed to Hawk and the extension of a promissory note issued by the Company in favor of Hawk. Pursuant to the Letter Agreement, we agreed to issue Hawk 3,218,878 unregistered shares of our common stock to satisfy in full an aggregate of $200,000 in management services fees that were payable to Hawk pursuant to the terms of management services agreements.

NOTE 20 – INCOME TAXES

The Company estimates that at December 31, 2009 it had cumulative net operating loss carryforwards for tax purposes of approximately $11,924,000 for both federal and state purposes. These carryforwards, if not used, will begin to expire in 2023. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. During 2009, the Company had a change of ownership as defined under IRC Section 382. Although the Company has not performed a formal Section 382 study, it appears that the NOL carryforwards from 2008 would be limited to approximately $390,000 per year. Due to the Section 382 ownership change, the $18,807,000 NOL carryforward from 2008 is being reduced to $7,800,000 of useable carryforward. Future ownership changes could significantly further limit the use of the NOL. In addition, a number of the Company's deferred tax assets will likely be considered capital assets and therefore, if the transactions result in a loss, they would create a capital loss. Capital losses have a five year carryforward and can only be offset by capital gains. There can be no assurance of future capital gain income to offset any potential capital losses.

Significant components of the Company’s estimated deferred tax assets and liabilities at December 31:

Deferred tax assets:	2009			2008
Net operating loss carryforwards	$	4,889,000		$	7,711,000
Exploration rights		5,640,000			3,274,000
Expenses related to warrants and options		3,113,000			2,168,000
Accrued liabilities and other		1,699,000			1,632,000
Total deferred tax asset		15,341,000			14,785,000
Valuation allowance		(15,341,000	)		(14,785,000	)
	$	—		$	—

The income tax provision consists of the following for the years ended December 31:

	2009			2008
Current tax provision	$	—		$	—
Deferred tax provision		(556,000	)		(3,424,000	)
Valuation allowance		556,000			3,424,000
Total income tax provision	$	—		$	—

Reconciliation between the statutory rate and the effective tax rate for the years ended December 31:

	2009			2008
Federal statutory tax rate		(35.0	)%		(35.0	)%
State taxes, net of federal benefit		(6.0	)%		(6.0	)%
Permanent differences		10.5	%		14.0	%
382 adjustment		29.2	%		—
Valuation allowance		1.3	%		27.0	%
Effective tax rate		—			—

At December 31, 2009, the Company fully reserved its net deferred tax assets totaling $15,341,000, recognizing that the Company has incurred losses since inception of exploration stage and there is no assurance that future years will be profitable.

F-37

NOTE 21 – EARNINGS (LOSS) PER SHARE

The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share for the years ended December 31:

	2009			2008
Basic earnings (loss) per share calculation:
Net income (loss) attributable to Wits Basin common shareholders	$	(15,378,918	)	$	(12,907,209	)
Weighted average of common shares outstanding		152,024,653			129,674,425

Basic net earnings (loss) per share	$	(0.10	)	$	(0.10	)

Diluted earnings (loss) per share calculation:
Net income (loss) attributable to Wits Basin common shareholders	$	(15,378,918	)	$	(12,907,209	)
Basic weighted average common shares outstanding		152,024,653			129,674,425
Options, convertible debentures and warrants			(1)			(2)
Diluted weighted average common shares outstanding		152,024,653			129,674,425

Diluted net income (loss) per share	$	(0.10	)	$	(0.10	)

(1)

As of December 31, 2009, we had (i) 15,643,500 shares of common stock issuable upon the exercise of outstanding stock options, (ii) 78,046,403 shares of common stock issuable upon the exercise of outstanding warrants and (iii) reserved an aggregate of 29,513,304 shares of common stock issuable under outstanding convertible debt agreements. These 123,203,207 shares, which would be reduced by applying the treasury stock method, were excluded from diluted weighted average outstanding shares amount for computing the net loss per common share, because the net effect would be antidilutive for the period presented.

(2)

As of December 31, 2008, we had (i) 16,643,500 shares of common stock issuable upon the exercise of outstanding stock options, (ii) 61,751,174 shares of common stock issuable upon the exercise of outstanding warrants and (iii) reserved an aggregate of 19,547,528 shares of common stock issuable under outstanding convertible debt agreements. These 97,942,202 shares, which would be reduced by applying the treasury stock method, were excluded from diluted weighted average outstanding shares amount for computing the net loss per common share, because the net effect would be antidilutive for the period presented.

NOTE 22 – SUBSEQUENT EVENTS

In January 2010, the secondary holder of a portion of the Platinum long-term convertible promissory note converted $50,000 plus $1,586 of accrued interest into 776,072 shares of our common stock.

In March 2010, Burnham Securities converted $100,000 of principal (of its $310,000 convertible promissory note) into 1,250,000 shares of our common stock.

F-38

In March 2010, the Company issued 833,592 shares of its common stock to a lender as payment in lieu of cash on a $50,000 June 9, 2009 short-term promissory note, which included $3,708 of accrued interest.

Effective March 10, 2010, the Company’s board of directors, with the recommendation of the compensation committee, reduced the exercise price of Clyde Smith’s, the Company’s President, 2,000,000 options from $0.31 to $0.20 per share and accelerated the remaining unvested 500,000 options to be vested.

F-39

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EXHIBIT 4.4

THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS (“BLUE SKY LAWS”).  NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH BOTH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY SUCH REGISTRATION OR EXEMPTION.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  KO-1

Date:  December 14, 2009

This certifies that, for value received, Kenglo One Ltd., or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Sixteen Million (16,000,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of Ten Cents ($0.10) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until the date five (5) years from the date hereof (the “Exercise Period”), at which time all of Holder’s rights hereunder shall expire.

On the last day of the Exercise Period, if this Warrant has not previously been exercised it will be deemed exercised by Net Exercise pursuant to Section 1 below, provided that on such date the fair market value of one Share is greater than the Exercise Price.

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

1.           Exercise of Warrant.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to any fractional shares of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above indicated), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares.  The Corporation agrees that the Shares so purchased shall be deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment for such Shares shall have been made as aforesaid.  Certificates for the Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

In lieu of exercising this Warrant as specified above, the Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Exercise Price of such Shares by (b) the fair market value of one Share (a “Net Exercise”).  The fair market value of the Shares shall be determined as set forth below.

If the Company’s common stock is traded in a public market and the Shares are common stock, the fair market value of each Share shall be the closing price of a Share reported for the business day immediately before Holder delivers its Notice of Exercise to the Company (or in the instance where the Warrant is exercised immediately prior to the effectiveness of the Company’s initial public offering, the “price to public” per share price specified in the final prospectus relating to such offering).  If the Company’s common stock is traded in a public market and the Shares are preferred stock, the fair market value of a Share shall be the closing price of a share of the Company’s common stock reported for the business day immediately before Holder delivers its Notice of Exercise to the Company (or, in the instance where the Warrant is exercised immediately prior to the effectiveness of the Company’s initial public offering, the initial “price to public” per share price specified in the final prospectus relating to such offering), in both cases, multiplied by the number of shares of the Company’s common stock into which a Share is convertible.  If the Company’s common stock is not traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.

2.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)           Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)           This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)           The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion of counsel is reasonably satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws;  provided, however, that this Warrant may be sold or transferred to an Affiliate (as defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) of the Holder without the Holder obtaining an opinion of counsel provided that (i) such assignee is an accredited investor within the meaning of the Securities Act, (ii) the Holder has given prior written notice to the Company.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)           Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

3.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

4.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.05 per Share.

(b)           Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 4(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability company, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability company, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

5.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership" of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Corporation, Holder may waive the provisions of this Section 5, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

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

7.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

8.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

9.           Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

10.           Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

11.           Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

12.           Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

13.           Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.5 5 v181039_ex4-5.htm

EXHIBIT 4.5

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER APPLICABLE SECURITIES LAWS.

AMENDED AND RESTATED

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  CG1.2

Date:  December 17, 2009

This certifies that, for value received, China Gold, LLC or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Eight Hundred Eighty-Two Thousand (882,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until October 28, 2013, at which time all of Holder’s rights hereunder shall expire.  This Amended and Restated Warrant modifies and supersedes in its entirety that certain Warrant CG1 of the Corporation dated October 28, 2008 issued in favor of Holder to purchase 882,000 shares of Common Stock at an exercise price of $0.11 per share.  Holder has delivered the original Warrant CG1 to the Corporation marked “cancelled,” and Holder and the Corporation hereby agree that Warrant CG1 shall no longer have any force or effect.

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

1.           Exercise of Warrant.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to any fractional shares of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above indicated), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares (or exercise pursuant to Section 2 below).  The Corporation agrees that the Shares so purchased shall be deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment for such Shares shall have been made as aforesaid.  Certificates for the Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

2.           Cashless Exercise.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not to as any fractional share of Common Stock) by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above named), together with a notice of cashless exercise.  Upon surrender of this Warrant and receipt of a notice of cashless exercise, the Holder shall be entitled to receive (without payment by the Holder of any exercise price) that number of Shares equal to the number of Shares subject to such notice of cashless exercise multiplied by a fraction, the numerator of which shall be the difference between (i) the Fair Market Value of one share of Common Stock and (ii) the Exercise Price, and the denominator of which shall be the Fair Market Value of one share of Common Stock.  For purposes of this Warrant, “Fair Market Value” of the Common Stock shall be determined as follows (as applicable):  (a) if the Common Stock is traded on an exchange, then the average closing or last sale prices, respectively, reported for the date of conversion; (b) if the Common Stock is traded in or quoted on an over-the-counter market, then the average of the closing bid and asked prices reported on the date of conversion; or (c) if the Common Stock is not traded on an exchange or traded or quoted on an over-the-counter market, then fair market value of such stock will be determined by the Company’s board of directors, acting in good faith utilizing customary business valuation criteria and methodologies (without discount for lack of marketability or minority interest).

3.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)          Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)          This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)          The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion and counsel are satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)          Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

4.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

5.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)          Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.01 per Share.

(b)          Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)          Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 5(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability Corporation, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability Corporation, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

6.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership" of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Issuer, Holder may waive the provisions of this Section 6, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

7.           Piggyback Registration Rights.  If at any time within two (2) years after complete exercise of this Warrant the Corporation proposes to register under the 1933 Act (except by a Form S-4 or Form S-8 Registration Statement or any successor forms thereto) or qualify for a public distribution under Section 3(b) of the 1933 Act, any of its securities, it will notify the Holder hereof at least twenty (20) days prior to each such filing and will use its best efforts to include in the Registration Statement (to the extent permitted by applicable regulation) the Shares purchased or purchasable by the Holder upon the exercise of the Warrant to the extent requested by the Holder hereof within ten (10) days after receipt of notice of such filing (which request shall specify the interest in this Warrant or the Shares intended to be sold or disposed of by such Holder and describe the nature of any proposed sale or other disposition thereof). The Holder of this Warrant agrees to cooperate with the Corporation in the preparation and filing of any Registration Statement, and in the furnishing of information concerning the Holder for inclusion therein, or in any efforts by the Corporation to establish that the proposed sale is exempt under the 1933 Act as to any proposed distribution.

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

9.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

10.         Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

11.         Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

12.         Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

13.         Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

14.         Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

15.         Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.6 6 v181039_ex4-6.htm

EXHIBIT 4.6

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER APPLICABLE SECURITIES LAWS.

AMENDED AND RESTATED

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  CG2.4

Date:  December 17, 2009

This certifies that, for value received, China Gold, LLC or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Thirty-Eight Million Two Hundred Thousand (38,200,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until November 10, 2013, at which time all of Holder’s rights hereunder shall expire.  This Amended and Restated Warrant modifies and supersedes in its entirety that certain Warrant CG2 of the Corporation dated November 10, 2008 issued in favor of Holder to purchase 39,200,000 shares of Common Stock at an exercise price of $0.15 per share.  Holder has delivered the original Warrant CG2 to the Corporation marked “cancelled,” and Holder and the Corporation hereby agree that Warrant CG2 shall no longer have any force or effect.

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

1.           Exercise of Warrant.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to any fractional shares of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above indicated), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares (or exercise pursuant to Section 2 below).  The Corporation agrees that the Shares so purchased shall be deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment for such Shares shall have been made as aforesaid.  Certificates for the Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

2.           Cashless Exercise.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not to as any fractional share of Common Stock) by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above named), together with a notice of cashless exercise.  Upon surrender of this Warrant and receipt of a notice of cashless exercise, the Holder shall be entitled to receive (without payment by the Holder of any exercise price) that number of Shares equal to the number of Shares subject to such notice of cashless exercise multiplied by a fraction, the numerator of which shall be the difference between (i) the Fair Market Value of one share of Common Stock and (ii) the Exercise Price, and the denominator of which shall be the Fair Market Value of one share of Common Stock.  For purposes of this Warrant, “Fair Market Value” of the Common Stock shall be determined as follows (as applicable):  (a) if the Common Stock is traded on an exchange, then the average closing or last sale prices, respectively, reported for the date of conversion; (b) if the Common Stock is traded or quoted on an over-the-counter market, then the average of the closing bid and asked prices reported on the date of conversion; or (c) if the Common Stock is not traded on an exchange or traded or quoted on an over-the-counter market, then fair market value of such stock will be determined by the Company’s board of directors, acting in good faith utilizing customary business valuation criteria and methodologies (without discount for lack of marketability or minority interest).

3.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)           Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)           This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)           The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion and counsel are satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)           Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

4.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

5.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.01 per Share.

(b)           Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 5(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability Corporation, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability Corporation, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

6.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership" of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Issuer, Holder may waive the provisions of this Section 6, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

7.           Piggyback Registration Rights.  If at any time within two (2) years after complete exercise of this Warrant the Corporation proposes to register under the 1933 Act (except by a Form S-4 or Form S-8 Registration Statement or any successor forms thereto) or qualify for a public distribution under Section 3(b) of the 1933 Act, any of its securities, it will notify the Holder hereof at least twenty (20) days prior to each such filing and will use its best efforts to include in the Registration Statement (to the extent permitted by applicable regulation) the Shares purchased or purchasable by the Holder upon the exercise of the Warrant to the extent requested by the Holder hereof within ten (10) days after receipt of notice of such filing (which request shall specify the interest in this Warrant or the Shares intended to be sold or disposed of by such Holder and describe the nature of any proposed sale or other disposition thereof). The Holder of this Warrant agrees to cooperate with the Corporation in the preparation and filing of any Registration Statement, and in the furnishing of information concerning the Holder for inclusion therein, or in any efforts by the Corporation to establish that the proposed sale is exempt under the 1933 Act as to any proposed distribution.

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

9.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

10.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

11.           Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

12.           Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

13.           Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

14.           Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

15.           Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.7 7 v181039_ex4-7.htm

EXHIBIT 4.7

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER APPLICABLE SECURITIES LAWS.



WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  CG3

Date:  December 17, 2009

This certifies that, for value received, China Gold, LLC or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), One Million Six Hundred Thousand (1,600,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until December 17, 2014, at which time all of Holder’s rights hereunder shall expire.

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

1.           Exercise of Warrant.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to any fractional shares of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above indicated), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares (or exercise pursuant to Section 2 below).  The Corporation agrees that the Shares so purchased shall be deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment for such Shares shall have been made as aforesaid.  Certificates for the Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

2.           Cashless Exercise.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not to as any fractional share of Common Stock) by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the Corporation’s books at any time within the period above named), together with a notice of cashless exercise.  Upon surrender of this Warrant and receipt of a notice of cashless exercise, the Holder shall be entitled to receive (without payment by the Holder of any exercise price) that number of Shares equal to the number of Shares subject to such notice of cashless exercise multiplied by a fraction, the numerator of which shall be the difference between (i) the Fair Market Value of one share of Common Stock and (ii) the Exercise Price, and the denominator of which shall be the Fair Market Value of one share of Common Stock.  For purposes of this Warrant, “Fair Market Value” of the Common Stock shall be determined as follows (as applicable):  (a) if the Common Stock is traded on an exchange, then the average closing or last sale prices, respectively, reported for the date of conversion; (b) if the Common Stock is traded or quoted on an over-the-counter market, then the average of the closing bid and asked prices reported on the date of conversion; or (c) if the Common Stock is not traded on an exchange or traded or quoted on an over-the-counter market, then fair market value of such stock will be determined by the Company’s board of directors, acting in good faith utilizing customary business valuation criteria and methodologies (without discount for lack of marketability or minority interest).

3.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)          Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)          This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)          The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion and counsel are satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)          Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

4.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

5.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.01 per Share.

(b)          Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 5(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability Corporation, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability Corporation, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

6.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership" of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Issuer, Holder may waive the provisions of this Section 6, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

7.           Piggyback Registration Rights.  If at any time within two (2) years after complete exercise of this Warrant the Corporation proposes to register under the 1933 Act (except by a Form S-4 or Form S-8 Registration Statement or any successor forms thereto) or qualify for a public distribution under Section 3(b) of the 1933 Act, any of its securities, it will notify the Holder hereof at least twenty (20) days prior to each such filing and will use its best efforts to include in the Registration Statement (to the extent permitted by applicable regulation) the Shares purchased or purchasable by the Holder upon the exercise of the Warrant to the extent requested by the Holder hereof within ten (10) days after receipt of notice of such filing (which request shall specify the interest in this Warrant or the Shares intended to be sold or disposed of by such Holder and describe the nature of any proposed sale or other disposition thereof). The Holder of this Warrant agrees to cooperate with the Corporation in the preparation and filing of any Registration Statement, and in the furnishing of information concerning the Holder for inclusion therein, or in any efforts by the Corporation to establish that the proposed sale is exempt under the 1933 Act as to any proposed distribution.

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

9.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

10.         Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

11.         Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

12.         Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

13.         Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

14.         Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

15.         Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.8 8 v181039_ex4-8.htm

EXHIBIT 4.8

THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS (“BLUE SKY LAWS”).  NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH BOTH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY SUCH REGISTRATION OR EXEMPTION.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  PH-3

Date:  December 17, 2009

This certifies that, for value received, Pioneer Holding, LLC, or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Two Million (2,000,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until the date five (5) years from the date hereof, at which time all of Holder’s rights hereunder shall expire.

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

               1.           Exercise of Warrant

(a)           Exercise for Cash. The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office in Minneapolis, Minnesota, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Corporation at any time within the period above named), and upon payment to it by cash, certified check or bank draft, electronic wire transfer or pursuant to the cashless-exercise provision of Section 1.(b) of the purchase price for such Shares.  The Corporation agrees that the Shares so purchased shall have and are deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Certificates for the Shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised, and provided that it is prior to the Termination Date, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

(b)           Cashless Exercise.  Upon receipt of a notice of cashless exercise, the Corporation shall deliver to the Holder (without payment by the Holder of any exercise price) that number of Shares that is equal to the quotient obtained by dividing (x) the value of the Warrant on the date that the Warrant shall have been surrendered (determined by subtracting the aggregate exercise price for the Shares in effect on the Exercise Date from the aggregate Fair Market Value (hereinafter defined) for the Shares) by (y) the Fair Market Value of one share of Common Stock.  A notice of “cashless exercise” shall state the number of Shares as to which the Warrant is being exercised.  “Fair Market Value” for purposes of this Section (b) shall mean the average of the Common Stock closing prices reported by the principal exchange on which the Common Stock is traded, for the ten (10) business days immediately preceding the Exercise Date or, in the event no public market shall exist for the Common Stock at the time of such cashless exercise, Fair Market Value shall mean the fair market value of the Common Stock as the same shall be determined in the good faith discretion of the Board of Directors, after full consideration of all factors then deemed relevant by such Board in establishing such value, including by way of illustration and not limitation, the per share purchase price of Common Stock or per security convertible into one share of Common Stock of the most recent sale of shares of Common Stock or securities convertible into Common Stock by the Corporation after the date hereof all as evidenced by the vote of a majority of the directors then in office.

2.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)           Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)           This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)           The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion of counsel is reasonably satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws;  provided, however, that this Warrant may be sold or transferred to an Affiliate (as defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) of the Holder without the Holder obtaining an opinion of counsel provided that (i) such assignee is an accredited investor within the meaning of the Securities Act, (ii) the Holder has given prior written notice to the Corporation.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)           Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

3.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

4.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.05 per Share.

(b)           Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 4(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability company, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability company, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

5.          Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership” of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Corporation, Holder may waive the provisions of this Section 5, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

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

7.          Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

8.          Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

9.          Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

10.        Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

11.        Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

12.        Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

13.        Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.9 9 v181039_ex4-9.htm

EXHIBIT 4.9

THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS (“BLUE SKY LAWS”).  NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH BOTH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY SUCH REGISTRATION OR EXEMPTION.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  PH-4

Date:  December 17, 2009

This certifies that, for value received, Pioneer Holding, LLC, or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Three Million (3,000,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until the date five (5) years from the date hereof, at which time all of Holder’s rights hereunder shall expire.

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

1.           Exercise of Warrant.

(a)           Exercise for Cash. The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office in Minneapolis, Minnesota, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Corporation at any time within the period above named), and upon payment to it by cash, certified check or bank draft, electronic wire transfer or pursuant to the cashless-exercise provision of Section 1.(b) of the purchase price for such Shares.  The Corporation agrees that the Shares so purchased shall have and are deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Certificates for the Shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised, and provided that it is prior to the Termination Date, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

(b)           Cashless Exercise.  Upon receipt of a notice of cashless exercise, the Corporation shall deliver to the Holder (without payment by the Holder of any exercise price) that number of Shares that is equal to the quotient obtained by dividing (x) the value of the Warrant on the date that the Warrant shall have been surrendered (determined by subtracting the aggregate exercise price for the Shares in effect on the Exercise Date from the aggregate Fair Market Value (hereinafter defined) for the Shares) by (y) the Fair Market Value of one share of Common Stock.  A notice of “cashless exercise” shall state the number of Shares as to which the Warrant is being exercised.  “Fair Market Value” for purposes of this Section (b) shall mean the average of the Common Stock closing prices reported by the principal exchange on which the Common Stock is traded, for the ten (10) business days immediately preceding the Exercise Date or, in the event no public market shall exist for the Common Stock at the time of such cashless exercise, Fair Market Value shall mean the fair market value of the Common Stock as the same shall be determined in the good faith discretion of the Board of Directors, after full consideration of all factors then deemed relevant by such Board in establishing such value, including by way of illustration and not limitation, the per share purchase price of Common Stock or per security convertible into one share of Common Stock of the most recent sale of shares of Common Stock or securities convertible into Common Stock by the Corporation after the date hereof all as evidenced by the vote of a majority of the directors then in office.

2.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)           Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)           This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)           The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion of counsel is reasonably satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws;  provided, however, that this Warrant may be sold or transferred to an Affiliate (as defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) of the Holder without the Holder obtaining an opinion of counsel provided that (i) such assignee is an accredited investor within the meaning of the Securities Act, (ii) the Holder has given prior written notice to the Corporation.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)           Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

3.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

4.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.05 per Share.

(b)           Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 4(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability company, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability company, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

5.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership” of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Corporation, Holder may waive the provisions of this Section 5, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

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

7.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

8.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

9.           Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

10.          Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

11.          Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

12.          Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

13.          Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-4.10 10 v181039_ex4-10.htm

EXHIBIT 4.10

THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS (“BLUE SKY LAWS”).  NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH BOTH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY SUCH REGISTRATION OR EXEMPTION.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

WITS BASIN PRECIOUS MINERALS INC.

Warrant No.:  PH-5

Date:  December 17, 2009

This certifies that, for value received, Pioneer Holding, LLC, or its successors or assigns (collectively, the “Holder”), is entitled to purchase from Wits Basin Precious Minerals Inc. (the “Corporation”), Two Million (2,000,000) fully paid and nonassessable shares (the “Shares”) of the Corporation’s common stock, par value $.01 per share (the “Common Stock”), at an exercise price of One Cent ($0.01) per Share (the “Exercise Price”), subject to adjustment as herein provided.  This Warrant may be exercised by Holder at any time from and after the date hereof until the date five (5) years from the date hereof, at which time all of Holder’s rights hereunder shall expire.

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

1.           Exercise of Warrant.

(a)           Exercise for Cash. The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Corporation’s principal office in Minneapolis, Minnesota, or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Corporation at any time within the period above named), and upon payment to it by cash, certified check or bank draft, electronic wire transfer or pursuant to the cashless-exercise provision of Section 1.(b) of the purchase price for such Shares.  The Corporation agrees that the Shares so purchased shall have and are deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Certificates for the Shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding 30 days, after the rights represented by this Warrant shall have been so exercised, and provided that it is prior to the Termination Date, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.  The Corporation may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant.

(b)           Cashless Exercise.  Upon receipt of a notice of cashless exercise, the Corporation shall deliver to the Holder (without payment by the Holder of any exercise price) that number of Shares that is equal to the quotient obtained by dividing (x) the value of the Warrant on the date that the Warrant shall have been surrendered (determined by subtracting the aggregate exercise price for the Shares in effect on the Exercise Date from the aggregate Fair Market Value (hereinafter defined) for the Shares) by (y) the Fair Market Value of one share of Common Stock.  A notice of “cashless exercise” shall state the number of Shares as to which the Warrant is being exercised.  “Fair Market Value” for purposes of this Section (b) shall mean the average of the Common Stock closing prices reported by the principal exchange on which the Common Stock is traded, for the ten (10) business days immediately preceding the Exercise Date or, in the event no public market shall exist for the Common Stock at the time of such cashless exercise, Fair Market Value shall mean the fair market value of the Common Stock as the same shall be determined in the good faith discretion of the Board of Directors, after full consideration of all factors then deemed relevant by such Board in establishing such value, including by way of illustration and not limitation, the per share purchase price of Common Stock or per security convertible into one share of Common Stock of the most recent sale of shares of Common Stock or securities convertible into Common Stock by the Corporation after the date hereof all as evidenced by the vote of a majority of the directors then in office.

2.           Transferability.  This Warrant is issued upon the following terms, to which Holder consents and agrees:

(a)           Until this Warrant is transferred on the books of the Corporation, the Corporation will treat the Holder of this Warrant, registered as such on the books of the Corporation, as the absolute owner hereof for all purposes without effect given to any notice to the contrary.

(b)           This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.

(c)           The Warrant may not be transferred, and the Shares issuable upon exercise of this Warrant, may not be transferred without the Holder obtaining an opinion of counsel, which opinion of counsel is reasonably satisfactory to the Corporation, stating that the proposed transaction will not result in a prohibited transaction under the Securities Act and applicable Blue Sky Laws;  provided, however, that this Warrant may be sold or transferred to an Affiliate (as defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) of the Holder without the Holder obtaining an opinion of counsel provided that (i) such assignee is an accredited investor within the meaning of the Securities Act, (ii) the Holder has given prior written notice to the Corporation.  By accepting this Warrant, the Holder agrees to act in accordance with any conditions imposed on such transfer by any such opinion of counsel.

(d)           Neither the issuance of this Warrant nor the issuance of the Shares issuable upon exercise of this Warrant have been registered under the Securities Act.

3.           Certain Covenants of the Corporation.  The Corporation covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or his property.  The Corporation covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and available, free of preemptive or other rights, for the purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the full exercise of the rights represented by this Warrant.

4.           Adjustment of Exercise Price and Number of Shares.  The Exercise Price and number of Shares are subject to the following adjustments:

(a)           Stock Dividend, Stock Split or Stock Combination.   If (i) any dividends on any class of the Corporation’s capital stock payable in Common Stock or securities convertible into or exercisable for Common Stock (collectively, “Common Stock Equivalents”) shall be paid by the Corporation, (ii) the Corporation shall divide its then-outstanding shares of Common Stock into a greater number of shares, or (iii) the Corporation shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) equal to the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the Exercise Price in effect immediately prior to such event, divided by (y) the total number of shares of Common Stock outstanding immediately after such event.  No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.01 per Share; but any such adjustment not required then to be made shall be carried forward and shall be made at the time and together with the any subsequent adjustment(s) which, together with any adjustment(s) so carried forward, shall amount to not less than $.05 per Share.

(b)           Number of Shares Issuable on Exercise of Warrants.  Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase, at the adjusted Exercise Price, the number of Shares, calculated to the nearest full Share, equal to the quotient of (i) the product of (A) the number of Shares issuable under this Warrant (as then adjusted pursuant hereto prior to the current adjustment), multiplied by (B) the Exercise Price in effect prior to such adjustment, divided by (ii) the adjusted Exercise Price.

(c)           Notice of Adjustment.  Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares of Common Stock issuable upon the exercise of the Warrant, then, and in each such case, the Corporation shall within 30 days thereafter give written notice thereof, by first-class mail, postage prepaid, addressed to each Holder as shown on the books of the Corporation.  Any such notice shall state the adjusted Exercise Price and adjusted number of Shares issuable upon the exercise of the Warrant, and shall set forth in reasonable detail the methods of calculation of such adjustments and the facts upon which such calculations were based.

(d)           Effect of Reorganization, Reclassification or Merger.  If at any time while this Warrant is outstanding there should be (i) any reorganization of the Corporation’s capital stock (other than splits or combinations of Common Stock contemplated by and provided for in Section 4(a)), (ii) any consolidation or merger of the Corporation with another corporation, limited liability company, partnership or other business entity, or any sale, conveyance, lease or other transfer by the Corporation of all or substantially all of its property to any other corporation, limited liability company, partnership or other business entity, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of the Corporation’s capital stock payable in capital stock of a different class, other securities of the Corporation, or other Corporation property (other than cash), then the Corporation shall use its best efforts to ensure that, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Corporation or of the successor entity (or, as applicable, a parent corporation of such successor entity) resulting from a consolidation or merger, or of the entity to which the property of the Corporation has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer.  In any such case, appropriate adjustments (as determined by the Corporation’s board of directors) shall be made in the application of the provisions of this Warrant to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger.

5.           Limitation of Exercise of Warrant.  Notwithstanding anything to the contrary herein, Holder may not exercise all or any portion of this Warrant during the time period and to the extent that the shares of Common Stock that Holder could acquire upon such exercise would cause the Beneficial Ownership (as defined below) of Common Stock held by Holder and its affiliates to exceed 4.99%.  The parties shall compute “Beneficial Ownership” of Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.  Holder will, at the request of the Corporation, from time to time, notify the Corporation of Holder’s computation of Holder’s Beneficial Ownership.  By written notice to Corporation, Holder may waive the provisions of this Section 5, but any such waiver will not be effective until the 61st day after delivery thereof.  Nothing herein shall preclude Holder or its affiliates from disposing of a sufficient number of other shares of Common Stock beneficially owned by Holder or its affiliates so as to thereafter permit the exercise of all or any portion of this Warrant.

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

7.           Loss or Mutilation.  Upon receipt by the Corporation from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to the Corporation, and in case of mutilation upon surrender and cancellation hereof, the Corporation will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, however, in the case of mutilation no indemnity shall be required if this Warrant in identifiable form is surrendered to the Corporation for cancellation.

8.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law provisions.

9.           Amendments and Waivers.  The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Corporation agrees in writing and has obtained the written consent of the Holder.

10.         Successors and Assigns.  All the terms and conditions of this Warrant shall be binding upon and inure to the benefit of the permitted successors and assigns of the Corporation and Holder.

11.         Headings and References.  The headings of this Warrant are for convenience only and shall not affect the interpretation of this Warrant.  Unless the context indicates otherwise, all references herein to Sections are references to Sections of this Warrant.

12.         Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing.  Notices sent to the Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her or its address set forth in the Corporation’s records.  Notices sent to the Corporation shall be mailed, hand delivered or faxed and confirmed to Wits Basin Precious Minerals Inc., c/o Mark D. Dacko, 900 IDS Center, 80 South Eight Street, Minneapolis, MN 55402-8773, or to such other address as the Corporation or the Holder shall notify the other as provided in this Section.

13.         Counterparts.  This warrant may be executed by the Corporation and attested to in counterparts.

In Witness Whereof, the Corporation has caused this Warrant to be signed by its duly authorized officer on the date first set forth above.

WITS BASIN PRECIOUS MINERALS INC.:

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-10.65 11 v181039_ex10-65.htm Unassociated Document

EXHIBIT 10.65

LOAN AGREEMENT

This Loan Agreement (the “Agreement”) is entered into as of the 14th day of December, 2009, by and among Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), and Kenglo One Ltd. (the “Lender”).

INTRODUCTION

A.   The Company is in need of financing and wishes to issue to the Lender, and the Lender desires to purchase from the Company, a $5,000,000 secured promissory note in the form attached hereto as Exhibit A (the “Note”).

B.    As additional consideration for Lender’s purchase of the Note, the Company shall issue to Lender (i) a warrant to purchase 16 million shares of the Company’s common stock at an exercise price of $0.10 per share, in the form attached hereto as Exhibit B (the “Warrant”), and (ii) an option to purchase from the Company 1.299 million shares of common stock of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) at an exercise price of $1.00 per share, in the form attached hereto as Exhibit C (the “Standard Gold Option”).

C.    As a condition of the Loan (as defined below), the Company is required to (i) grant Lender a security interest in the assets of the Company, on a pari passu basis with China Gold, LLC, the Company’s senior lender (“China Gold”) pursuant to the terms of a Security Agreement attached hereto as Exhibit D (the “Security Agreement”), and (ii) obtain the consent of London Mining Plc, a joint venture partner of the Company (“London Mining”), as to the release of US$4,000,000 from escrow in China with respect to the acquisition by China Global Mining Resources Limited, a British Virgin Islands corporation (“CGMR”), or its subsidiaries, of iron ore properties in China.  As of the date hereof, the Company has obtained the consent of China Gold permitting the pari passu security interest of Lender, as attached hereto as Exhibit E (the “China Gold Consent”) and London Mining has released such funds from escrow.

D.    The parties wish to enter into an agreement in connection with the financing, in the form of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing facts and premises hereby made a part of this Agreement, the mutual promises hereinafter set forth and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

Article 1

Sale and Purchase of Securities

1.1          Sale and Purchase.  On the terms and conditions hereof, the Company hereby issues and sells to the Lender, and the Lender hereby purchases from the Company, for an aggregate purchase price of US$4,000,000 (the “Purchase Price”):

(a)           the Note;

(b)           the Warrant; and

(c)           the Standard Gold Option.

1.2          Closing.  The closing of the transactions contemplated and effected hereby (the “Closing”) have taken place on the date hereof by the Company’s and Lender’s release of closing documents (as set forth below) to the other, either by facsimile transmission followed by original documentation delivered by overnight courier, or in such other manner agreed upon by the parties (referred to herein as the “Closing Date”).  At the Closing, the Company will issue, sell and deliver to the Lender the Note, the Warrant and the Standard Gold Option against payment of the Purchase Price by certified check or wire transfer of immediately available funds, in either case pursuant to instructions delivered by the Company to Lender at or prior to the Closing.

Article 2

Company Representations and Warranties

The Company hereby makes the following representations and warranties to the Lender as of the Closing Date.

2.1          Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota.  The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Note, the Warrant, the Standard Gold Option and the Security Agreement (together, the “Transaction Documents”), to issue and sell the shares of the Company’s common stock issuable upon exercise of the Warrant (the “Warrant Shares”), to carry out the provisions of the Transaction Documents, and to carry on its business as presently conducted and as presently proposed to be conducted.  The Company is duly qualified and is authorized to do business and is in good standing in each jurisdiction in which the nature of its activities makes such qualification necessary, except for those jurisdictions in which failure to be so qualified would not have a materially adverse effect on the Company or its business, taken as a whole.

2.2          Authorization;  Binding Obligations.  All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization of the Transaction Documents, the performance of all obligations of the Company hereunder, including the authorization, sale, issuance and delivery of the Warrant Shares upon exercise of the Warrant, has been taken.  The Transaction Documents, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their respective terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and according to general principles of equity that restrict the availability of equitable remedies.

2.3          Securities.  Assuming the accuracy of the representations and warranties of the Lender contained in Article 3 hereof, the offer, issue, sale and transfer (as applicable) of the Note, the Standard Gold Option, the shares of common stock of Standard Gold transferred upon exercise of the Standard Gold Option (the “Option Shares”), the Warrant and the Warrant Shares (collectively, the “Securities”) is and will be exempt from registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), and are exempt from registration and qualification under the requirements of all applicable state securities laws.  The Company and its representatives have complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Securities.

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2.4          Outstanding Indebtedness.  Except for the Note and the indebtedness set forth on Schedule 2.4 hereof, the Company does not have secured indebtedness with any lender incurred as the result of a direct borrowing of money in an amount exceeding $100,000.  Except as set forth on Schedule 2.4, the Company is not in default in the payment of the principal of or interest or premium on any such secured indebtedness (including, without limitation, any indebtedness owed to China Gold), and no event has occurred or is continuing under the provisions of any instrument, document or agreement evidencing or relating to any such secured indebtedness which with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder.  The Company is not committed or obligated to make any loan or advance to any person or entity.

2.5          Capitalization. Immediately prior to the Closing, the authorized capital stock of the Company consists of 300,000,000 shares of common stock, par value $0.01 per share, of which 172,527,710 shares are issued and outstanding.  All such issued and outstanding shares have been duly authorized and validly issued, are fully paid and nonassessable.   Additionally, the Company has reserved for issuance an aggregate of 103,145,385 shares of its common stock pursuant to the valid exercise of outstanding rights, options, warrants, conversion rights or other agreements to acquire Company common stock.

2.6          Consents.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration, or filing with, any corporation, person or firm or any public, governmental or judicial authority (“Consents”), is required on the part of the Company in connection with the valid execution and delivery of this Agreement or any other of the Transaction Documents, or the consummation of any other transaction contemplated hereby or thereby, except as such as have been duly obtained or made, as the case may be, and any such Consents are in full force and effect except for notices required or permitted to be filed with certain state and federal securities commissions after the execution hereof, which notices, if any, will be filed on a timely basis.  Without limiting the foregoing, the issuance of the Warrant and any Warrant Shares issuable upon exercise thereof is not subject to preemptive or other similar statutory or contractual rights that have not been duly and effectively waived.

2.7          Compliance with Other Instruments.  The Company is not, and will not by virtue of entering into and performing under this Agreement, the other Transaction Documents or the transactions contemplated hereby and thereby, be in violation of or conflict with any term of its Articles of Incorporation or Bylaws or any term or provision of any material mortgage, indenture, lease, license, contract, agreement, instrument, judgment or decree to which it is a party or by which it is bound, and is not, and will not by virtue of entering into and performing under this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, be in violation of any order addressed specifically to the Company nor any material statute, rule or regulation applicable to the Company.

2.8          Disclosure.  Neither this Agreement nor any other document, certificate or written statement furnished to the Lender by or on behalf of the Company required by this Agreement or any other Transaction Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading.

Article 3

Lender’s Representations and Warranties

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

3.1          Investment Representations.  The Lender understands that neither the offer or the sale of the Securities have been registered under the Securities Act.  The Lender also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in material part upon the Lender’s representations contained in the Agreement.  In this regard, the Lender additionally represents and warrants as follows:

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(a)           The Lender has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company.  The Lender must bear the economic risk of this investment indefinitely unless the Securities are registered for resale pursuant to the Securities Act, or an exemption from registration is available.  The Lender has no present intention of selling or otherwise transferring the Securities, or any interest therein.  The Lender also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the Lender to transfer all or any portion of the Securities under the circumstances, in the amounts or at the times the Lender might wish.  Lender represents and agrees that if, contrary to the foregoing representations and warranties, Lender should later desire to dispose of or transfer all or any portion of the Securities in any manner, Lender shall not do so without complying with applicable securities laws.

(b)           The Lender is acquiring the Securities for the Lender’s own account, for investment only, and not with a view towards their public distribution.  Lender is not aware of any occurrence, event or circumstance upon the happening of which Lender intends to transfer or sell the Securities.  Lender has been informed that, in the view of the certain state securities commissions, a purchase of Securities with a current intent to resell, by reason of any foreseeable specific contingency or anticipated change in market values, any change in the condition of the Company or the investment market as a whole, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Securities, would represent a purchase with an intent inconsistent with the representations set forth above, and that certain state securities commissions might regard such sale or disposition as a deferred sale with regard to which an exemption from registration is not available.

(c)           The Lender represents that by reason of its (or its management’s or advisor’s) business or financial experience, the Lender has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement and the Securities.  Further, the Lender is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement.

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

3.2         High Risk.  The Securities offered hereby are highly speculative in nature and an investment therein involves a high degree of risk, including but not limited to the risk of losing the entire investment in such Securities.

3.3         No Governmental Approval.  No federal or state agency, including the Securities and Exchange Commission under the Securities Act or the securities commission or authority of any state, has approved or disapproved the Securities, passed upon or endorsed the merits of the issuance of Securities or the accuracy or adequacy of any information provided by the Company, or made any finding or determination as to the fairness or fitness of the Securities for sale.

3.4         No Reliance.  Lender has been encouraged to rely upon the advice of its legal counsel, accountants or other financial advisors with respect to tax and other considerations relating to the purchase of the Securities and Shares pursuant hereto.  Lender is not relying upon the Company with respect to the economic considerations involved in determining to make an investment in the Securities.

4

3.5         Access to Information.  Lender has been given access to full and complete information regarding the Company and has utilized such access to Lender’s satisfaction for the purpose of obtaining information respecting the Company.  Particularly, Lender has been given reasonable opportunity to meet with and/or contact Company representatives for the purpose of asking questions of, and receiving answers from, such representatives concerning the terms and conditions of the issuance of the Securities and to obtain any additional information, to the extent reasonably available, necessary to verify the accuracy of information about the Company already obtained.

Article 4

Security

To secure the full and timely payment and performance of the Company’s obligations under this Agreement and the Note, as a condition to the Closing, the Company shall grant the Lender a security interest (the “Security Interest”) in the assets of the Company, whether now owned or later acquired or created, and including all proceeds therefrom, whether cash or non-cash (collectively, the “Collateral”) pursuant to the terms of the Security Agreement.  Pursuant to the terms of the China Gold Consent, the Security Interest is pari passu with the security interests held by China Gold with respect to the Collateral.  Lender hereby agrees prior to December 31, 2009 to negotiate in good faith with China Gold the terms of an intercreditor agreement between Lender and China Gold pertaining to the pari passu security interests held by each party in the assets of the Company, which intercreditor agreement shall be consistent with agreements of China Gold under the China Gold Consent.  The Company agrees to use its best efforts to (i) cause Section 4 of that certain Promissory Note of CGMR issued in favor of the Company in the principal amount of $4,800,000 to be amended to provide that the Lender receive its pro rata share of any payments made under such note in the same respect as China Gold and (ii) cause that certain Shareholders' Agreement dated March 17, 2009 related to CGMR to be amended to allow transfers of shares held by the Company under such agreement to the Lender in the same manner that transfers from the Company to China Gold are allowed.

Article 5

General Provisions

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

5.2         Governing Law.  This Agreement shall be governed by the laws of the State of Minnesota without regard to its conflicts-of-law principles.

5.3         Payment of Fees and Expenses of the Lender.  The Company will promptly reimburse the Lender for reasonable legal expenses payable to Oppenheimer Wolff & Donnelly LLP, counsel to the Lender, incurred in connection with the transactions contemplated by this Agreement, including, without limitation, reasonable legal expenses related to the proposed intercreditor agreement between Lender and China Gold; provided that, in no event shall the Company’s obligation to provide reimbursement to Lender exceed US$10,000.  The Company will be solely responsible for its own legal costs incurred in performing its obligations in this transaction.

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

5

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

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

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

(a)           if to the Company, at

Wits Basin Precious Minerals Inc.

80 South Eighth Street, Suite 900

Minneapolis, Minnesota  55402

Attention:  Mark Dacko, Chief Financial Officer

Facsimile:  (612) 395-5276

(b)

if to the Lender, in care of:

Kenglo One Ltd.

c/o Baccata Trustees Limited

Third Floor, Conway House

Conway Street

St. Helier, Jersey  JE2 3NT

Channel Islands

Attention:  Mrs. Ann Williams

Facsimile:  44 1534 870 671

with a copy of such notice (which shall not constitute notice to the Lender) to:

Oppenheimer Wolff & Donnelly LLP

45 South Seventh Street

Plaza VII, Suite 3300

Minneapolis, MN 55402

Attn:  Patrice H. Kloss

Facsimile:  (612) 607-7100

5.8         Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement binding on the parties.  Facsimile and electronically transmitted signatures shall be valid and binding to the same extent as original signatures.

5.9         Further Assurances.  Each party hereby agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and the transactions contemplated hereby.

Signature Page Follows

6

IN WITNESS WHEREOF, the parties hereto have set their hands to this Loan Agreement to be effective as of the date first set forth above.

COMPANY:

LENDER:

WITS BASIN PRECIOUS MINERALS INC.

KENGLO ONE, LTD.

By:

/s/ Stephen D. King

By:

/s/ Ann Williams

Its:

CEO

Its:

Director

Signature Page

Loan and Security Agreement

SCHEDULE 2.4

Secured Indebtedness in excess of $100,000

1.           Wits Basin has outstanding obligations to China Gold, LLC in the principal amounts of (i) $5,487,066 and (ii) $227,391.  The obligations set forth in subsection (ii) had a maturity date of February 15, 2009, and Wits Basin has been in constant discussions with China Gold since such time.  The parties are currently negotiating an extension of the note obligations set forth in subsection (ii).

2.           Wits Basin has outstanding obligations to Cabo Drilling (America) Inc. in the principal amount of $511,589.59.

3.           Hunter Bates has an outstanding obligation to George E. Otten (on behalf of the sellers of the Bates-Hunter property) in the principal amount of $6,428,500.  Hunter Bates is now a wholly owned subsidiary of Standard Gold, Inc., of which Wits Basin currently holds a majority interest.

EXHIBIT E

CONSENT OF CHINA GOLD, LLC

WHEREAS, China Gold, LLC, a Kansas limited liability company (“Lender”), is a party to that certain Convertible Notes Purchase Agreement dated as of April 10, 2007 (as amended  the “Purchase Agreement”) with Wits Basin Precious Minerals Inc., a Minnesota corporation (“Wits Basin”), pursuant to which Wits Basin has (i) issued Lender that certain Promissory Note dated December 22, 2008 in the aggregate principal amount of $10,241,000 (as amended, the “Note”), (ii) entered into with Lender that certain Amended and Restated Security Agreement dated December 22, 2009 (the “Security Agreement”), (iii) entered into with Lender that certain Second Amended and Restated Pledge Agreement dated December 22, 2008 (as amended, the “Pledge Agreement”; collectively, the Purchase Agreement, the Note, the Security Agreement the Pledge Agreement and all such related documents entered into pursuant to the Purchase Agreement are herein referred to as the “CG Documents”); and

WHEREAS, Lender, as a successor-in-interest, is a party to that certain Note and Warrant Purchase Agreement dated on or around February 11, 2008 (the “Platinum Agreement”) with Wits Basin, pursuant to which Wits Basin has (i) issued to Lender that certain 10% Senior Secured Convertible Promissory Note, in the original principal amount of $1,020,000 on or about February 11, 2008 and that certain 10% Senior Secured Promissory Note, in the original principal amount of $110,000 issued by Wits Basin to Lender on or about July 10, 2008 (collectively, the “Platinum Notes”), and (ii) entered into with Lender that certain Security Agreement dated February 11, 2008 by and between Lender and Wits Basin (the “Platinum Security Agreement; collectively, the Platinum Agreement, the Platinum Notes, the Platinum Security Agreement and all such related documents entered into pursuant to the Platinum Agreement are herein referred to as the “Platinum Documents”); and

WHEREAS, pursuant to the CG Documents and the Platinum Documents, China Gold holds a security interest in (i) all of Wits Basin's assets, including in Wits Basin's equity interest in its wholly and majority-owned subsidiaries and (ii) assets of certain of Wits Basin's subsidiaries pursuant to security agreements with such subsidiaries (collectively, the “Assets’); and

WHEREAS, Wits Basin has been in negotiations with Kenglo One Ltd. (“Kenglo”) with respect to a proposed loan of $4,000,000 to Wits Basin (the “Loan”) in consideration of a promissory note of Wits Basin in the principal face amount of $5,000,000 (the “Kenglo Note”) and certain other considerations of Wits Basin; and

WHEREAS, as a condition of Kenglo in making the Loan, Kenglo requires that Wits Basin secure the payment and performance of the Kenglo Note (and the other applicable Loan documents) with a security interests in the Assets on a pari passu basis with Lender (provided that the proceeds of any collateral shall be allocated ratably in accordance with the then outstanding balance of payment obligations of Wits Basin to the respective lenders).

NOW THEREFORE,

Lender hereby acknowledges that the terms of the aforementioned transactions as referenced herein are as currently contemplated by Wits Basin and Kenglo, but may be amended through negotiation through negotiation or otherwise by the parties involved prior to completion. In consideration of the Loan and other good consideration, the sufficiency of which is acknowledged by Lender, Lender hereby: (i) to the extent required pursuant to the CG Documents and Platinum Documents, provides any necessary consents to the Loan and the issuance of the Kenglo Note; (ii) permits Wits Basin's grant to Kenglo of a security interest against the Assets that is pari passu to that of Lender's security interest and equal in all respects to Lender's security interest in the Assets (provided that the proceeds of any collateral shall be allocated ratably in accordance with the then outstanding balance of payment obligations of Wits Basin to the respective lenders), (iii) agrees that, regardless of any priority otherwise available to either of Lender or Kenglo pursuant to law or by agreement, Lender and Kenglo shall each hold equal first priority liens in the Assets, including, without limitation, in any securities or stock that are subject to the Pledge Agreement and the Security Agreement; (iv) agrees with respect to any Investment Property (as such term is defined in the Uniform Commercial Code adopted in the State of Minnesota) which Lender holds possession of pursuant to the Pledge Agreement or the Security Agreement (the “Pledged Property”), to hold and possess such Pledged Property for the equal benefit of Kenglo; and (v) agrees that Kenglo, along with Lender, has “control” (as such term is defined in the Uniform Commercial Code adopted in the State of Minnesota) of the Pledged Property. Lender further agrees prior to December 31, 2009, to negotiate in good faith with Kenglo the terms of an intercreditor agreement between Lender and Kenglo pertaining to the pari passu security interests held by each party in the Assets, including, without limitation, the Pledged Property, which intercreditor agreement shall be consistent with the foregoing agreements by Lender.

IN WITNESS WHEREOF, this Consent has been duly executed effective this 10 day of December, 2009.

LENDER:

China Gold, LLC,

a Kansas limited liability company

By:

/s/ C. Andrew Martin

Name:

C. Andrew Martin

Title:

Manager

ACKNOWLEDGED AND AGREED as of

the 14 day of December, 2009:

KENGLO ONE LTD.

By:

/s/ Ann Williams

Its:

Director

EX-10.66 12 v181039_ex10-66.htm

EXHIBIT 10.66

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION (TOGETHER, THE “SECURITIES LAWS”) AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ENCUMBERED IN THE ABSENCE OF COMPLIANCE WITH SUCH SECURITIES LAWS AND UNTIL THE ISSUER THEREOF SHALL HAVE RECEIVED AN OPINION FROM COUNSEL REASONABLY ACCEPTABLE TO IT THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY APPLICABLE SECURITIES LAWS.

SECURED PROMISSORY NOTE

US$5,000,000

December 14, 2009

FOR VALUE RECEIVED, Wits Basin Precious Minerals Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), hereby unconditionally promises to pay to Kenglo One Ltd., or its successors and assigns (the “Holder”), on or before February 14, 2011 (the “Maturity Date”), the principal sum of Five Million U.S. Dollars (US$5,000,000.00) (the “Principal”).

This Secured Promissory Note (“Note”) is issued pursuant to the terms of that certain Loan Agreement dated as of December 14, 2009 by and between the Company and Holder (the “Loan Agreement”), in consideration of a loan by Holder to the Company of US$4,000,000.  This Note shall be deemed to be issued with an original issue discount of US$1,000,000, and no additional interest shall accrue on the Principal hereunder.  Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Loan Agreement.

1.           Payment.  All payments of Principal on this Note shall be made at such place as the Holder shall designate to the Company in writing.  If any payment of Principal on this Note is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day.  “Business Day” means any day other than a Saturday, Sunday or legal holiday in the State of Minnesota.

2.           Prepayment.  This Note may be prepaid in cash or other immediately available funds, in whole or in part by the Company at any time and from time to time, without premium or penalty.  At Holder’s option, any payments on this Note shall be applied first to pay Holder for all costs of collection of any kind, including reasonable attorneys’ fees and expenses, and thereafter to the payment of Principal.

3.           Security.  The full and timely payment of this Note shall be secured pursuant to the terms of that certain Security Agreement dated of even date herewith by and between Issuer and Holder.

4.           Events of Default.  The occurrence of any of the following events shall constitute a “Event of Default” under this Note:  (a) the Company fails to pay any monetary obligation under this Note when due in accordance with the terms hereof; (b) the Company fails to cure a default in the payment of any indebtedness for borrowed money exceeding $50,000 owing to any other entity or person within the cure period, if any, applicable to such default and the default shall not have been waived in writing; (c) the occurrence of any violation under any document related to the Company’s indebtedness to China Gold, including, without limitation, any loan agreement, note or security agreement; (d) any representation or warranty set forth herein or in the Loan Agreement or any other Transaction Document shall be untrue in any material respect on the date as of which the facts set forth are stated or certified; (e) the Company violates any provision of a Transaction Document; (f) the Company shall generally fail to pay or admit in writing its inability to pay its debts as they become due; or the Company shall apply for, consent to, or acquiesce in the appointment of a trustee, receiver or other custodian for itself or any of its property, or make a general assignment composition, or similar device for the benefit of its creditors; or a trustee, receiver or other custodian shall otherwise be appointed for the Company or any of its assets; an attachment or receivership of assets or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding shall be commenced by or against the Company; or the Company shall take any corporate action to authorize, or in furtherance of any item set forth in subsection (f) hereof; or (g) the Company’s dissolution or liquidation.

5.           Remedies.  Upon any Event of Default, Holder may without further notice declare the entire unpaid Principal sum of this Note immediately due and payable; Holder’s failure to declare the entire unpaid Principal sum of this Note immediately due and payable shall not constitute a waiver by Holder of its right to so declare at any other time; Holder may employ an attorney to enforce its rights and remedies hereunder and the Company hereby agrees to pay Holder’s reasonable attorneys’ fees and other reasonable expenses incurred by Holder in exercising any of Holder’s rights and remedies upon an Event of Default; and/or Holder’s rights and remedies provided hereunder shall be cumulative and concurrent with all other remedies provided by law or in equity and may be pursued singly, successively or together in Holder’s sole discretion; and Holder’s failure to exercise any such right or remedy shall not be a waiver or release of such rights or remedies or the right to exercise any of them at another time.

6.           Transferability.  This Note shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders.  Holder shall not transfer any right, title or interest in this Note without the prior written consent of the Company, which consent shall not be unreasonably withheld;  provided, however, that this Note may be sold or transferred to an Affiliate (as defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) of the Holder without the prior written consent of the Company provided that (i) such assignee is an accredited investor within the meaning of the Securities Act, (ii) the Holder has given prior written notice to the Company.

7.           Waiver.  The Company hereby waives presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting the amounts due under this Note and agrees that the Holder shall not be required first to initiate any suit or exhaust its remedies against any other person or parties in order to enforce payment of this Note.  No waiver of any right or remedy of the Holder under this Note shall be valid unless in a writing executed by the Holder and any such waiver shall be effective only in the specific instance and for the specific purpose given.  All rights and remedies of the Holder of this Note shall be cumulative and may be exercised singly, concurrently or successively.

8.           Notices.  Any notice required or permitted to be given hereunder shall be given by the Company to the Holder or the Holder to the Company in accordance with the Loan Agreement.

9.           Severability.  If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

10.         Governing Law.  This Note will be governed by the laws of the State of Minnesota without regard to conflicts of laws principles.

11.         Parties in Interest.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.

12.         Section Headings, Construction.  The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation.  All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Note unless otherwise specified.  All words used in this Note will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the words “hereof” and “hereunder” and similar references refer to this Note in its entirety and not to any specific section or subsection hereof.

13.         Miscellaneous Provisions.  This Note may not be changed orally, but only by an agreement in writing and signed by the Holder and the Company.  This Note is subject to the terms, conditions and provisions of the Loan Agreement.

IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the date first stated above.

WITS BASIN PRECIOUS MINERALS INC.

By:

/s/ Stephen D. King

Name:

Stephen D. King

Title:

Chief Executive Officer

EX-10.67 13 v181039_ex10-67.htm

EXHIBIT 10.67

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is dated as of December 14, 2009, and is by and between Wits Basin Precious Minerals Inc., a Minnesota corporation (“Wits Basin”), Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”), Gregory Gold Producers, Inc., a Colorado corporation (“Gregory Gold”; and collectively with Wits Basin and Hunter Bates, the “Debtors” and each individually, a “Debtor”) and Kenglo One, Ltd., a company incorporated under the laws of Jersey, its successors and assigns (together with its successors and assigns, “Secured Party”).

RECITALS

The following recitals are a material part of this Agreement.

A.           Wits Basin and Secured Party are parties to that certain Loan Agreement dated of even date herewith (the “Loan Agreement”), pursuant to which, among other things, Wits Basin has issued a Secured Promissory Note dated of even date herewith in favor of Secured Party in a principal amount of US$5,000,000 (the “Secured Note”).  All capitalized terms used in this Agreement without definition have the definitions given to them in the Loan Agreement.

B.           Pursuant to a prior financing with China Gold, LLC (“China Gold”), the Debtors have entered into a security agreement with China Gold whereby the Debtors have granted China Gold a security interest in certain of their respective assets.  As of the date of this Agreement, Hunter Bates and Gregory Gold are indirect, majority-owned subsidiaries of Wits Basin.

C.           As a condition to Secured Party’s agreement to extend credit to Wits Basin under the Secured Note, Secured Party has required the execution and delivery of this Agreement by Debtors to provide Secured Party a security interest that is pari passu with China Gold.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing facts and premises hereby made a part of this Agreement, the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, Debtors and Secured Party agree as follows:

1.           Grant of Security Interest.  Each Debtor hereby grants to Secured Party a present and continuing security interest (the “Security Interest”) in all of such Debtor’s right, title and interest in and to all personal property of Debtor and all products and proceeds thereof, whether now owned or hereinafter acquired, including the following (collectively, the “Collateral”):

(a)           All inventory, of every type and description, now owned or hereafter acquired by Debtor, including inventory consisting of whole goods, spare parts or components, supplies or materials and inventory acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, or any other purpose, and wherever located.

(b)           All warehouse receipts, bills of lading and other documents of title of every type and description now owned or hereafter acquired by Debtor.

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(c)           All of Debtor’s accounts, now existing or hereafter arising, including each and every right of Debtor to the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property, out of a rendering of services, out of a loan, out of the overpayment of taxes or other liabilities, or any other transaction or event, whether such right to payment is created, generated or earned by Debtor or by some other person whose interest is subsequently transferred to Debtor, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced (including, without limitation, that certain Promissory Note of CGMR BVI in favor of Wits Basin in the principal amount of $4,800,000), together with all other rights and interests (including all liens, security interests and guaranties) which Debtor may at any time have by law or agreement against any account debtor or other person obligated to make any such payment or against any property of such account debtor or other person; all contract rights, chattel papers, bonds, notes and other debt instruments, and all loans and obligations receivable, tax refunds and other rights to payment in the nature of general intangibles; all checking accounts, savings accounts and other depository accounts and all savings certificates and certificates of deposit maintained with or issued by any bank or financial institution.

(d)           All equipment, now owned or hereafter acquired by Debtor and all fixtures of every type and description now owned or hereafter acquired by Debtor, including (without limitation) all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies and all other goods (except inventory) used or bought for use by Debtor for any business or enterprise; including (without limitation) all goods that are or may be attached or affixed or otherwise become fixtures upon any real property; and including specifically (without limitation) the goods described in any equipment schedule or list herewith or hereafter furnished to Secured Party by Debtor, all accessions attachments, parts and repairs now or hereafter attached or affixed or used in connection with equipment, all substitutions and replacements thereof, and all like or similar property now owned or hereafter acquired by Debtor.  (No such schedule or list need be furnished in order for the security interest granted herein to be valid as to all of Debtor’s equipment.)

(e)           All investment property, whether now owned or hereafter acquired by Debtor, including (without limitation) all securities, security entitlements, securities accounts, commodity contracts, commodity accounts, stocks, bonds, mutual fund shares, money market shares and U.S. Government securities, including, subject to the limitations and/or exclusions below, all investment property and general intangibles respecting ownership and/or other equity interests of Debtor in each wholly-owned, majority-owned or minority owned subsidiary, including, without limitation, the shares of capital stock and the other equity interests listed on Schedule A hereto (as the same may be modified from time to time pursuant to the terms hereof, the “Pledged Securities”), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash (“Future Rights”). Notwithstanding the foregoing, the Secured Party acknowledges and agrees that 1,839,000 shares of common stock of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) held by Wits Basin shall be excluded from the Collateral and the Pledged Securities.

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(f)           All general intangibles of every type and description now owned or hereafter acquired by Debtor, including (without limitation) all present and future intellectual property, proprietary rights, foreign and domestic patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade dress, mask works, copyrights, trade names, trade secrets, shop drawings, engineering drawings, blueprints, specifications, parts lists, manuals, operating instructions, customer or supplier lists and contracts, licenses, permits, franchises, the right to use Debtor’s corporate name, and the goodwill of Debtor’s business.

(g)           All instruments, chattel paper, deposit accounts, documents, goods, letter-of-credit rights, letters of credit, all sums on deposit in any collateral account, and any items in any lockbox, now existing or hereafter arising, and any money or other assets of Debtor that come into the possession, custody or control of Secured Party.

For purposes of this Agreement, “Account”, “Account Debtor”, “Chattel Paper”, “Commercial Tort Claims”, “Deposit Account”, “Document”, “Equipment”, “Fixtures”, “General Intangibles”, “Instrument”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Proceeds” and “Supporting Obligations” shall have the meanings set forth in the Minnesota Uniform Commercial Code, as amended from time to time, and such meanings shall automatically change at the time that any amendment to the Minnesota Uniform Commercial Code, which changes such meanings, shall become effective.  For purposes of this Agreement, such terms may be capitalized, even if not capitalized in the Minnesota Uniform Commercial Code, provided, that if any additional goods, property or rights shall be included in such terms under Article 2 thereof, such terms shall be construed to include such additional goods, property or rights. To the extent that the Uniform Commercial Code does not apply to any item of the Collateral, it is the intention of the parties and this Agreement that Secured Party have a common law pledge or collateral assignment of such item of Collateral.

2.           Security for Obligations.  This Agreement secures the payment and performance of all obligations of Wits Basin under the Loan Agreement and the Secured Note (collectively, the “Investment Documents”; and all such obligations collectively referred to herein as the “Obligations”), and Hunter Bates and Gregory Gold each hereby absolutely and unconditionally guarantee to Secured Party the full and prompt payment of the Obligations when due to the extent of the value of each such Debtor’s Collateral.

3.           Delivery and Registration of Pledged Securities.  With respect to each Debtor:

(a)           All certificates or instruments representing or evidencing the Pledged Securities shall be promptly delivered by Debtor to Secured Party or Secured Party’s designees pursuant to this Agreement at a location designated by Debtor and shall be held by or on behalf of Secured Party pursuant to this Agreement, and shall be in suitable form for transfer by delivery, or shall be accompanied by a duly executed instrument of transfer or assignment in blank, in form and substance satisfactory to Secured Party.

(b)           Upon the occurrence and during the continuance of an Event of Default, Secured Party shall have the right, at any time in its discretion and without notice to Debtor, to transfer to or to register on the books of a subsidiary of Debtor of which Pledged Securities are held (or of any other person maintaining records with respect to the Pledged Securities) in the name of Secured Party or any of its nominees any or all of the Pledged Securities.  In addition, Secured Party shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Securities for certificates or instruments of smaller or larger denominations.  Notwithstanding the foregoing, in the event this Section 3(b) is applicable to Wits Basin’s equity interest in CGMR BVI (as defined below in Section 3(f), Secured Party’s rights shall be subject to the execution and delivery to CGMR BVI of a signed Deed of Adherence (as defined in the Shareholders’ Agreement (as defined in Section 3(f)), which Secured Party undertakes to execute.

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(c)           If, at any time and from time to time, any Pledged Securities (including any certificate or instrument representing or evidencing any Pledged Securities) is in the possession of a person other than Secured Party, China Gold (who, pursuant to the terms of an intercreditor agreement with Secured Party has agreed or will agree to hold Pledged Securities for the benefit of Secured Party) or Debtor (each, a “Holder”), then Debtor shall immediately, at Secured Party’s option, either cause such Pledged Securities to be delivered into Secured Party’s or China Gold’s possession, or cause such Holder to enter into a control agreement, in form and substance satisfactory to Secured Party, and take all other steps deemed necessary by Secured Party to perfect the security interest of Secured Party in such Pledged Securities, all pursuant to Sections 9-106 and 9-313 of the Uniform Commercial Code or other applicable law governing the perfection of Secured Party’s security interest in the Pledged Securities in the possession of such Holder.

(d)           Any and all Pledged Securities (including dividends, interest, and other cash distributions relating to such Pledged Securities) at any time received or held by Debtor shall be so received or held in trust for Secured Party, shall be segregated from other funds and property of Debtor and shall be forthwith delivered to Secured Party in the same form as so received or held, with any necessary endorsements; provided that cash dividends or distributions received by Debtor may be retained by Debtor subject to an Event of Default.

(e)           If at any time, and from time to time, any Pledged Securities consists of an uncertificated security or a security in book entry form, then Debtor shall immediately cause such Pledged Securities to be registered or entered, as the case may be, in the name of Secured Party, or otherwise cause Secured Party’s security interest thereon to be perfected in accordance with applicable law.

(f)           So long as no Event of Default shall have occurred and be continuing, Debtor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Securities or any part thereof for any purpose not inconsistent with the terms of the Investment Documents and shall be entitled to receive and retain any cash dividends or distributions paid or distributed in respect of the Pledged Securities.  Upon the occurrence and during the continuance of an Event of Default, all rights of Debtor to exercise the voting and other consensual rights or receive and retain cash dividends or distributions that it would otherwise be entitled to exercise or receive and retain, as applicable pursuant to this Section 3(f), shall cease, and all such rights shall thereupon become vested in Secured Party, who shall thereupon have the sole right to exercise such voting or other consensual rights and to receive and retain such cash dividends and distributions; provided that with respect to Wits Basin and the exercise of any rights (including the right to receive and retain dividends) relating to its equity interest in China Global Mining Resources (BVI) Limited (registered number 1513743 in the British Virgin Islands), and/or the subsidiary undertakings of CGMR BVI (“CGMR BVI”), such rights shall be subject to the terms of that certain Shareholders’ Agreement dated on March 17, 2009 by and between London Mining Plc (“London Mining”), Wits Basin and CGMR BVI (the “Shareholders’ Agreement”).  Wits Basin shall execute and deliver (or cause to be executed and delivered) to Secured Party all such proxies and other instruments as Secured Party may reasonably request for the purpose of enabling Secured Party to exercise the voting and other rights which it is entitled to exercise and to receive the dividends and distributions that it is entitled to receive and retain pursuant to the preceding sentence; provided that with respect to exercise of any rights (including the right to receive and retain dividends) relating to the equity interest in CGMR BVI, such rights shall be subject to the terms of the Shareholders’ Agreement.

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4.           Acknowledgments of Secured Party.  Secured Party acknowledges and agrees that, except with respect to the pledge of Wits Basin’s equity interest in CGMR BVI and as consented to by London Mining, Secured Party has no security interest in the assets of CGMR BVI and its subsidiary undertakings, including any rights of CGMR BVI or its subsidiaries to acquire, hold or operate certain mining properties in the People’s Republic of China.

5.           Release.   On completion of any acquisition of all or part of Wits Basin’s equity interest in CGMR BVI by London Mining or a member of its Group (as defined in the Shareholders’ Agreement) or a third party under the “Come Along” provisions of the Shareholders’ Agreement undertaken in accordance with the terms of the Shareholders’ Agreement (an “Acquisition”), Wits Basin’s equity interest in CGMR BVI, or such part acquired, will automatically and irrevocably be released and Secured Party agrees to take any further action (including the execution, delivery and filing (as applicable) of any necessary documents or agreements) necessary to effect such release, and shall, prior to the completion of the Acquisition, deliver to CGMR BVI all documents and items held by Secured Party pursuant to Section 3 of this agreement.

6.           Further Assurances.

(a)           Each Debtor agrees that it shall, from time to time and at its sole expense, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies under this Agreement with respect to any Collateral.  Without limiting the generality of the foregoing, each Debtor shall: (i) if any Collateral is or shall become evidenced by any promissory note or other instrument or any certificate or document of title or the like, deliver and pledge to Secured Party such note, instrument, certificate or document duly endorsed with recourse by Debtor, and accompanied by duly executed instruments of transfer or assignment, all in form and content satisfactory to Secured Party; (ii) with respect to Pledged Securities, at the request of Secured Party, mark conspicuously each of its records pertaining to the Pledged Securities with a legend, in form and substance reasonably satisfactory to Secured Party, indicating that such Pledged Securities are subject to the security interest granted by this Agreement; and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby.

(b)           Each Debtor will furnish to Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may reasonably request from time to time, all in reasonable detail.

7.           Secured Party’s Duties.  The powers conferred on Secured Party under this Agreement are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it under this Agreement, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against other parties or any other rights pertaining to any Collateral.  Upon full and complete payment and performance of all of the Obligations under the Investment Documents, Secured Party shall release the Collateral of the liens created and granted under this Agreement and, at each Debtor’s expense, execute and deliver to each such Debtor such documents as such Debtor shall reasonably request to evidence such release.

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8.           Debtor Remains Liable.  Notwithstanding anything in this Agreement to the contrary, (a) each Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Secured Party of any of its rights under this Agreement shall not release such Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) Secured Party shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of such Debtor thereunder or to take any action to collect or enforce any claim for payment assigned under this Agreement.

9.           Representations, Warranties and Agreements. Each Debtor hereby represents, warrants and agrees as follows:

(a)           Title. Debtor (i) has absolute title to each item of Collateral in existence on the date hereof, free and clear of all Liens except the Permitted Liens, (ii) will have, at the time Debtor acquires any rights in the Collateral hereafter arising, absolute title to, or valid leasehold interests in, each such item of the Collateral, free and clear of all Liens except the Permitted Liens, (iii) will keep all of the Collateral free and clear of all Liens ranking in priority to or pari passu with Liens created by this Security Interest except the Permitted Liens, and (iv) will defend the Collateral against all claims or demands of all persons other than the Secured Party, China Gold and the holder of any Permitted Lien.  Debtor will not sell or otherwise dispose of the Collateral or any interest therein, outside the ordinary course of business, without the prior written consent of the Secured Party.  For the purposes of this Agreement, the term “Liens” means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a person, whether now owned or hereafter acquired and whether arising by agreement or operation of law, and the term “Permitted Liens” means (1) the Security Interest, (2) a pari passu Lien in the Collateral held by China Gold that is in all respects equal and identical to the Security Interest, (3) covenants, restrictions, rights, easements and minor irregularities in title that do not materially interfere with the Company’s business or operations as presently conducted; (4) liens for taxes not yet delinquent or liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established, (5) liens in respect of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’s, landlord’s and mechanics’ liens and other similar liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings and (6) matters of record as of the date hereof, itemized on Schedule B hereof; provided, however, that notwithstanding the foregoing, Secured party shall not be subject to any Permitted Lien unless China Gold is also subject to the same Permitted Lien.

(b)           Location of the Collateral.  As of the date hereof, the tangible Collateral is located only in the state and at the address(es) identified on Schedule C attached hereto.  Debtor will not permit any tangible Collateral to be located in any state (and, if county filing is required, in any county) in which a financing statement covering such Collateral is required to be, but has not in fact been, filed in order to perfect the Security Interest.

(c)           Fixtures.  Except as otherwise set forth in any lease agreement between Debtor and its landlord, Debtor will not permit any tangible Collateral to become part of or to be affixed to any real property without first assuring to the reasonable satisfaction of the Secured Party that the Security Interest will be prior and senior to any Lien then held or thereafter acquired by any mortgagee of such real property or the owner or purchaser of any interest therein.

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(d)          Rights to Payment.  Each right to payment and each instrument, document, chattel paper and other agreement constituting or evidencing the Collateral is (or will be when arising, issued or assigned to the Secured Party) the valid, genuine and legally enforceable obligation, subject to no defense, setoff or counterclaim (other than those arising in the ordinary course of business), of the account debtor or other obligor named therein or in Debtor’s records pertaining thereto as being obligated to pay such obligation.  Debtor will neither agree to any material modification or amendment nor agree to any forbearance, release or cancellation of any such obligation, and will not subordinate any such right to payment to claims of other creditors of such account debtor or other obligor.

(e)          Commercial Tort Claims.  Promptly upon knowledge thereof, Debtor will deliver to the Secured Party notice of any commercial tort claims it may bring against any person, including the name and address of each defendant, a summary of the facts, an estimate of Debtor’s damages, copies of any complaint or demand letter submitted by Debtor, and such other information as the Secured Party may request.  Upon request by the Secured Party, Debtor will grant the Secured Party a security interest in all commercial tort claims it may have against any person.

(f)          Miscellaneous Covenants.  Debtor will:

(1)           keep all tangible Collateral in good repair, working order and condition, normal depreciation excepted;

(2)           promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security Interest;

(3)           at all reasonable times, permit the Secured Party or its representatives to examine or inspect any Collateral, wherever located, and to examine, inspect and copy Debtor’s books and records pertaining to the Collateral and its business and financial condition and to send and discuss with account debtors and other obligors requests for verifications of amounts owed to Debtor;

(4)           keep accurate and complete records pertaining to the Collateral and pertaining to Debtor’s business and financial condition and submit to the Secured Party such periodic reports concerning the Collateral and Debtor’s business and financial condition as the Secured Party may from time to time reasonably request;

(5)           promptly notify the Secured Party of any material loss of or material damage to any Collateral or of any material adverse change known to Debtor pertaining to the prospect of payment of any sums due on or under any instrument, chattel paper, or account constituting the Collateral;

(6)           from time to time execute such financing statements as the Secured Party may reasonably require in order to perfect the Security Interest (including, without limitation, any filings with the United States Patent and Trademark Office, Copyright or other Intellectual Property filings and any filings of financing or continuation statements under the UCC) in order to create, preserve, upgrade in rank (to the extent required hereby), perfect, confirm or validate the Security Interest or to enable the Secured Party to obtain the full benefits of this Agreement, or to enable the Secured Party to exercise and enforce any of its rights, powers and remedies hereunder with respect to any of the Collateral and, if any Collateral consists of a motor vehicle, execute such documents as may be required to have the Security Interest properly noted on a certificate of title;

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(7)           with respect to the Pledged Securities, to the extent it may lawfully do so, use its best efforts to prevent any subsidiary of Debtor of which Pledged Securities are held from issuing Future Rights or Proceeds; and

(8)           upon receipt by Debtor of any material notice, report, or other communication from a subsidiary of Debtor of which Pledged Securities are held or any Holder relating to all or any part of the Pledged Securities, deliver such notice, report or other communication to Secured Party as soon as possible, but in no event later than five (5) days following the receipt thereof by Debtor.

(9)           pay when due or reimburse the Secured Party on demand for all costs of collection of any of the Obligations and all other out-of-pocket expenses (including, in each case, all reasonable attorneys’ fees) incurred by the Secured Party in connection with the creation, perfection, satisfaction, protection, defense or enforcement of the Security Interest or the creation, continuance, protection, defense or enforcement of this Agreement or any or all of the Obligations, including expenses incurred in any litigation or bankruptcy or insolvency proceedings; and

(10)           not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law, statute or ordinance.

(g)          The Secured Party’s Right to Take Action.  Debtor authorizes the Secured Party to file from time to time where permitted by law, such financing statements against the Collateral described as “all of Debtor’s assets” as the Secured Party deems necessary or useful to perfect the Security Interest.  Debtor will not amend any financing statements in favor of the Secured Party, except as permitted by law.  Further, if Debtor at any time fails to perform or observe any agreement contained in Section 9(f), and if such failure continues for a period of 10 days after the Secured Party gives Debtor written notice thereof (or, in the case of the agreements contained in clauses (6) and (9) of Section 9(f), immediately upon the occurrence of such failure, without notice or lapse of time), the Secured Party may (but need not) perform or observe such agreement on behalf and in the name, place and stead of Debtor (or, at the Secured Party’s option, in the Secured Party’s own name) and may (but need not) take any and all other actions which the Secured Party may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens, or encumbrances, the performance of obligations under contracts or agreements with account debtors or other obligors, the procurement and maintenance of insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs or transportation); and, except to the extent that the effect of such payment would be to render any loan or forbearance of money usurious or otherwise illegal under any applicable law, Debtor shall thereupon pay the Secured Party on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys’ fees) incurred by the Secured Party in connection with or as a result of the Secured Party’s performance or observation of such agreements or any actions taken thereunder, together with interest thereon from the date expended or incurred by the Secured Party at the highest rate then applicable to any of the Obligations.  To facilitate the performance or observance by the Secured Party of such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with an interest) the Secured Party, or its delegate, as the attorney-in-fact of Debtor with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file, in the name and on behalf of Debtor, any and all instruments, documents, control agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Debtor under this Section 9 and Section 10, including: (i) to receive, indorse, and collect all instruments made payable to Debtor representing any dividend, interest payment or other distribution in respect of the Pledged Securities or any part thereof to the extent permitted under this Agreement and to give full discharge for the same and to execute and file governmental notifications and reporting forms; or (ii) to arrange for the transfer of the Pledged Securities on the books of a subsidiary of Debtor of which Pledged Securities are held or any other person to the name of Secured Party or to the names of Secured Party’s nominees.  In addition to the designation of Secured Party as Debtor’s attorneys-in-fact, Debtor by this Agreement irrevocably appoints Secured Party as Debtor’s agents and attorneys-in-fact to make, execute and deliver after the occurrence and during the continuance of an Event of Default any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where Debtor or any subsidiary of Debtor of which Pledged Securities are held engage in business, in order to transfer or to more effectively transfer any of the Pledged Securities or otherwise enforce Secured Party’s rights under this Agreement.

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Debtor shall pay the costs of, or incidental to, any recording or filing of any financing statements, financing statement amendments or continuation statements concerning the Collateral.

10.          Rights of the Secured Party.

(a)           Account Verification. At any time and from time to time, whether before or after an Event of Default, the Secured Party may send or require a Debtor to send requests for verification of Accounts to account debtors and other obligors.  The Secured Party may also at any time and from time to time telephone account debtors and other obligors to verify accounts.

(b)           Direct Collection.  At any time after the occurrence and during the continuation of an Event of Default, the Secured Party may notify any account debtor, or any other person obligated to pay any amount due, that such chattel paper, Account, or other right to payment has been assigned or transferred to the Secured Party for security and shall be paid directly to the Secured Party.  At any time after the Secured Party or any Debtor gives such notice to an account debtor or other obligor, the Secured Party may (but need not), in its own name or in such Debtor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such chattel paper, Account, or other right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor.

11.          Assignment of Insurance.  Each Debtor hereby assigns to the Secured Party, as additional security for the payment of the Obligations, any and all moneys (including, but not limited to, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of such Debtor under or with respect to any and all policies of insurance covering the Collateral, and such Debtor hereby directs the issuer of any such policy to pay any such moneys directly to the Secured Party.  After the occurrence and during the continuation of an Event of Default, the Secured Party may (but need not), in its own name or in such Debtor’s name, execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy.

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12.         Events of Default.  Each of the following occurrences (subject to any applicable grace periods) shall constitute an Event of Default under this Agreement (herein called an “Event of Default”):  (i)  Wits Basin shall fail to pay any or all of the Obligations when due or, if payable on demand, on demand; or (ii)  the occurrence of an “Event of Default” as defined under any Investment Document; or (iii) payment of any substantial indebtedness of Wits Basin, other than the Obligations, shall be demanded or the maturity of any such indebtedness shall be accelerated, or any precondition or circumstance permitting any creditor of Wits Basin, acting individually or with the consent of other creditors, to accelerate the maturity of any such indebtedness shall have occurred (for this purpose indebtedness shall be deemed substantial if it exceeds $50,000); or (iv) Wits Basin shall become insolvent or shall commit an act of bankruptcy under the United States Bankruptcy Act, or shall file or have filed against it, voluntarily or involuntarily, a petition in bankruptcy or for reorganization or for the adoption of an arrangement or plan under the United States Bankruptcy Code or shall procure or suffer the appointment of a receiver for any substantial portion of its properties, or shall initiate or have initiated against it, voluntarily or involuntarily, any act, process or proceeding under any insolvency law or other statute or law providing for the modification or adjustment of the rights of creditors.

13.         Remedies.  If any Event of Default shall have occurred and be continuing:

(a)           Secured Party shall have the right pursuant to the applicable Uniform Commercial Code (or pursuant to applicable law for any Collateral not subject to the Uniform Commercial Code) to declare all unmatured Obligations to be immediately due and payable, and the same shall thereupon be immediately due and payable, without presentment or other notice or demand, exercise and enforce any or all rights and remedies available upon default to a secured party under the UCC, including, but not limited to, the right to take possession of any Collateral, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which Debtor hereby expressly waives), and (i) to require each Debtor to assemble the Collateral, at Debtor’s expense, and make it available to Secured Party at a place designated by Secured Party which is reasonably convenient to both parties, and (ii) to enter any of the premises of any Debtor or wherever any of the Collateral shall be located, and to keep and store the same on such premises until sold or otherwise realized upon (and if such premises are the property of such Debtor, such Debtor agrees not to charge Secured Party for storage thereof).

(b)           Secured Party shall have the right to sell or otherwise dispose of all or any Collateral at public or private sale or sales, with such notice as may be required by law, all as Secured Party, in its sole discretion, may deem advisable.  Each Debtor agrees that ten (10) days written notice to such Debtor of any public or private sale or other disposition of such Collateral shall be reasonable notice thereof, and such sale shall be at such locations as Secured Party may designate in such notice.  Secured Party shall have the right to conduct such sales on such Debtor’s premises, without charge therefor.  All public or private sales may be adjourned from time to time in accordance with applicable law.  Secured Party shall have the right to sell, lease or otherwise dispose of such Collateral, or any part thereof, for cash, credit or any combination thereof, and Secured Party may purchase all or any part of such Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations.

(c)           Debtors by this Agreement acknowledge that the sale by Secured Party of any Pledged Securities pursuant to the terms hereof in compliance with the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect (the “Securities Act”), as well as applicable “Blue Sky” or other state securities laws may require strict limitations as to the manner in which Secured Party or any subsequent transferee of the Pledged Securities may dispose thereof. Debtors acknowledge and agree that in order to protect Secured Party’s interest it may be necessary to sell the Pledged Securities at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Each such Debtor has no objection to sale in such a manner and agrees that Secured Party shall have no obligation to obtain the maximum possible price for the Pledged Securities. Without limiting the generality of the foregoing, such Debtor agrees that upon the occurrence and during the continuation of an Event of Default, Secured Party may, subject to applicable law, from time to time attempt to sell all or any part of the Pledged Securities by a private placement, restricting the bidders and prospective Secured Party to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, Secured Party may solicit offers to buy the Pledged Securities or any part thereof for cash from a limited number of investors reasonably believed by Secured Party to be institutional investors or other accredited investors who might be interested in purchasing the Pledged Securities. If Secured Party shall solicit such offers, then the acceptance by Secured Party of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Pledged Securities.

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Each Debtor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

(d)           Secured Party may exercise with respect to the Collateral all of the rights and remedies (i) provided for in this Agreement, (ii) provided under the Loan Agreement or under the other Investment Documents, (iii) afforded to a secured party upon a default under the Uniform Commercial Code, or (iv) otherwise available at law or in equity.

14.         Indemnity and Expenses.

(a)           Each Debtor agrees to indemnify Secured Party from and against any and all claims, losses and liabilities arising out of or relating to this Agreement or any of the Obligations (including enforcement of this Agreement and Secured Party’s exercise of its rights and remedies under this Agreement), unless such claims, losses and liabilities are caused solely by Secured Party’s gross negligence or willful misconduct.

(b)           Each Debtor shall upon demand pay to Secured Party the amount of any and all charges, costs, fees and expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, that Secured Party may incur following such Debtor’s default in connection with (i) the custody, preservation, use of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of Secured Party under this Agreement, or (iii) the failure by such Debtor to perform or observe any of the provisions of this Agreement.  All such fees, expenses and disbursements shall be deemed Obligations secured by this Agreement.

15.         Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to any choice of law rule thereof giving effect to the laws of any other jurisdiction; provided, however, that if the laws of another jurisdiction govern the method, manner and procedure for foreclosure of Secured Party’s security interest in any Collateral or the enforcement of Secured Party’s other remedies in respect of any Collateral, then the laws of such jurisdiction shall govern to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of Minnesota.

16.         Organizational Representations; UCC Filing Offices.

(a)           Wits Basin represents and warrants to Secured Party that (a) it is a corporation incorporated under the laws of Minnesota, (b) its chief executive office is located at 80 South Eighth Street, Suite 900, Minneapolis, Minnesota 55402-8773 and (c) its organizational identification number is 84-1236619.

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(b)           Hunter Bates represents and warrants to Secured Party that (a) it is a corporation incorporated under the laws of Minnesota, (b) its chief executive office is located at 80 South Eighth Street, Suite 900, Minneapolis, Minnesota 55402-8773 and (c) its organizational identification number is 26-2543036.

(c)           Gregory Gold represents and warrants to Secured Party that (a) it is a corporation incorporated under the laws of Colorado, (b) its chief executive office is 11438 County Road 19, Ft. Lupton, CO 80321 and (c) its organizational identification number is 56-2454853.

If any Debtor changes the address of its chief executive office, or its name, identity, corporate structure or state of incorporation (without implying any right of such Debtor to make any such change without the prior consent of Secured Party), then, in each case, such Debtor shall give Secured Party not less than ten (10) Business Days prior written notice thereof.

17.         Miscellaneous.

(a)           The mere delay or failure to act shall not preclude the exercise or enforcement of any of the Secured Party’s rights or remedies.  All rights and remedies of the Secured Party shall be cumulative and may be exercised singularly or concurrently, at the Secured Party’s option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other.  The Secured Party’s duty of care with respect to the Collateral in its possession (as imposed by law) shall be deemed fulfilled if the Secured Party exercises reasonable care in physically safekeeping such Collateral or, in the case of any Collateral in the custody or possession of a bailee or other third person, exercises reasonable care in the selection of the bailee or other third person, and the Secured Party need not otherwise preserve, protect, insure or care for any Collateral.  The Secured Party shall not be obligated to preserve any rights of any Debtor may have against prior parties, to realize on the Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral in any particular order of application.  All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations.

(b)           No amendment or waiver of any provision of this Agreement nor consent to any departure by any Debtor from the terms or provisions of this Agreement, shall in any event be effective unless it shall be in writing and signed by the party against whom enforcement of such amendment, waiver or consent is sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(c)           The paragraph and section headings in this Agreement are solely for convenience and shall not be deemed to limit or otherwise affect the meaning or construction of any part of this Agreement.  This Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing such document or any portion thereof to be drafted.  The section and other headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement.  Any pronoun used in this Agreement shall be deemed to cover all genders.  The terms “include”, “including” and similar terms shall be construed as if followed by the phrase “without being limited to.”  The term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision or section of this Agreement.  An Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by.

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(d)           If any provision or provisions of this Agreement shall be unlawful, then such provision or provisions shall be null and void, but the remainder of the Agreement shall remain in full force and effect and be binding on the parties.

(e)           This Agreement may be validly executed and delivered by fax or other electronic transmission and in one or more counterpart signature pages by different signatories thereto.

(f)           Any notice or demand that Secured Party may wish to give to any Debtor shall be served upon it in the fashion prescribed for notices in Section 16 hereof at the address and facsimile number for Debtor set forth in the Loan Agreement, and any notice or demand so sent shall be deemed to be served as set forth in the Loan Agreement.

18.          Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO SECURED PARTY, DEBTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH SECURED PARTY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR ANY OF THE OTHER INVESTMENT DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL, SECURED PARTY’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING, ANY OTHER INVESTMENT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, REGARDLIESS OF WHICH PARTY INITATES SUCH ACTION, SUIT, PROCEEDING OR COUNTERCLAIM.  TO EFFECTUATE THE FOREGOING, SECURED PARTY IS HEREBY GRANTED AN IRREVOCABLE POWER OF ATTORNEY, COUPLED WITH AN INTEREST, TO FILE, AS ATTORNEY-IN-FACT FOR SUCH DEBTOR, A COPY OF THIS AGREEMENT IN ANY COURT, AND THE COPY OF THIS AGREEMENT SO FILED SHALL CONCLUSIVELY BE DEEMED TO CONSTITUTE SUCH DEBTOR’S WAIVER OF TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR ANY OF THE OTHER INVESTOR DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL OR SECURED PARTY’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

DEBTORS:

Wits Basin Precious Minerals Inc.,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Hunter Bates Mining Corporation,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Gregory Gold Producers, Inc.,

a Colorado corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

SECURED PARTY:

Kenglo One, Ltd.

a company incorporated under the laws of Jersey

By:

/s/ Ann Williams

Ann Williams, Director

SIGNATURE PAGE TO

SECURITY AGREEMENT

14

SCHEDULE A

Pledged Securities

Name of Subsidiary

Jurisdiction

of

Organization

Type of

Interest

Number of

Shares/Units

(if applicable)

Certificate

Numbers

(if any)

Percentage of

Outstanding

Interests in

Subsidiary

WITS BASIN PRECIOUS MINERALS

Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.)1

Colorado

Common Stock
18,584,544

various
85 %

Kwagga Gold (Barbados) Limited

Barbados

Common Shares
1,884,615
2
35 %

China Global Mining Resources (BVI) Limited (1513743)

British Virgin Islands

Common Stock

100 B Shares

1
50 %

HUNTER BATES MINING CORPORATION

Gregory Gold Producers, Inc.

Colorado

Common Stock
100
1
100 %

1 Security interest excludes 1,839,000 shares of common stock of Standard Gold held by Wits Basin Precious Minerals Inc.

SCHEDULE B

Permitted Liens

Wits Basin Precious Minerals

1.           All assets security interest to China Gold, LLC.

2.           Security interest in favor of Hawk Uranium Inc. with respect to Wits Basin’s right to acquire the other 65% interest in Kwagga Gold (Barbados) Limited.

Hunter Bates Mining Corporation

1.           Easements, or claims of easements, not shown by public records.

2.           Discrepancies, conflicts in boundary lines, shortage in area, encroachments, and any facts which a correct survey and inspection of the land would disclose, and which are not shown by the public records.

3.           Any water rights or claims or title to water, in, on or under the land.

4.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 21, 1876, in Book 62 at Page 287; and any and all assignments thereof or interest therein. (Affects Parcel A-1)

5.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on August 7, 1879, in Book 68 at Page 349; and any and all assignments thereof or interest therein. (Affects Parcel A-2)

6.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on June 20, 1872, in Book 53 at Page 277; and any and all assignments thereof or interest therein.(Affects Parcel A-3)

7.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on August 24, 1874, in Book 58 at Page 74; and any and all assignments thereof or interest therein. (Affects Parcels A-4 and A-5)

8.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 16, 1970, in Book 268 at Page 311; and any and all assignments thereof or interest therein. (Affects Parcel A-6)

9.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on June 22, 1883, in Book 93 at Page 137; and any and all assignments thereof or interest therein. (Affects Parcel A-7)

10.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded in Book 246 at Page 437; and any and all assignments thereof or interest therein. (Affects Parcel A-8)

11.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 83; and any and all assignments thereof or interest therein. (Affects Parcel A-9)

12.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 12, 1988, in Book 296 at Page 419; and any and all assignments thereof or interest therein. (Affects Parcel A-10)

13.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded in Book 296 at Page 426; and any and all assignments thereof or interest therein. (Affects Parcel A-11)

14.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 80; and any and all assignments thereof or interest therein.  (Affects Parcel B-1)

15.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 12, 1988, in Book 393 at Page 333; and any and all assignments thereof or interest therein. (Affects Parcel B-2)

16.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on December 16, 1881, in Book 82 at Page 12; and any and all assignments thereof or interest therein. (Affects Parcel B-3)

17.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 77; and any and all assignments thereof or interest therein. (Affects Parcel B-4)

18.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on December 17, 1975, in Book 296 at Page 413; and any and all assignments thereof or interest therein. (Affects Parcel B-5)

19.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on February 28, 1892, in Book 82 at Page 40; and any and all assignments thereof or interest therein. (Affects Parcel B-6)

20.           Terms, agreements, provisions, conditions and obligations as contained in the Mammoth Hill Project, State of Colorado, Division of Minerals and Geology, Colorado Inactive Mine Reclamation Program, Consent for Right of Entry for Reclamation Activities recorded on February 10, 1997 in Book 615 at Page 240. (Affects Parcels B-3 and B-5.)

21.           Reservations contained in the Patent to the City of Central recorded on July 21, 1876, in Book 62 at Page 193, as follows: “Providing that no title shall be hereby acquired to any mine of gold, silver, cinnabar or copper or to any valid mining claim or possession held under existing laws.”  (Affects Parcels A-12, A-13 and A-14)

22.           The effect of the inclusion of the subject property in the Black Hawk-Central City Sanitation District, as disclosed by the instrument recorded July 26, 1968, in Book 259 at Page 288.

23.           The effect of the inclusion of portions of the subject property in the Central City Business Improvement District, as disclosed by the instrument recorded on May 21, 2003 at Reception No. 117343.

24.           Rights of co-tenants, including, but not limited to, the right of partition. (Affects Parcel A-4).

25.           Exception of rights of way, if any, for existing roads, as contained in the Deed from the County of Gilpin to William C. Russell, Jr. recorded on January 22, 1970, in Book 26 at Page 297.  (Affects Parcel A-15).

26.           A one percent (1%) net smelter return royalty as granted to GSR Goldsearch Resources (U.S.), Inc. by the deed recorded on August 15, 1996, in Book 605 at Page 410, and any assignment thereof or interest therein. (Affects Parcels A-1, A-4, A-5, A-6, A-7., A-8, A-10, A-11, A-12, A-13, A-14 and A-15 and Parcels B-1, B-2, B-3, B-4 and B-5).

27.           Any question as to the size or location of the easements referred to as Parcel B-7.

28.           A two percent (2%) net smelter return royalty as granted to Kenneth Swaisland by the deed recorded on January 22, 2009, in Gilpin County, Colorado, and any assignment thereof or interest therein.   (Affects Parcels A-1, A-4, A-5, A-6, A-7., A-8, A-10, A-11, A-12, A-13, A-14 and A-15 and Parcels B-1, B-2, B-3, B-4 and B-5).

29.           Deed of Trust from Hunter Bates Mining Corporation, a Minnesota corporation, to the Public Trustee of Gilpin County, for the benefit of George E. Otten, securing an original principal indebtedness of Six Million Seven Hundred Fifty Thousand Canadian Dollars (CND $6,750,000.00), and any other amounts and/or obligations dated June 6, 2008, recorded on June 25, 2008 at Reception No. 136731.

30.           Deed of Trust to Public Trustee, Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing Statement and Fixture Filing of Hunter Bates Mining Corporation, as debtor, in favor of The Public Trustee of Gilpin County, Colorado, as trustee f/b/o Cabo Drilling (America), Inc., as secured party, securing principal indebtedness in the aggregate amount of $511,589.59, and any other amounts and/or obligations pursuant to a Convertible Debenture dated April 27, 2009.

31.           Secondary Deed of Trust and Security Agreement from Hunter Bates Mining Corporation, a Minnesota corporation, to the Public Trustee of Gilpin County, for the benefit of China Gold, LLC (as assignee of Platinum Long Term Growth V, LLC) securing (i) an original principal indebtedness of One Million Twenty Thousand Dollars (U.S.) pursuant to a senior secured convertible note of Wits Basin Precious Minerals Inc. dated February 11, 2008, (ii) an original principal indebtedness of One Hundred Ten Thousand Dollars (U.S.) pursuant to a secured promissory note dated on or about July 10, 2008 and (iii) any other amounts and/or obligations to China Gold, LLC under such notes, recorded on September 15, 2008 at Reception No. 137375.

SCHEDULE C

Location(s) of the Collateral

(1)  Wits Basin Precious Minerals Inc., with a legal address of 900 IDS Center, 80 South 8th Street, Minneapolis, MN 55402-8773.

(2) Hunter Bates Mining Corporation, with a legal address of 900 IDS Center, 80 South 8th Street, Minneapolis, MN 55402-8773 acquired the following assets: land, buildings, equipment, mining claims and permits.  All assets are located on the Bates-Hunter mining property, located at 422 Gregory Street, Central City, CO 80427.

(3) Gregory Gold Producers, Inc., with a legal address of 11438 County Road 19, Ft. Lupton, CO 80321, holds depreciable assets at 422 Gregory Street, Central City, CO 80427.

EX-10.68 14 v181039_ex10-68.htm
EXHIBIT 10.68

PRIVATE OPTION AGREEMENT

This Private Option Agreement is made as of the 14th day of December, 2009, by and between Wits Basin Precious Minerals Inc., a Minnesota corporation (“Grantor”), and Kenglo One Ltd. (“Holder”).

1.           Grant of Option.  Grantor hereby irrevocably grants to Holder the right and option, hereinafter called the “Option,” to purchase from Grantor up to 1,299,000 shares of common stock, par value $0.001 per share, of Princeton Acquisitions, Inc. (a/k/a Standard Gold) (“Princeton”; and the shares of common stock of Princeton subject to this Option, the “Option Shares”), subject to the terms and conditions herein set forth.  The parties hereby acknowledge and agree that this Option is being issued pursuant to that certain Loan Agreement dated on or around the date hereof by and between Grantor and Holder (the “Loan Agreement”), the terms and conditions of which are incorporated herein.

2.           Purchase Price.  The purchase price of the Option Shares covered by this Option shall be One U.S. Dollar (US$1.00) per Option Share, hereinafter referred to as the “Option Exercise Price.”

3.           Term of Option.  The Option shall become exercisable on the date hereof and until five (5) years from the date hereof.

4.           Exercise of Option.  Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to Grantor.  Such notice shall state the election to exercise the Option, the number of Option Shares with respect to which the Option is being exercised, and shall be signed by Holder.  Such notice shall be accompanied by full payment, in good and immediately available funds, of the total purchase price of the Option Shares being purchased upon such exercise.  By exercising such Option, Holder shall reaffirm, with respect to the Option Shares, as of the date of such exercise the representations, warranties and covenants of Holder as set forth in the Loan Agreement.  At the reasonable request of Grantor, at the time of any exercise of this Option, Holder shall also be required to make any additional reasonable representations, warranties or covenants with respect to the securities of Princeton.

5.           Transferability of Option; No Liens.  Grantor hereby represents and warrants to Holder that the Option Shares that may be transferred to Holder upon any exercise of this Option shall be free of any liens and encumbrances other than ordinary restrictions on subsequent transfer imposed by state and federal securities laws and other governing Princeton documents.

6.           General.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota without regard to its conflicts-of-law principles.  The Loan Agreement (and any agreements referenced therein) and this Option set forth the complete agreement of the parties hereto with respect to the subject matter hereof, and may not be modified, waived or amended except in a writing executed by the parties hereto.

[Signature Page to Follow.]

1

In Witness Whereof, this Agreement is made as of the date first above written.

GRANTOR:

HOLDER:

Wits Basin Precious Minerals Inc.

KENGLO ONE LTD.

By:

/s/ Stephen D. King

By:

  /s/ Ann Williams

Stephen D. King, Chief Executive Officer

Its:  Director

2

EX-10.69 15 v181039_ex10-69.htm

EXHIBIT 10.69

AMENDMENT NO. 4 TO

NOTES PURCHASE AGREEMENT

This Amendment No. 4 to Notes Purchase Agreement (this “Amendment”) is entered into on this 17th day of December, 2009, by and between Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Issuer”), and China Gold, LLC, a Kansas limited liability company, its successors and assigns (together with its successors and assigns “Purchaser”), to amend, as hereinafter set forth, the terms of that certain Notes Purchase Agreement dated April 10, 2007 by and between Issuer and Purchaser, as previously amended on June 19, 2007, November 10, 2008 and December 22, 2008 (as amended, the “Purchase Agreement”).  Capitalized terms used in this Amendment and not otherwise defined herein shall have the same meanings as defined in the Purchase Agreement.

A.           Issuer and Purchaser entered into the Purchase Agreement on April 10, 2007, which contemplated the initial sale by Issuer, and purchase by Purchaser, of an aggregate minimum of $12,000,000 and an aggregate maximum of $25,000,000 in convertible notes of Issuer within 12 months of the Initial Closing Date.  Pursuant to the Purchase Agreement, on April 10, 2007, Issuer sold, and Purchaser purchased, that certain Convertible Note in the amount of $3,000,000 (“Note 1”).  On May 7, 2007, Issuer sold, and Purchaser purchased, that certain Convertible Note in the amount of $2,000,000 (“Note 2”).  On June 19, 2007, Issuer sold and Purchaser purchased that certain Convertible Note in the aggregate amount of $4,000,000 (“Note 3”).  On July 9, 2007, Issuer sold, and Purchaser purchased, that certain Convertible Note in the amount of $800,000 (“Note 4”; collectively with Note 1, Note 2 and Note 3, the “Prior Notes”).

B.           To secure its obligations under the Prior Notes, Issuer entered into a Security Agreement with Purchaser dated June 19, 2007 (the “Security Agreement”), whereby Issuer granted Purchaser a security interest in all of the assets acquired by Issuer from the use of the proceeds from the sale of the Prior Notes.  Pursuant to the Purchase Agreement and Security Agreement, Issuer and certain of its subsidiaries further entered into the following agreements with Purchaser relating to such security:  (i) that certain Pledge Agreement dated as of April 10, 2007 by and between Purchaser and Issuer, as amended pursuant to that certain Amended and Restated Pledge Agreement dated February 7, 2008 by and between Purchaser and Issuer (as amended, the “Pledge Agreement”); (ii) that certain Guaranty dated April 10, 2007 (the “Wits-China Guaranty”) of Wits-China Acquisition Corporation, a Minnesota corporation and wholly owned subsidiary of Issuer (“Wits-China”); (iii) that certain Guaranty dated February 7, 2008 (the “Wits BVI Guaranty”) of Wits Basin (BVI) Ltd. (f/k/a China Global Mining Resources Limited), a British Virgin Islands corporation (registered number 1386052) and wholly owned subsidiary of Issuer (“Wits BVI”); (iv) that certain Guaranty dated February 7, 2008 (the “HK Guaranty”) of China Global Mining Resources Limited, a Hong Kong corporation and wholly owned subsidiary of Issuer (“CGMR HK”); (v) that certain Subsidiary Security Agreement dated February 7, 2008 by and between Wits-China and Purchaser (the “Wits-China Subsidiary Security Agreement”); (vi) that certain Subsidiary Security Agreement dated February 7, 2008 by and between Wits BVI and Purchaser (the “Wits BVI Subsidiary Security Agreement”); and (vii) that certain Subsidiary Security Agreement dated February 7, 2008 by and between CGMR HK and Purchaser (the “HK Subsidiary Security Agreement”).  Collectively, the Security Agreement, Pledge Agreement, Wits-China Guaranty, Wits BVI Guaranty, HK Guaranty, Wits-China Subsidiary Security Agreement, Wits BVI Subsidiary Security Agreement and HK Subsidiary Security Agreement are referred to herein as the “Security Documents.”

C.           On November 10, 2008, Issuer and Purchaser cancelled the Prior Notes and Issuer issued Purchaser an Amended and Restated Promissory Note in the aggregate principal amount of $9,800,000 (the “Amended and Restated Note”), which, amongst other amendments to the terms of the Prior Notes, terminated the conversion feature of the Prior Notes and terminated certain Purchase Rights (as defined in the Purchase Agreement) provided to Purchaser.  In consideration thereof, Issuer issued Purchaser a five-year warrant to purchase up to 38,200,000 shares of the Issuer’s common stock, par value $0.01 per share, at an exercise price of $0.15 per share (the “First Warrant”).

D.           On October 28, 2008, Purchaser loaned Issuer an additional $441,000 pursuant to the terms of that certain Promissory Note dated October 28, 2008 of Issuer in favor of Purchaser (the “Additional Note”), the payment obligations of which are secured by the Security Documents.  In consideration of the Additional Note, Issuer issued Purchaser a five-year warrant to purchase up to 882,000 shares of Issuer’s common stock at an exercise price of $0.11 per share (the “Second Warrant”; and collectively with the First Warrant, the “Warrants”).

E.           In March 2009, Issuer entered into a joint venture transaction (the “JV Transaction”) with London Mining Plc (“London Mining”), whereby London Mining and Issuer formed a joint venture entity in the British Virgin Islands entitled China Global Mining Resources (BVI) Limited (registered number 1513743) (“CGMR BVI”) to acquire and operate certain mining properties in the People’s Republic of China (the “PRC Properties”) pursuant to certain rights to acquire the PRC Properties held by the Issuer through certain of its subsidiaries (the “Rights”).  Such Rights were subject to the security interest of Purchaser under the terms of the Original Security Agreement.

F.           To enable Issuer to complete the JV Transaction, on December 22, 2008, Issuer and Purchaser entered into Amendment No. 3 to the Purchase Agreement (“Amendment No. 3”), pursuant to which (i) Issuer and Purchaser cancelled the Amended and Restated Note and the Additional Note, and issued in replacement thereof a Second Amended and Restated Note in the aggregate principal amount of $10,241,000, with accrued and unpaid interest of $179,693.45 thereon as of the date thereof (the “Second Amended Note”), and (ii) Issuer and Purchaser amended certain of the Security Documents to (A) release Purchaser’s security interest in the Rights, the PRC Properties and Issuer’s equity interest in CGMR HK, (B) release and terminate the HK Guaranty and the HK Subsidiary Security Agreement and (C) permit the transfer to CGMR BVI of the equity interests in CGMR HK.  Pursuant to Amendment No. 3, Purchaser and Issuer amended and superseded the terms of the Security Agreement pursuant to an Amended and Restated Security Agreement (the “Amended Security Agreement”) and the Amended and Restated Pledge Agreement pursuant to a Second Amended and Restated Pledge Agreement (the “Second Amended Pledge Agreement”).

G.           On March 17, 2009, contemporaneously with the closing of the JV Transaction, Issuer prepaid the Second Amended Note in the aggregate amount of $5,600,000.

H.           On April 20, 2009, Purchaser purchased from Platinum Long Term Growth V, LLC (“Platinum”) the rights of Platinum under (i) that certain Note and Warrant Purchase Agreement dated on or around February 11, 2008 by and between Issuer and Platinum (the “Platinum Purchase Agreement”), pursuant to which Issuer issued that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 issued by Issuer in favor of Platinum on or around February 11, 2008 (the “Original Platinum Note”) and (ii) that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $110,000 issued by Issuer in favor of Platinum on or around July 10, 2008 (collectively with the Original Platinum Note, the “Platinum Notes”).  The Issuer’s obligations under the Platinum Notes are secured pursuant to the terms of (i) that certain Security Agreement dated February 11, 2008 (the “Platinum Security Agreement”) by and between Purchaser (as a successor-in-interest to Platinum), Issuer, Hunter Bates Mining Corporation (“Hunter Bates”), as an additional debtor, and Gregory Gold Producers, Inc. (“Gregory Gold”), as an additional debtor, and (ii) that certain Amended and Restated Guaranty of Gregory Gold and Hunter Bates, each of which were wholly owned subsidiaries of Issuer at such time.  Pursuant to the acquisition of the Platinum Security Agreement, Purchaser obtained a security interest in all of Issuer’s assets with the exception of equity interests and assets held in CGMR BVI, Wits BVI and Wits-China Acquisition, a wholly owned subsidiary of Issuer, to the extent such entities or assets were located in or relate to China and were subject to a lien in favor of Purchaser pursuant to the Purchase Agreement and related security documents.

I.           On June 9, 2009, Purchaser loaned Issuer an additional $100,000 pursuant to the terms of the Second Amended Note.  On September 1, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to terms of the Second Amended Note.  On November 10, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to the terms of the Second Amended Note (the “Additional Loans”).

J.           On December 14, 2009, Issuer entered into a financing arrangement with Kenglo One, Ltd., a company incorporated under the laws of Jersey (“Kenglo”), whereby Issuer issued Kenglo a secured promissory note in the principal amount of US$5,000,000.  As a condition to the financing, Purchaser agreed to permit Issuer to grant Kenglo a security interest in certain assets of Debtors on a  pari passu basis with Purchaser.

K.          Issuer and Purchaser wish to amend the Purchase Agreement with this Amendment No. 4 to (i) consolidate the Second Amended Note and the Additional Loans into a Third Amended and Restated Note in the aggregate principal amount of $6,153,321.86, such amount including all accrued and unpaid interest on the Second Amended Note and the Additional Loans as of the date hereof and (ii) amend and modify the Security Documents to consolidate the security interests of Purchaser as held pursuant to the security agreements between Purchaser and Issuer and Issuer and Platinum.  Pursuant to the amendments, Purchaser has also agreed to release and terminate the Wits-China Subsidiary Security Agreement, Wits-China Guaranty, Wits BVI Subsidiary Security Agreement and the Wits-BVI Guaranty on the understanding that Wits-China and Wits BVI are not currently, nor are they contemplated to be, operating entities and thus Issuer intends to dissolve such entities.  As additional consideration for Purchaser’s agreement to enter into this Amendment No. 4, Issuer has agreed to reduce the exercise prices of the Warrants to $0.01 per share.

Now, Therefore, in consideration of the foregoing facts and premises hereby made a part of this Agreement, the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.           Amendment to Notes.  As of the date hereof, Issuer and Purchaser hereby cancel the Second Amended Note and Additional Loans, and Issuer shall issue Purchaser a promissory note in the aggregate principal amount of $6,153,321.86 and having a maturity date of February 15, 2010, in the form attached as Exhibit A (the “Third Amended and Restated Note”).  Together with the execution and delivery of this Amendment, Purchaser has delivered to Issuer the original Second Amended Note marked “Cancelled,” and the Additional Loans shall be deemed satisfied in full.

2.           Amendment of Platinum Agreements.  As additional consideration for Issuer’s agreement to the terms hereof, Purchaser hereby agrees to (i) extend the maturity date applicable to the Platinum Notes to February 15, 2010, (ii) amend Issuer’s obligation under Section 3.15 of the Platinum Purchase Agreement with respect to reservation of shares for conversion of the Platinum Notes from 150% of the aggregate number of shares issuable upon conversion of the Platinum Notes to 100% of such maximum number, and (iii) amend the conversion feature of the Original Platinum Note to provide for a minimum Conversion Price (as defined in the Platinum Notes) of $0.01 per share.  Additionally, Purchaser hereby waives any rights to call such Platinum Notes into default solely based on Issuer’s failure to timely satisfy its payment obligations under the Platinum Notes as of the date hereof until February 15, 2010.

3.           Amendment to Security Agreement.  As of the date hereof, Purchaser and Issuer amend, restate and supersede in their entirety the terms of the Amended Security Agreement and Platinum Security Agreement into the form attached hereto as Exhibit B (the “Second Amended and Restated Security Agreement”).

4.           Amendment to Pledge Agreement.  As of the date hereof, Purchaser and Issuer amend, restate and supersede in their entirety the terms of the Second Amended and Restated Pledge Agreement into the form attached hereto as Exhibit C (the “Third Amended and Restated Pledge Agreement”).  Without limitation as to the terms of the Third Amended and Restated Pledge Agreement, Purchaser hereby agrees to release Issuer’s equity interest in Wits-China and Wits BVI to enable Issuer to dissolve such entities; provided that, in the event Issuer or any of its subsidiaries begins to operate or otherwise utilize such entities prior to dissolution, Issuer hereby covenants and agrees to pledge such equity interests to Purchaser on the terms previously pledged.

5.           Other Forms of Security.  Purchaser hereby agrees to release and terminate Wits-China and Wits BVI from their respective obligations under the Wits-China Guaranty, the Wits-China Subsidiary Security Agreement, the Wits BVI Guaranty and the Wits BVI Subsidiary Security Agreement; provided that, in the event Issuer or any of its subsidiaries begin to operate or otherwise utilize such entities prior to their dissolution, Issuer shall cause such entities to enter into a security agreement and guaranty on the terms set forth in the respective agreements.  Notwithstanding the foregoing, Purchaser’s other forms of security, including without limitation the Amended and Restated Guaranty of Hunter Bates and Gregory Gold, shall continue in full force and effect except as expressly set forth herein.

6.           Modification and Issuance of Warrants.  In consideration of Purchaser’s agreement to enter into the amendments set forth herein:

a.           Issuer hereby agrees to modify the Warrants to reduce the Exercise Price (as defined in the respective Warrants) to $0.01 per share effective as of the date hereof.  At the request of Purchaser, together with delivery to Issuer of the original certificates of the Warrants, Issuer shall reissue to Purchaser modified warrant certificates reflecting the modified Exercise Prices as set forth herein.  Additionally, Issuer hereby agrees to extend the expiration date of the Second Warrant to October 28, 2013.

b.           Issuer hereby agrees to issue Purchaser a five-year warrant to purchase 1,600,000 shares of Issuer’s common stock at an exercise price of $0.01 per share.

7.           Miscellaneous.

a.           This Amendment shall be construed in connection with and as part of the Purchase Agreement, and, except as modified and expressly amended by this Amendment, all terms, conditions and covenants contained in the Purchase Agreement, are hereby ratified and shall be and remain in full force and effect.

b.           Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment may refer to the Purchase Agreement without making specific reference to this Amendment, but nevertheless all such references shall include this Amendment, unless the context otherwise requires.

c.           The description headings of the various sections or parts of this Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

d.           This Amendment shall be governed by and construed in accordance with Kansas law.

e.           This Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.  Signature to this Amendment may be given by facsimile or other electronic transmission and such signatures shall be fully binding on the party sending the same.

[Remainder of page left blank intentionally.

Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

ISSUER:

WITS BASIN PRECIOUS MINERALS INC.,

a Minnesota corporation

By:

/s/ Stephen D. King

Name:

Stephen D. King

Title:

Chief Executive Officer

PURCHASER:

CHINA GOLD, LLC,

a Kansas limited liability company

By:

Pioneer Holdings, LLC

Its:

Manager

By:

/s/ C. Andrew Martin

Name:

C. Andrew Martin

Title:

Manager

EX-10.70 16 v181039_ex10-70.htm

EXHIBIT 10.70

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION (TOGETHER, THE “SECURITIES LAWS”) AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ENCUMBERED IN THE ABSENCE OF COMPLIANCE WITH SUCH SECURITIES LAWS AND UNTIL THE ISSUER THEREOF SHALL HAVE RECEIVED AN OPINION FROM COUNSEL ACCEPTABLE TO IT THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY APPLICABLE SECURITIES LAWS.  TRANSFER OF THIS NOTE IS ALSO RESTRICTED BY THE NOTES PURCHASE AGREEMENT REFERRED TO HEREIN.  THE PAYMENT AND PERFORMANCE OF THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN NOTES PURCHASE AGREEMENT, AS AMENDED FROM TIME TO TIME.

CERTIFICATE NO: CG1.1

THIRD AMENDED AND RESTATED PROMISSORY NOTE

$6,153,321.86

December 17, 2009

FOR VALUE RECEIVED, Wits Basin Precious Minerals Inc., a corporation organized and existing under the laws of the State of Minnesota (“Issuer”), hereby unconditionally promises to pay to the order of China Gold LLC, a Kansas limited liability company, or its successors and assigns (the “Holder”) on demand at any time on or after February 15, 2010 (the “Maturity Date”), the principal sum of up to Six Million One Hundred Fifty-Three Thousand Three Hundred Twenty-One Dollars and  Eighty-Six Cents ($6,153,321.86) (the “Principal”), together with accrued and unpaid interest thereon, as provided herein until fully paid (the “Indebtedness”), all without relief from valuation or appraisement laws.

This Third Amended and Restated Promissory Note (the “Note”) is issued pursuant to that certain Notes Purchase Agreement dated as of April 10, 2007, as previously amended by that certain Amendment to Notes Purchase Agreement dated June 19, 2007, and as further amended on November 10, 2008, December 22, 2008 and on the date hereof (as amended, modified, or replace from time to time, the “Notes Purchase Agreement”).  Pursuant to that certain Amended and Restated Promissory Note dated November 11, 2008 (the “First Amended Note”), the Issuer and Holder amended and consolidated the following notes issued pursuant to the Notes Purchase Agreement:  (i) Convertible Promissory Note issued on April 10, 2007 in the principal amount of $3,000,000; (ii) Convertible Promissory Note issued on May 7, 2007 in the principal amount of $2,000,000; (iii) Convertible Promissory Note issued on June 19, 2007 in the principal amount of $4,000,000; and (iv) Convertible Promissory Note issued on July 9, 2007 in the principal amount of $800,000 (collectively, the “Prior Notes”).  Pursuant to that Second Amended and Restated Promissory Note dated December 22, 2008 (the “Second Amended Note”), the First Amended Note was consolidated with that certain Promissory Note dated October 28, 2008 in the principal amount of $441,000.  Pursuant to this Third Amended and Restated Promissory Note, the Second Amended Note is consolidated with the payment obligations of Issuer pursuant to that certain loan of $100,000 by Holder to Issuer on June 9, 2009, that certain loan of $150,000 by Holder to Issuer on September 1, 2009, and that certain loan of $150,000 by Holder to Issuer on November 10, 2009 (the “Additional Loans”).  Holder has delivered the Second Amended Note to Issuer and hereby acknowledges and agrees that the Second Amended Note and the Additional Loans have been cancelled in their entirety.

1.           Payment of Principal and Interest.  Subject to acceleration or earlier payment as provided for elsewhere in this Note, the Notes Purchase Agreement or any of the other agreements, documents, and instruments relating to any of the Indebtedness or any security therefor that are required by the Notes Purchase Agreement to be executed and delivered to or for the benefit of Holder (collectively, together with this Note and the Notes Purchase Agreement, the “Investment Documents”), the principal balance of this Note, and any accrued and unpaid interest thereon, shall be due and payable upon Holder’s demand on or after the Maturity Date.   Issuer shall make all payments payable in cash under this Note in lawful money of the United States.  All payments paid by Issuer to Holder under this Note and under the other Investment Documents shall be applied in the following order of priority:  (a) to amounts, other than principal and interest, due to Holder pursuant to this Note for all costs of collection of any kind, including reasonable attorneys’ fees and expenses; (b) to accrued but unpaid interest on this Note; and (c) to the unpaid principal balance of this Note.  If Issuer makes any payment of principal, interest or other amounts upon the Indebtedness by check, draft, or other remittance, Holder shall not be deemed to have received such payment until Holder actually receives the payment instrument.

2.           Calculation of Interest.  Interest shall accrue on the outstanding principal balance at the end of each day on which any amount is outstanding under this Note at the rate of 12.25% (the “Interest Rate”) per annum.  Interest shall be calculated on a basis of the actual number of days elapsed over a year of 365 days, commencing as of the date hereof.

3.           Prepayment.  This Note may be prepaid in cash or other immediately available funds, in whole or in part, by Issuer at any time and from time to time, without premium or penalty (a “Prepayment”).

4.           Waiver.  Payment of principal and interest due under this Note shall be made without presentment or demand.  The Issuer and all others at any time liable directly or indirectly (including, without limitation, the Issuer, any co-makers, endorsers, sureties and guarantors, all of which are referred to herein as “Parties”), severally waive presentment, demand and protest, notice of protest, demand, and dishonor, and nonpayment of this Note, and all diligence in collection and agree to pay all costs of collection when incurred, including reasonable attorneys’ fees, and to perform and comply with each of the covenants, conditions, provisions, and agreements of the Issuer contained in every instrument now evidencing the Indebtedness.  No release by Holder of any security for payment of the Indebtedness or any modification or restructuring in respect of any lien or security interest held or at any time obtained or acquired by Holder for payment of such Indebtedness shall operate to release, discharge, impair or alter the liability of any Party liable at any time directly or indirectly for payment of such Indebtedness.

5.           Renewal and Modification.  Issuer further agrees that the Indebtedness may be from time to time, extended, renewed, modified, rearranged, or evidenced by one or more other notes or obligations in substitution for this Note and upon and for such term or terms agreed to by Issuer and Holder in writing, and with or without notice to other Parties.  Issuer agrees that upon and after such extension, renewal, modification, rearrangement, substitution, or other change in form of the Indebtedness, each of the other Parties shall remain liable in respect of the Indebtedness so renewed, extended, modified, rearranged, or otherwise evidenced in the same capacity and to the same extent as prior thereto.  No release or discharge (in whole or in part) of any Party hereto by Holder shall in any manner impair, release, discharge, or alter the liability of any other Party.

6.           Events of Default.  Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Note: (a) Issuer fails to timely pay as and when due any monetary obligation under this Note in accordance with the terms hereof; (b) Issuer’s assignment for the benefit of creditors, or filing of a petition in bankruptcy or for reorganization or to effect a plan or arrangement with creditors; (c) Issuer’s application for, or voluntary permission of, the appointment of a receiver of trustee for any or all Company property; (d) any action or proceeding described in the foregoing paragraphs (b) or (c) is commenced against Issuer and such action or proceeding is not vacated within sixty (60) days of its commencement; (e) Issuer’s dissolution or liquidation; and (f) an event of default under any other Investment Document shall have occurred.

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7.           Rights and Remedies.  Upon the occurrence, and during the continuation, of an Event of Default (a) all Indebtedness and all other amounts due and owing under this Note shall (at the option of Holder) immediately become due and payable without demand and without notice to Issuer, (b) Holder shall have all rights, powers and remedies set forth in the Investment Documents, as well as any and all rights and remedies available to it under any applicable law or as otherwise provided at law or in equity; and (c) Issuer shall pay to Holder, in addition to the sums stated above, the costs of collection, regardless of whether litigation is commenced, including reasonable attorneys’ fees.

Holder may employ an attorney to enforce its rights and remedies hereunder and Issuer hereby agrees to pay Holder’s reasonable attorneys’ fees and other reasonable expenses, including reasonable expenses relating to any assistance provided by Holder to Issuer in resolving such defaults and amounts incurred by Holder in exercising any of Holder’s rights and remedies upon an Event of Default.  Holder’s rights and remedies under this Note and the other Investment Documents shall be cumulative.  Holder shall have all other rights and remedies not inconsistent herewith as provided under the Uniform Commercial Code as in effect in the State of Kansas, or otherwise by law, or in equity.  No exercise by Holder of one right or remedy shall be deemed an election, and no waiver by Holder of any Event of Default shall be deemed a continuing waiver.  No delay by Holder shall constitute a waiver, election, or acquiescence by it.

8.           Revival and Reinstatement of Note.  To the extent that any payment to Holder or any payment or proceeds of any collateral received by Holder in reduction of the Indebtedness is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, to Issuer (or Issuer’s successor) as a debtor-in-possession, or to a receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then the portion of the Indebtedness intended to have been satisfied by such payment or proceeds shall remain due and payable hereunder, be evidenced by this Note, and shall continue in full force and effect as if such payment or proceeds had never been received by Holder whether or not this Note has been marked “paid” or otherwise canceled or satisfied or has been delivered to Issuer, and in such event Issuer shall be immediately obligated to return the original Note to Holder and any marking of “paid” or other similar marking shall be of no force and effect.

9.           Authority.  Issuer warrants and represents that the persons or officers who are executing this Note and the other Investment Documents on behalf of Issuer have full right, power and authority to do so, and that this Note and the other Investment Documents constitute valid and binding documents, enforceable against Issuer in accordance with their terms, and that no other person, entity, or party is required to sign, approve, or consent to, this Note.

10.         Governing Law; Consent to Forum.  This Note shall be governed by the laws of the State of Kansas without giving effect to any choice of law rules thereof; provided, however, that if any of the collateral securing the Indebtedness shall be located in any jurisdiction other than Kansas, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Holder’s security interest, lien or mortgage upon such collateral and the enforcement of Holder’s other remedies in respect of such collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of Kansas.  AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, ISSUER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN JOHNSON COUNTY, KANSAS OR FEDERAL COURT IN THE DISTRICT OF KANSAS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.  ISSUER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.  ISSUER FURTHER AGREES NOT TO ASSERT AGAINST HOLDER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED BY HOLDER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THIS NOTE, THE OTHER INVESTMENT DOCUMENTS, HOLDER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.

3

11.         WAIVER OF JURY TRIAL AND COUNTERCLAIMS.  TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO HOLDER, ISSUER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH HOLDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR IN ANY COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO THIS NOTE, THE INDEBTEDNESS, THE COLLATERAL SECURING THE INDEBTEDNESS, OR THE HOLDER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

12.         Transfer of Note.  Issuer shall not transfer any obligations hereunder without Holder’s prior written consent, which may be withheld in Holder’s sole and absolute discretion.  With the prior written consent of Issuer, which shall not be unreasonably withheld, conditioned, or delayed, Holder may participate, sell, assign, transfer or otherwise dispose of all or any portion of its interest in this Note (including Holder’s rights, title, interests, remedies, powers and duties hereunder) to a purchaser, participant, any syndicate, or any other Person (each, a “Note Purchaser”).  In connection with any such disposition (and thereafter), Holder may, with adequate safeguards of confidentiality in a manner satisfactory to Issuer, disclose any financial information Holder may have concerning Issuer to any such Note Purchaser or potential Note Purchaser.

13.         Further Assurances.  Issuer agrees to execute and deliver such further documents and to do such other acts as Holder may request in order to effect or carry out the terms of this Note and the other Investment Documents and the due performance of Issuer’s obligations hereunder and thereunder.

14.         Relationship to Security Agreement.  This Note shall be entitled to the benefits of, shall be construed in accordance with the security granted by the Issuer to the Holder under the Second Amended and Restated Security Agreement by and between the Holder, Issuer, Hunter Bates Mining Corporation (“Hunter Bates”) and Gregory Gold Producers, Inc. (“Gregory Gold”) dated on or around the date hereof (the "Security Agreement"), the Third Amended and Restated Pledge Agreement by and between Holder, Issuer, Hunter Bates and Gregory Gold (the “Pledge Agreement”) dated on or around the date hereof, and any other security agreements identified in the Investment Documents. The Holder agrees and acknowledges that it has no other security over the assets of or otherwise in relation to China Global Mining Resources (BVI) Limited and any of its subsidiary undertakings from time to time other than specifically referenced in, and as limited by, the terms of the Security Agreement and Pledge Agreement.

15.         Miscellaneous.

(a)           Time is of the essence with respect to this Note.

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(b)           Issuer hereby waives presentment, demand, protest, and notice of dishonor and protest.  No waiver of any right or remedy of the Holder under this Note shall be valid unless in a writing executed by the Holder and any such waiver shall be effective only in the specific instance and for the specific purpose given.  All rights and remedies of the Holder of this Note shall be cumulative and may be exercised singly, concurrently, or successively.

(c)           Unless otherwise provided herein, any notice required or permitted to be given hereunder shall be given by Issuer to the Holder or the Holder to the Company in accordance with the Notes Purchase Agreement.

(d)           Any provision of this Note that is prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

(e)           This Note and the other Investment Documents collectively: (i) constitute the final expression of the agreement between Issuer and Holder concerning the Indebtedness; (ii) contain the entire agreement between Issuer and Holder respecting the matters set forth herein and in the other Investment Documents; and (iii) may not be contradicted by evidence of any prior or contemporaneous oral agreements or understandings between Issuer and Holder.  Neither this Note nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing executed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought.

(f)            If there is a conflict between or among the terms, covenants, conditions or provisions of this Note and the other Investment Documents, then any term, covenant, condition and/or provision that Holder may elect to enforce from time to time so as to enlarge the interest of Holder in its security for the Indebtedness, afford Holder the maximum financial benefits or security for the Indebtedness, and/or provide Holder the maximum assurance of payment of the Indebtedness and the Indebtedness in full, shall control.  ISSUER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN PROVIDED WITH SUFFICIENT AND NECESSARY TIME AND OPPORTUNITY TO REVIEW THE TERMS OF THIS NOTE AND EACH OF THE INVESTMENT DOCUMENTS WITH ANY AND ALL COUNSEL IT DEEMS APPROPRIATE, AND THAT NO INFERENCE IN FAVOR OF, OR AGAINST, HOLDER OR ISSUER SHALL BE DRAWN FROM THE FACT THAT EITHER SUCH PARTY HAS DRAFTED ANY PORTION OF THIS NOTE OR ANY OF THE INVESTMENT DOCUMENTS.

(g)           The terms “include”, “including” and similar terms shall be construed as if followed by the phrase “without being limited to.”  The term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  Words of masculine, feminine or neuter gender shall mean and include the correlative words of the other genders, and words importing the singular number shall mean and include the plural number, and vice versa.  All article, section, schedule, and exhibit captions are used for convenient reference only and in no way define, limit or describe the scope or intent of, or in any way affect, any such article, section, schedule, or exhibit.  Unless the context of this Note clearly requires otherwise, references to the plural include the singular, references to the singular include the plural.  Any reference in this Note or in the Investment Documents to this Note or to any of the Investment Documents shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, and supplements thereto and thereof, as applicable. An Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by Holder or completely cured in accordance with the terms of the applicable Investment Documents.

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IN WITNESS WHEREOF, Issuer has executed and delivered this Note as of the date first stated above.

ISSUER:

WITS BASIN PRECIOUS MINERALS INC.

By:

/s/ Stephen D. King

Name:

Stephen D. King

Title:

Chief Executive Officer

EX-10.71 17 v181039_ex10-71.htm Unassociated Document

EXHIBIT 10.71

SECOND AMENDED AND RESTATED SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) is dated as of December 17, 2009, and is by and between Wits Basin Precious Minerals Inc., a Minnesota corporation (“Wits Basin”), Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”), Gregory Gold Producers, Inc., a Colorado corporation (collectively with Wits Basin and Hunter Bates, the “Debtors”), and China Gold, LLC, a Kansas limited liability company, its successors and assigns (together with its successors and assigns, “Secured Party”).

RECITALS

The following recitals are a material part of this Agreement.

A.          Debtor and Secured Party are parties to that certain Convertible Notes Purchase Agreement dated as of April 10, 2007, as amended on June 19, 2007 and November 10, 2008 (as amended, the “Purchase Agreement”), pursuant to which, among other things, Debtor has issued Secured Party Secured Convertible Notes in an aggregate principal amount of $9,800,000 (the “Prior Notes”).  All capitalized terms used in this Agreement without definition have the definitions given to them in the Purchase Agreement.

B.           As partial security for Debtor’s obligations under the Prior Notes, Debtor entered into a Security Agreement with Secured Party dated June 19, 2007 (the “Original Security Agreement”), whereby Debtor granted Secured Party a security interest in all of the assets acquired by Debtor from the use of the proceeds from the sale of the Prior Notes.

C.           On October 28, 2008, Secured Party loaned Debtor an additional $441,000 pursuant to the terms of a Promissory Note dated October 28, 2008 (the “October 2008 Note”), with Debtor’s payment obligations under the Additional Note secured by the Original Security Agreement, amongst other forms of security.

D.           Pursuant to Amendment No. 2 to the Purchase Agreement, on November 10, 2008, the parties converted the Prior Notes (including accrued and unpaid interest thereon) into a Promissory Note dated November 10, 2008 in the principal amount of $9,800,000 (the “First Amended Note”), the obligations under which remained secured by the Original Security Agreement.

E.           In March 2009, Debtor entered into a joint venture transaction (the “JV Transaction”) with London Mining Plc (“London Mining”), whereby London Mining and Debtor formed a joint venture entity in the British Virgin Islands entitled China Global Mining Resources (BVI) Limited (registered number 1513743) (“CGMR BVI”) to acquire and operate certain mining properties in the People’s Republic of China (the “PRC Properties”) pursuant to certain rights to acquire the PRC Properties held by the Debtor and certain of its subsidiaries (the “Rights”).  Such Rights were subject to the security interest of Secured Party under the terms of the Original Security Agreement.  For the avoidance of doubt, CGMR BVI is a separate entity to the Debtor’s wholly owned subsidiary “China Global Mining Resources Limited” (registered number 1386052) registered in the British Virgin Islands and referred to in the Original Security Agreement (currently known as Wits Basin (BVI) Ltd.).

F.           On December 22, 2008, Debtor and Secured Party entered into that certain Amendment No. 3 to the Purchase Agreement (“Amendment No. 3”) in an effort to consolidate the First Amended Note and October 2008 Note, and Debtor issued Secured Party in lieu thereof a promissory note dated December 22, 2008  in the aggregate principal amount of $10,241,000 (the “Second Amended Note”).  Additionally, pursuant to Amendment No. 3, to enable the Debtor to enter into the JV Transaction, the parties modified certain terms of the First Amended Note and October 2008 Note to, among other modifications, amend certain terms of Secured Party’s security interest to release from such security interest the Rights, the PRC Properties and Debtor’s equity interest in China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”).  As a result of such modifications, on December 19, 2009, Debtor and Secured Party amended and superseded the terms of the Original Security Agreement pursuant to an Amended and Restated Security Agreement (the “Amended Security Agreement”).

G.           On April 20, 2009, the Secured Party purchased from Platinum Long Term Growth V, LLC (“Platinum”) the rights of Platinum under (i) that certain Note and Warrant Purchase Agreement dated on or around February 11, 2008 by and between Issuer and Platinum (the “Platinum Purchase Agreement”), pursuant to Issuer issued that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 issued by Debtor in favor of Platinum on or around February 11, 2008 and (ii) that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $110,000 issued by Debtor in favor of Platinum on or around July 10, 2008 (the “Platinum Notes”).  The Debtor’s obligations under the Platinum Notes are secured pursuant to the terms of (i) that certain Security Agreement dated February 11, 2008 (the “Platinum Security Agreement”) by and between Debtor and Secured Party (as a successor-in-interest to Platinum) and (ii) that certain Amended and Restated Guaranty of Gregory Gold Producers, Incorporated (“Gregory Gold”) and Hunter Bates Mining Corporation (“Hunter Bates”), each of which were wholly owned subsidiaries of the Debtor at such time.  Pursuant to the Platinum Security Agreement, Secured Party holds a security interest in all of Debtor’s assets with the exception of equity interests and assets held in CGMR BVI, Wits Basin (BVI) Ltd. and Wits-China Acquisition, a wholly owned subsidiary of the Debtor, to the extent such entities or assets are located in or relate to China and are subject to a lien in favor of Secured Party.

H.           On June 9, 2009, Purchaser loaned Issuer an additional $100,000 pursuant to the terms of the Second Amended Note.  On September 1, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to terms of the Second Amended Note.  On November 10, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to the terms of the Second Amended Note (the “Additional Loans”).  The terms of the Additional Loans included, without limitation, that Debtor’s payment obligations under the Additional Loans were to be secured by the Amended Security Agreement, amongst other forms of security.

I.            On December 14, 2009, Issuer entered into a financing arrangement with Kenglo One, Ltd., a company incorporated under the laws of Jersey (“Kenglo”), whereby Issuer issued Kenglo a secured promissory note in the principal amount of US$5,000,000.  As a condition to the financing, Purchaser agreed to permit Issuer to grant Kenglo a security interest in certain assets of Debtors on a  pari passu basis with Purchaser.

J.           On or around the date hereof, Debtor and Secured Party entered into that certain Amendment No. 4 to the Purchase Agreement (“Amendment No. 4”) in an effort to consolidate the Second Amended Note and the Additional Loans, and Debtor issued Secured Party in lieu thereof a promissory note dated December 17, 2009  in the aggregate principal amount of $6,153,321.86 (the “Third Amended Note”).

K.           Pursuant to the terms of Amendment No. 4, Debtor and Secured Party wish to enter into this Second Amended and Restated Security Agreement to consolidate the security rights of Secured Party under the Amended Security Agreement and the Platinum Security Agreement into a single agreement under the terms and conditions set forth herein.  This Agreement supersedes in its entirety the Amended Security Agreement and Platinum Security Agreement, each of which shall have no continuing effect from the date hereof.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing facts and premises hereby made a part of this Agreement, the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, Debtors and Secured Party agree as follows:

1.           Grant of Security Interest.  Each Debtor hereby grants to Secured Party a present and continuing security interest (the “Security Interest”) in all of such Debtor’s right, title and interest in and to all personal property of Debtor and all products and proceeds thereof, whether now owned or hereinafter acquired, including the following (collectively, the “Collateral”):

(a)           All inventory, of every type and description, now owned or hereafter acquired by Debtor, including inventory consisting of whole goods, spare parts or components, supplies or materials and inventory acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, or any other purpose, and wherever located.

(b)           All warehouse receipts, bills of lading and other documents of title of every type and description now owned or hereafter acquired by Debtor.

(c)           All of Debtor’s accounts, now existing or hereafter arising, including each and every right of Debtor to the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property, out of a rendering of services, out of a loan, out of the overpayment of taxes or other liabilities, or any other transaction or event, whether such right to payment is created, generated or earned by Debtor or by some other person whose interest is subsequently transferred to Debtor, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced (including without limitation, that certain Promissory Note of CGMR BVI in favor of Wits Basin in the principal amount of $4,800,000), together with all other rights and interests (including all liens, security interests and guaranties) which Debtor may at any time have by law or agreement against any account debtor or other person obligated to make any such payment or against any property of such account debtor or other person; all contract rights, chattel papers, bonds, notes and other debt instruments, and all loans and obligations receivable, tax refunds and other rights to payment in the nature of general intangibles; all checking accounts, savings accounts and other depository accounts and all savings certificates and certificates of deposit maintained with or issued by any bank or financial institution.

(d)           All equipment, now owned or hereafter acquired by Debtor and all fixtures of every type and description now owned or hereafter acquired by Debtor, including (without limitation) all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies and all other goods (except inventory) used or bought for use by Debtor for any business or enterprise; including (without limitation) all goods that are or may be attached or affixed or otherwise become fixtures upon any real property; and including specifically (without limitation) the goods described in any equipment schedule or list herewith or hereafter furnished to Secured Party by Debtor, all accessions attachments, parts and repairs now or hereafter attached or affixed or used in connection with equipment, all substitutions and replacements thereof, and all like or similar property now owned or hereafter acquired by Debtor.  (No such schedule or list need be furnished in order for the security interest granted herein to be valid as to all of Debtor’s equipment.)

(e)           All investment property, whether now owned or hereafter acquired by Debtor, including (without limitation) all securities, security entitlements, securities accounts, commodity contracts, commodity accounts, stocks, bonds, mutual fund shares, money market shares and U.S. Government securities, including, subject to the limitations and/or exclusions below, all investment property and general intangibles respecting ownership and/or other equity interests of Debtor in each wholly-owned, majority-owned or minority owned subsidiary, including, without limitation, the shares of capital stock and the other equity interests listed on Schedule A hereto (as the same may be modified from time to time pursuant to the terms hereof, the “Pledged Securities”), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash (“Future Rights”).  Notwithstanding the foregoing, the Secured Party acknowledges and agrees that 1,839,000 shares of common stock of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) held by Wits Basin shall be excluded from the Collateral and the Pledged Securities.

(f)           All general intangibles of every type and description now owned or hereafter acquired by Debtor, including (without limitation) all present and future intellectual property, proprietary rights, foreign and domestic patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade dress, mask works, copyrights, trade names, trade secrets, shop drawings, engineering drawings, blueprints, specifications, parts lists, manuals, operating instructions, customer or supplier lists and contracts, licenses, permits, franchises, the right to use Debtor’s corporate name, and the goodwill of Debtor’s business.

(g)           All instruments, chattel paper, deposit accounts, documents, goods, letter-of-credit rights, letters of credit, all sums on deposit in any collateral account, and any items in any lockbox, now existing or hereafter arising, and any money or other assets of Debtor that come into the possession, custody or control of Secured Party.

For purposes of this Agreement, "Account", "Account Debtor", "Chattel Paper", "Commercial Tort Claims", "Deposit Account", "Document", "Equipment", "Fixtures", "General Intangibles", "Instrument", "Inventory", "Investment Property", "Letter-of-Credit Rights", "Proceeds" and "Supporting Obligations" shall have the meanings set forth in the Kansas Uniform Commercial Code, as amended from time to time, and such meanings shall automatically change at the time that any amendment to the Kansas Uniform Commercial Code, which changes such meanings, shall become effective.  For purposes of this Agreement, such terms may be capitalized, even if not capitalized in the Kansas Uniform Commercial Code, provided, that if any additional goods, property or rights shall be included in such terms under Article 2 thereof, such terms shall be construed to include such additional goods, property or rights. To the extent that the Uniform Commercial Code does not apply to any item of the Collateral, it is the intention of the parties and this Agreement that Secured Party have a common law pledge or collateral assignment of such item of Collateral.

2.           Security for Obligations.  This Agreement secures the payment and performance of all obligations of Wits Basin under the Purchase Agreement, the Platinum Purchase Agreement, the Third Amended Note and the Platinum Notes (collectively, the “Investment Documents”; and all such obligations collectively referred to herein as the “Obligations”), and Hunter Bates and Gregory Gold each hereby absolutely and unconditionally guarantee to Secured Party the full and prompt payment of the Obligations when due to the extent of the value of each such Debtor’s Collateral.

3.           Acknowledgments of Secured Party.  Secured Party acknowledges and agrees that, except with respect to the pledge of Wits Basin’s equity interest pursuant to that certain Third Amended and Restated Pledge Agreement dated of even date herewith by and between Debtors and Secured Party (as amended, the “Pledge Agreement”), Secured Party has no security interest in the assets of CGMR BVI and its subsidiary undertakings, including any rights of CGMR BVI or its subsidiaries to acquire, hold or operate certain mining properties in the People’s Republic of China.

4.           Release.  On completion of any acquisition of all or part of Wits Basin's equity interest in CGMR BVI by London Mining or a member of its Group (as defined in the Shareholders' Agreement) or a third party under the "Come Along" provisions of the Shareholders' Agreement undertaken in accordance with the terms of the Shareholders' Agreement (an "Acquisition"), Wits Basin’s equity interest in CGMR BVI, or such part acquired, will automatically and irrevocably be released and Secured Party agrees to take any further action (including the execution, delivery and filing (as applicable) of any necessary documents or agreements) necessary to effect such release, and shall, prior to the completion of the Acquisition deliver to CGMR BVI all documents and items held by Secured Party pursuant to the terms of the Pledge Agreement.

5.           Further Assurances.

(a)           Each Debtor agrees that it shall, from time to time and at its sole expense, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies under this Agreement with respect to any Collateral.  Without limiting the generality of the foregoing, each Debtor shall: (i) if any Collateral is or shall become evidenced by any promissory note or other instrument or any certificate or document of title or the like, deliver and pledge to Secured Party such note, instrument, certificate or document duly endorsed with recourse by Debtor, and accompanied by duly executed instruments of transfer or assignment, all in form and content satisfactory to Secured Party; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby.

(b)           Debtor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral, without the signature of Debtor to the extent permitted by law.  A copy of this Agreement shall be sufficient as a financing statement to the extent permitted by law.

(c)           Each Debtor will furnish to Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may reasonably request from time to time, all in reasonable detail.

6.           Secured Party’s Duties.  The powers conferred on Secured Party under this Agreement are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it under this Agreement, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against other parties or any other rights pertaining to any Collateral.  Upon full and complete payment and performance of all of the Obligations under the Investment Documents, Secured Party shall release the Collateral of the liens created and granted under this Agreement and, at each Debtor’s expense, execute and deliver to each such Debtor such documents as such Debtor shall reasonably request to evidence such release.

7.           Debtor Remains Liable.  Notwithstanding anything in this Agreement to the contrary, (a) each Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Secured Party of any of its rights under this Agreement shall not release such Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) Secured Party shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of such Debtor thereunder or to take any action to collect or enforce any claim for payment assigned under this Agreement.

8.           Representations, Warranties and Agreements. Each Debtor hereby represents, warrants and agrees as follows:

(a)           Title. Debtor (i) has absolute title to each item of Collateral in existence on the date hereof, free and clear of all Liens except the Permitted Liens, (ii) will have, at the time Debtor acquires any rights in the Collateral hereafter arising, absolute title to, or valid leasehold interests in, each such item of the Collateral, free and clear of all Liens except the Permitted Liens, (iii) will keep all of the Collateral free and clear of all Liens ranking in priority to or pari passu with Liens created by this Security Interest except the Permitted Liens, and (iv) will defend the Collateral against all claims or demands of all persons other than the Secured Party, China Gold and the holder of any Permitted Lien.  Debtor will not sell or otherwise dispose of the Collateral or any interest therein, outside the ordinary course of business, without the prior written consent of the Secured Party.  For the purposes of this Agreement, the term “Liens” means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a person, whether now owned or hereafter acquired and whether arising by agreement or operation of law, and the term “Permitted Liens” means (1) the Security Interest, (2) a pari passu Lien in the Collateral held by Kenglo that is in all respects equal and identical to the Security Interest, (3) covenants, restrictions, rights, easements and minor irregularities in title that do not materially interfere with the Company’s business or operations as presently conducted; (4) liens for taxes not yet delinquent or liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established, (5) liens in respect of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’s, landlord’s and mechanics’ liens and other similar liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings and (6) matters of record as of the date hereof, itemized on Schedule A hereof; provided, however, that notwithstanding the foregoing, Secured party shall not be subject to any Permitted Lien unless Kenglo is also subject to the same Permitted Lien.

(b)           Location of the Collateral.  As of the date hereof, the tangible Collateral is located only in the state and at the address(es) identified on Schedule B attached hereto.  Debtor will not permit any tangible Collateral to be located in any state (and, if county filing is required, in any county) in which a financing statement covering such Collateral is required to be, but has not in fact been, filed in order to perfect the Security Interest.

(c)           Fixtures.  Except as otherwise set forth in any lease agreement between Debtor and its landlord, Debtor will not permit any tangible Collateral to become part of or to be affixed to any real property without first assuring to the reasonable satisfaction of the Secured Party that the Security Interest will be prior and senior to any Lien then held or thereafter acquired by any mortgagee of such real property or the owner or purchaser of any interest therein.

(d)           Rights to Payment.  Each right to payment and each instrument, document, chattel paper and other agreement constituting or evidencing the Collateral is (or will be when arising, issued or assigned to the Secured Party) the valid, genuine and legally enforceable obligation, subject to no defense, setoff or counterclaim (other than those arising in the ordinary course of business), of the account debtor or other obligor named therein or in Debtor’s records pertaining thereto as being obligated to pay such obligation.  Debtor will neither agree to any material modification or amendment nor agree to any forbearance, release or cancellation of any such obligation, and will not subordinate any such right to payment to claims of other creditors of such account debtor or other obligor.

(e)           Commercial Tort Claims.  Promptly upon knowledge thereof, Debtor will deliver to the Secured Party notice of any commercial tort claims it may bring against any person, including the name and address of each defendant, a summary of the facts, an estimate of Debtor’s damages, copies of any complaint or demand letter submitted by Debtor, and such other information as the Secured Party may request.  Upon request by the Secured Party, Debtor will grant the Secured Party a security interest in all commercial tort claims it may have against any person.

(f)           Miscellaneous Covenants.  Debtor will:

(1)             keep all tangible Collateral in good repair, working order and condition, normal depreciation excepted;

(2)             promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security Interest;

(3)             at all reasonable times, permit the Secured Party or its representatives to examine or inspect any Collateral, wherever located, and to examine, inspect and copy Debtor’s books and records pertaining to the Collateral and its business and financial condition and to send and discuss with account debtors and other obligors requests for verifications of amounts owed to Debtor;

(4)             keep accurate and complete records pertaining to the Collateral and pertaining to Debtor’s business and financial condition and submit to the Secured Party such periodic reports concerning the Collateral and Debtor’s business and financial condition as the Secured Party may from time to time reasonably request;

(5)             promptly notify the Secured Party of any material loss of or material damage to any Collateral or of any material adverse change known to Debtor pertaining to the prospect of payment of any sums due on or under any instrument, chattel paper, or account constituting the Collateral;

(6)             from time to time execute such financing statements as the Secured Party may reasonably require in order to perfect the Security Interest (including, without limitation, any filings with the United States Patent and Trademark Office, Copyright or other Intellectual Property filings and any filings of financing or continuation statements under the UCC) in order to create, preserve, upgrade in rank (to the extent required hereby), perfect, confirm or validate the Security Interest or to enable the Secured Party to obtain the full benefits of this Agreement, or to enable the Secured Party to exercise and enforce any of its rights, powers and remedies hereunder with respect to any of the Collateral and, if any Collateral consists of a motor vehicle, execute such documents as may be required to have the Security Interest properly noted on a certificate of title;

(7)             with respect to the Pledged Securities, to the extent it may lawfully do so, use its best efforts to prevent any subsidiary of Debtor of which Pledged Securities are held from issuing Future Rights or Proceeds; and

(8)             upon receipt by Debtor of any material notice, report, or other communication from a subsidiary of Debtor of which Pledged Securities are held or any Holder relating to all or any part of the Pledged Securities, deliver such notice, report or other communication to Secured Party as soon as possible, but in no event later than five (5) days following the receipt thereof by Debtor.

(9)             pay when due or reimburse the Secured Party on demand for all costs of collection of any of the Obligations and all other out-of-pocket expenses (including, in each case, all reasonable attorneys’ fees) incurred by the Secured Party in connection with the creation, perfection, satisfaction, protection, defense or enforcement of the Security Interest or the creation, continuance, protection, defense or enforcement of this Agreement or any or all of the Obligations, including expenses incurred in any litigation or bankruptcy or insolvency proceedings; and

(10)           not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law, statute or ordinance.

(g)           The Secured Party’s Right to Take Action.  Debtor authorizes the Secured Party to file from time to time where permitted by law, such financing statements against the Collateral described as “all of Debtor’s assets” as the Secured Party deems necessary or useful to perfect the Security Interest.  Debtor will not amend any financing statements in favor of the Secured Party, except as permitted by law.  Further, if Debtor at any time fails to perform or observe any agreement contained in Section 8(f), and if such failure continues for a period of 10 days after the Secured Party gives Debtor written notice thereof (or, in the case of the agreements contained in clauses (6) and (9) of Section 8(f), immediately upon the occurrence of such failure, without notice or lapse of time), the Secured Party may (but need not) perform or observe such agreement on behalf and in the name, place and stead of Debtor (or, at the Secured Party’s option, in the Secured Party’s own name) and may (but need not) take any and all other actions which the Secured Party may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens, or encumbrances, the performance of obligations under contracts or agreements with account debtors or other obligors, the procurement and maintenance of insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs or transportation); and, except to the extent that the effect of such payment would be to render any loan or forbearance of money usurious or otherwise illegal under any applicable law, Debtor shall thereupon pay the Secured Party on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys’ fees) incurred by the Secured Party in connection with or as a result of the Secured Party’s performance or observation of such agreements or any actions taken thereunder, together with interest thereon from the date expended or incurred by the Secured Party at the highest rate then applicable to any of the Obligations.  To facilitate the performance or observance by the Secured Party of such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with an interest) the Secured Party, or its delegate, as the attorney-in-fact of Debtor with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file, in the name and on behalf of Debtor, any and all instruments, documents, control agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Debtor under this Section 8 and Section 9, including: (i) to receive, indorse, and collect all instruments made payable to Debtor representing any dividend, interest payment or other distribution in respect of the Pledged Securities or any part thereof to the extent permitted under this Agreement and to give full discharge for the same and to execute and file governmental notifications and reporting forms; or (ii) to arrange for the transfer of the Pledged Securities on the books of a subsidiary of Debtor of which Pledged Securities are held or any other person to the name of Secured Party or to the names of Secured Party’s nominees.  In addition to the designation of Secured Party as Debtor’s attorneys-in-fact, Debtor by this Agreement irrevocably appoints Secured Party as Debtor’s agents and attorneys-in-fact to make, execute and deliver after the occurrence and during the continuance of an Event of Default any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where Debtor or any subsidiary of Debtor of which Pledged Securities are held engage in business, in order to transfer or to more effectively transfer any of the Pledged Securities or otherwise enforce Secured Party’s rights under this Agreement.

Debtor shall pay the costs of, or incidental to, any recording or filing of any financing statements, financing statement amendments or continuation statements concerning the Collateral.

9.           Rights of the Secured Party.

(a)           Account Verification. At any time and from time to time, whether before or after an Event of Default, the Secured Party may send or require a Debtor to send requests for verification of Accounts to account debtors and other obligors.  The Secured Party may also at any time and from time to time telephone account debtors and other obligors to verify accounts.

(b)           Direct Collection.  At any time after the occurrence and during the continuation of an Event of Default, the Secured Party may notify any account debtor, or any other person obligated to pay any amount due, that such chattel paper, Account, or other right to payment has been assigned or transferred to the Secured Party for security and shall be paid directly to the Secured Party.  At any time after the Secured Party or any Debtor gives such notice to an account debtor or other obligor, the Secured Party may (but need not), in its own name or in such Debtor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such chattel paper, Account, or other right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor.

10.         Assignment of Insurance.  Each Debtor hereby assigns to the Secured Party, as additional security for the payment of the Obligations, any and all moneys (including, but not limited to, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of such Debtor under or with respect to any and all policies of insurance covering the Collateral, and such Debtor hereby directs the issuer of any such policy to pay any such moneys directly to the Secured Party.  After the occurrence and during the continuation of an Event of Default, the Secured Party may (but need not), in its own name or in such Debtor’s name, execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy.

11.         Events of Default.  Each of the following occurrences (subject to any applicable grace periods) shall constitute an Event of Default under this Agreement (herein called an “Event of Default”):  (i)  Wits Basin shall fail to pay any or all of the Obligations when due or, if payable on demand, on demand; or (ii)  the occurrence of an “Event of Default” as defined under any Investment Document; or (iii) payment of any substantial indebtedness of Wits Basin, other than the Obligations, shall be demanded or the maturity of any such indebtedness shall be accelerated, or any precondition or circumstance permitting any creditor of Wits Basin, acting individually or with the consent of other creditors, to accelerate the maturity of any such indebtedness shall have occurred (for this purpose indebtedness shall be deemed substantial if it exceeds $50,000); or (iv) Wits Basin shall become insolvent or shall commit an act of bankruptcy under the United States Bankruptcy Act, or shall file or have filed against it, voluntarily or involuntarily, a petition in bankruptcy or for reorganization or for the adoption of an arrangement or plan under the United States Bankruptcy Code or shall procure or suffer the appointment of a receiver for any substantial portion of its properties, or shall initiate or have initiated against it, voluntarily or involuntarily, any act, process or proceeding under any insolvency law or other statute or law providing for the modification or adjustment of the rights of creditors.

12.         Remedies.  If any Event of Default shall have occurred and be continuing:

(a)           Secured Party shall have the right pursuant to the applicable Uniform Commercial Code (or pursuant to applicable law for any Collateral not subject to the Uniform Commercial Code) to declare all unmatured Obligations to be immediately due and payable, and the same shall thereupon be immediately due and payable, without presentment or other notice or demand, exercise and enforce any or all rights and remedies available upon default to a secured party under the UCC, including, but not limited to, the right to take possession of any Collateral, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which Debtor hereby expressly waives), and (i) to require each Debtor to assemble the Collateral, at Debtor’s expense, and make it available to Secured Party at a place designated by Secured Party which is reasonably convenient to both parties, and (ii) to enter any of the premises of any Debtor or wherever any of the Collateral shall be located, and to keep and store the same on such premises until sold or otherwise realized upon (and if such premises are the property of such Debtor, such Debtor agrees not to charge Secured Party for storage thereof).

(b)           Secured Party shall have the right to sell or otherwise dispose of all or any Collateral at public or private sale or sales, with such notice as may be required by law, all as Secured Party, in its sole discretion, may deem advisable.  Each Debtor agrees that ten (10) days written notice to such Debtor of any public or private sale or other disposition of such Collateral shall be reasonable notice thereof, and such sale shall be at such locations as Secured Party may designate in such notice.  Secured Party shall have the right to conduct such sales on such Debtor’s premises, without charge therefor.  All public or private sales may be adjourned from time to time in accordance with applicable law.  Secured Party shall have the right to sell, lease or otherwise dispose of such Collateral, or any part thereof, for cash, credit or any combination thereof, and Secured Party may purchase all or any part of such Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations.

(c)           Debtors by this Agreement acknowledge that the sale by Secured Party of any Pledged Securities pursuant to the terms hereof in compliance with the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect (the “Securities Act”), as well as applicable “Blue Sky” or other state securities laws may require strict limitations as to the manner in which Secured Party or any subsequent transferee of the Pledged Securities may dispose thereof. Debtors acknowledge and agree that in order to protect Secured Party’s interest it may be necessary to sell the Pledged Securities at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Each such Debtor has no objection to sale in such a manner and agrees that Secured Party shall have no obligation to obtain the maximum possible price for the Pledged Securities. Without limiting the generality of the foregoing, such Debtor agrees that upon the occurrence and during the continuation of an Event of Default, Secured Party may, subject to applicable law, from time to time attempt to sell all or any part of the Pledged Securities by a private placement, restricting the bidders and prospective Secured Party to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, Secured Party may solicit offers to buy the Pledged Securities or any part thereof for cash from a limited number of investors reasonably believed by Secured Party to be institutional investors or other accredited investors who might be interested in purchasing the Pledged Securities. If Secured Party shall solicit such offers, then the acceptance by Secured Party of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Pledged Securities.

Each Debtor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

(d)           Secured Party may exercise with respect to the Collateral all of the rights and remedies (i) provided for in this Agreement, (ii) provided under the Purchase Agreement or under the other Investment Documents, (iii) afforded to a secured party upon a default under the Uniform Commercial Code, or (iv) otherwise available at law or in equity.

13.         Indemnity and Expenses.

(a)           Each Debtor agrees to indemnify Secured Party from and against any and all claims, losses and liabilities arising out of or relating to this Agreement or any of the Obligations (including enforcement of this Agreement and Secured Party’s exercise of its rights and remedies under this Agreement), unless such claims, losses and liabilities are caused solely by Secured Party’s gross negligence or willful misconduct.

(b)           Each Debtor shall upon demand pay to Secured Party the amount of any and all charges, costs, fees and expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, that Secured Party may incur following such Debtor’s default in connection with (i) the custody, preservation, use of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of Secured Party under this Agreement, or (iii) the failure by such Debtor to perform or observe any of the provisions of this Agreement.  All such fees, expenses and disbursements shall be deemed Obligations secured by this Agreement.

14.         Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas without regard to any choice of law rule thereof giving effect to the laws of any other jurisdiction; provided, however, that if any of the Collateral is located in any jurisdiction other than Kansas, then the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Secured Party’s security interest in such Collateral and the enforcement of Secured Party’s other remedies in respect of such Collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of Kansas.

15.         Organizational Representations; UCC Filing Offices.

(a)           Wits Basin represents and warrants to Secured Party that (i) it is a corporation incorporated under the laws of Minnesota, (ii) its chief executive office is located at 80 South Eighth Street, Suite 900, Minneapolis, Minnesota 55402-8773 and (iii) its organizational identification number is 11M-931.

(b)           Hunter Bates represents and warrants to Secured Party that (i) it is a corporation incorporated under the laws of Minnesota, (ii) its chief executive office is located at 80 South Eighth Street, Suite 900, Minneapolis, Minnesota 55402-8773 and (iii) its organizational identification number is 2820102-2.

(c)           Gregory Gold represents and warrants to Secured Party that (i) it is a corporation incorporated under the laws of Colorado, (ii) its chief executive office is 11438 County Road 19, Ft. Lupton, CO 80321 and (iii) its organizational identification number is 20041114473.

If any Debtor changes the address of its chief executive office, or its name, identity, corporate structure or state of incorporation (without implying any right of such Debtor to make any such change without the prior consent of Secured Party), then, in each case, such Debtor shall give Secured Party not less than ten (10) Business Days prior written notice thereof.

16.         Miscellaneous.

(a)           The mere delay or failure to act shall not preclude the exercise or enforcement of any of the Secured Party’s rights or remedies.  All rights and remedies of the Secured Party shall be cumulative and may be exercised singularly or concurrently, at the Secured Party’s option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other.  The Secured Party’s duty of care with respect to the Collateral in its possession (as imposed by law) shall be deemed fulfilled if the Secured Party exercises reasonable care in physically safekeeping such Collateral or, in the case of any Collateral in the custody or possession of a bailee or other third person, exercises reasonable care in the selection of the bailee or other third person, and the Secured Party need not otherwise preserve, protect, insure or care for any Collateral.  The Secured Party shall not be obligated to preserve any rights of any Debtor may have against prior parties, to realize on the Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral in any particular order of application.  All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations.

(b)           No amendment or waiver of any provision of this Agreement nor consent to any departure by Debtor from the terms or provisions of this Agreement, shall in any event be effective unless it shall be in writing and signed by the party against whom enforcement of such amendment, waiver or consent is sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(c)           The paragraph and section headings in this Agreement are solely for convenience and shall not be deemed to limit or otherwise affect the meaning or construction of any part of this Agreement.  This Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing such document or any portion thereof to be drafted.  The section and other headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement.  Any pronoun used in this Agreement shall be deemed to cover all genders.  The terms “include”, “including” and similar terms shall be construed as if followed by the phrase “without being limited to.”  The term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision or section of this Agreement.  An Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by Secured Party.

(d)           If any provision or provisions of this Agreement shall be unlawful, then such provision or provisions shall be null and void, but the remainder of the Agreement shall remain in full force and effect and be binding on the parties.

(e)           This Agreement may be validly executed and delivered by fax or other electronic transmission and in one or more counterpart signature pages by different signatories thereto.

(f)           Any notice or demand that Secured Party may wish to give to Debtor shall be served upon it in the fashion prescribed for notices in Section 15 at the address and facsimile number for Debtor set forth in the Purchase Agreement, and any notice or demand so sent shall be deemed to be served as set forth in the Purchase Agreement.

17.         Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO SECURED PARTY, DEBTORS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY (WHICH SECURED PARTY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR ANY OF THE OTHER INVESTMENT DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL, SECURED PARTY’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING, ANY OTHER INVESTMENT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, REGARDLIESS OF WHICH PARTY INITATES SUCH ACTION, SUIT, PROCEEDING OR COUNTERCLAIM.  TO EFFECTUATE THE FOREGOING, SECURED PARTY IS HEREBY GRANTED AN IRREVOCABLE POWER OF ATTORNEY, COUPLED WITH AN INTEREST, TO FILE, AS ATTORNEY-IN-FACT FOR SUCH DEBTOR, A COPY OF THIS AGREEMENT IN ANY COURT, AND THE COPY OF THIS AGREEMENT SO FILED SHALL CONCLUSIVELY BE DEEMED TO CONSTITUTE SUCH DEBTOR’S WAIVER OF TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR ANY OF THE OTHER INVESTOR DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL OR SECURED PARTY’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

[Remainder of page intentionally left blank; signature page follows.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

DEBTOR:

Wits Basin Precious Minerals Inc.,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Hunter Bates Mining Corporation,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Gregory Gold Producers, Inc.,

a Colorado corporation

By:

/s/ Stephen D. King

Stephen D. King, President

SECURED PARTY:

China Gold, LLC

a Kansas limited liability company

By:

Pioneer Holdings, LLC

Its:

Manager

By:

/s/ C. Andrew Martin

Name:

C. Andrew Martin

Title:

Manager

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED

SECURITY AGREEMENT

SCHEDULE A

Permitted Liens

Wits Basin Precious Minerals

1.           All assets security interest to Kenglo One, Ltd.

2.           Security interest in favor of Hawk Uranium Inc. with respect to Wits Basin’s right to acquire the other 65% interest in Kwagga Gold (Barbados) Limited.

Hunter Bates Mining Corporation

1.           Easements, or claims of easements, not shown by public records.

2.           Discrepancies, conflicts in boundary lines, shortage in area, encroachments, and any facts which a correct survey and inspection of the land would disclose, and which are not shown by the public records.

3.           Any water rights or claims or title to water, in, on or under the land.

4.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 21, 1876, in Book 62 at Page 287; and any and all assignments thereof or interest therein. (Affects Parcel A-1)

5.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on August 7, 1879, in Book 68 at Page 349; and any and all assignments thereof or interest therein. (Affects Parcel A-2)

6.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on June 20, 1872, in Book 53 at Page 277; and any and all assignments thereof or interest

therein.(Affects Parcel A-3)

7.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on August 24, 1874, in Book 58 at Page 74; and any and all assignments thereof or interest therein. (Affects Parcels A-4 and A-5)

8.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 16, 1970, in Book 268 at Page 311; and any and all assignments thereof or interest therein. (Affects Parcel A-6)

9.            The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on June 22, 1883, in Book 93 at Page 137; and any and all assignments thereof or interest therein. (Affects Parcel A-7)

10.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded in Book 246 at Page 437; and any and all assignments thereof or interest therein. (Affects Parcel A-8)

11.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 83; and any and all assignments thereof or interest therein. (Affects Parcel A-9)

12.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 12, 1988, in Book 296 at Page 419; and any and all assignments thereof or interest therein. (Affects Parcel A-10)

13.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded in Book 296 at Page 426; and any and all assignments thereof or interest therein. (Affects Parcel A-11)

14.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 80; and any and all assignments thereof or interest therein.  (Affects Parcel B-1)

15.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on September 12, 1988, in Book 393 at Page 333; and any and all assignments thereof or interest therein. (Affects Parcel B-2)

16.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on December 16, 1881, in Book 82 at Page 12; and any and all assignments thereof or interest therein. (Affects Parcel B-3)

17.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on November 6, 1871, in Book 53 at Page 77; and any and all assignments thereof or interest therein. (Affects Parcel B-4)

18.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on December 17, 1975, in Book 296 at Page 413; and any and all assignments thereof or interest therein. (Affects Parcel B-5)

19.           The right of proprietor of a vein or lode to extract or remove his ore should the same be found to penetrate or intersect the premises thereby granted as reserved in United States Patent recorded on February 28, 1892, in Book 82 at Page 40; and any and all assignments thereof or interest therein. (Affects Parcel B-6)

20.           Terms, agreements, provisions, conditions and obligations as contained in the Mammoth Hill Project, State of Colorado, Division of Minerals and Geology, Colorado Inactive Mine Reclamation Program, Consent for Right of Entry for Reclamation Activities recorded on February 10, 1997 in Book 615 at Page 240. (Affects Parcels B-3 and B-5.)

21.           Reservations contained in the Patent to the City of Central recorded on July 21, 1876, in Book 62 at Page 193, as follows: “Providing that no title shall be hereby acquired to any mine of gold, silver, cinnabar or copper or to any valid mining claim or possession held under existing laws.”  (Affects Parcels A-12, A-13 and A-14)

22.           The effect of the inclusion of the subject property in the Black Hawk-Central City Sanitation District, as disclosed by the instrument recorded July 26, 1968, in Book 259 at Page 288.

23.           The effect of the inclusion of portions of the subject property in the Central City Business Improvement District, as disclosed by the instrument recorded on May 21, 2003 at Reception No. 117343.

24.           Rights of co-tenants, including, but not limited to, the right of partition. (Affects Parcel A-4).

25.           Exception of rights of way, if any, for existing roads, as contained in the Deed from the County of Gilpin to William C. Russell, Jr. recorded on January 22, 1970, in Book 26 at Page 297.  (Affects Parcel A-15).

26.           A one percent (1%) net smelter return royalty as granted to GSR Goldsearch Resources (U.S.), Inc. by the deed recorded on August 15, 1996, in Book 605 at Page 410, and any assignment thereof or interest therein. (Affects Parcels A-1, A-4, A-5, A-6, A-7., A-8, A-10, A-11, A-12, A-13, A-14 and A-15 and Parcels B-1, B-2, B-3, B-4 and B-5).

27.           Any question as to the size or location of the easements referred to as Parcel B-7.

28.           A two percent (2%) net smelter return royalty as granted to Kenneth Swaisland by the deed recorded on January 22, 2009, in Gilpin County, Colorado, and any assignment thereof or interest therein.   (Affects Parcels A-1, A-4, A-5, A-6, A-7., A-8, A-10, A-11, A-12, A-13, A-14 and A-15 and Parcels B-1, B-2, B-3, B-4 and B-5).

29.           Deed of Trust from Hunter Bates Mining Corporation, a Minnesota corporation, to the Public Trustee of Gilpin County, for the benefit of George E. Otten, securing an original principal indebtedness of Six Million Seven Hundred Fifty Thousand Canadian Dollars (CND $6,750,000.00), and any other amounts and/or obligations dated June 6, 2008, recorded on June 25, 2008 at Reception No. 136731.

30.           Deed of Trust to Public Trustee, Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing Statement and Fixture Filing of Hunter Bates Mining Corporation, as debtor, in favor of The Public Trustee of Gilpin County, Colorado, as trustee f/b/o Cabo Drilling (America), Inc., as secured party, securing principal indebtedness in the aggregate amount of $511,589.59, and any other amounts and/or obligations pursuant to a Convertible Debenture dated April 27, 2009.

31.           Secondary Deed of Trust and Security Agreement from Hunter Bates Mining Corporation, a Minnesota corporation, to the Public Trustee of Gilpin County, for the benefit of Kenglo One Ltd. securing (i) an original principal indebtedness of Five Million Dollars (U.S.) pursuant to a secured promissory note of Wits Basin Precious Minerals Inc. dated December 14, 2009 and (ii) any other amounts and/or obligations to Kenglo One Ltd. under such note.

SCHEDULE B

Location(s) of the Collateral

(1)           Wits Basin Precious Minerals Inc., with a legal address of 900 IDS Center, 80 South 8th Street, Minneapolis, MN 55402-8773.

(2)           Hunter Bates Mining Corporation, with a legal address of 900 IDS Center, 80 South 8th Street, Minneapolis, MN 55402-8773 acquired the following assets: land, buildings, equipment, mining claims and permits.  All assets are located on the Bates-Hunter mining property, located at 422 Gregory Street, Central City, CO 80427.

(3)           Gregory Gold Producers, Inc., with a legal address of 11438 County Road 19, Ft. Lupton, CO 80321, holds depreciable assets at 422 Gregory Street, Central City, CO 80427.

EX-10.72 18 v181039_ex10-72.htm

EXHIBIT 10.72

THIRD AMENDED AND RESTATED PLEDGE AGREEMENT

Wits Basin Precious Minerals Inc.

THIS THIRD AMENDED AND RESTATED PLEDGE AGREEMENT (this “Agreement”), is entered into as of December 17, 2009 by and between Wits Basin Precious Minerals Inc., a Minnesota corporation (“Wits Basin”), Hunter Bates Mining Corporation, a Minnesota corporation (“Hunter Bates”), Gregory Gold Producers, Inc., a Colorado corporation (“Gregory Gold”; and collectively with Wits Basin and Gregory Gold, the “Pledgors”), and China Gold, LLC, a Kansas limited liability company, together with its successors and assigns and all other holders of securities and equity interests pursuant to the Purchase Agreement (hereinafter defined) (together with its respective successors and assigns, “Purchaser”).

RECITALS

The following recitals are a material part of this Agreement.

A.          Wits Basin and Purchaser are parties to that certain Convertible Notes Purchase Agreement dated as of April 10, 2007 as amended from time to time (as the same may hereafter be further modified, amended, restated or supplemented from time to time, the “Purchase Agreement”), pursuant to which Purchaser loaned Wits Basin an aggregate principal amount of $9.8 million in convertible secured promissory notes (the “Prior Notes”). On November 10, 2008, the parties converted the Prior Notes (including accrued and unpaid interest thereon) into a Promissory Note dated November 10, 2008 in the principal amount of $9,800,000 (the “First Amended Note”). Capitalized terms used in this Agreement without definition have the definitions given to them in the Purchase Agreement.

B.          Pursuant to the Purchase Agreement, Wits Basin and Purchaser entered into that certain Pledge Agreement dated as of April 10, 2007 (“Original Pledge Agreement”) whereby Wits Basin agreed to provide Purchaser security documents, in form and substance satisfactory to Purchaser, granting Purchaser a security interest in all of the assets acquired from the use of proceeds for its purchase of the Prior Notes. Accordingly, Wits Basin pledged certain shares of common stock of Wits-China Acquisition Corp, a Minnesota corporation. On February 7, 2008, the parties amended the Original Pledge Agreement pursuant to an Amended and Restated Pledge Agreement (the “Amended Pledge Agreement”) to provide Purchaser a pledge of the equity interests in two additional wholly owned subsidiaries of Wits Basin, namely China Global Mining Resources Limited, a Hong Kong corporation (“CGMR HK”), and Wits Basin (BVI) Ltd, a British Virgin Islands corporation with registered number 1386052 (“Wits BVI”), which held assets acquired with proceeds from the Prior Notes received from Purchaser.

C.          On October 28, 2008, Purchaser loaned Wits Basin an additional $441,000 pursuant to the terms of a Promissory Note dated October 28, 2008 (the “Additional Note”), with Wits Basin’s payment obligations under the Additional Note secured by the Amended Pledge Agreement, amongst other forms of security.

D.          Pursuant to Amendment No. 2 to the Purchase Agreement, on November 10, 2008, the parties converted the Prior Notes (including accrued and unpaid interest thereon) into a Promissory Note dated November 10, 2008 in the principal amount of $9,800,000 (the “First Amended Note”), the obligations under which remained secured by the Original Security Agreement and Amended and Pledge Agreement.

E.          In March 2009, Wits Basin entered into a joint venture transaction (the “JV Transaction”) with London Mining Plc (“London Mining”), whereby London Mining and Wits Basin formed a joint venture entity in the British Virgin Islands entitled China Global Mining Resources (BVI) Limited (registered number 1513743) (“CGMR BVI”) to acquire and operate certain mining properties in the People’s Republic of China (the “PRC Properties”) pursuant to certain rights to acquire the PRC Properties held by the Debtor and certain of its subsidiaries (the “Rights”). Such Rights were subject to the security interest of Secured Party under the terms of the Original Security Agreement. For the avoidance of doubt, CGMR BVI is a separate entity to the Debtor’s wholly owned subsidiary “China Global Mining Resources Limited” (registered number 1386052) registered in the British Virgin Islands and referred to in the Original Security Agreement (currently known as Wits Basin (BVI) Ltd.).

F.          On December 22, 2009, Wits Basin and Purchaser entered into that certain Amendment No. 3 to the Purchase Agreement (“Amendment No. 3”), whereby the parties consolidated the First Amended Note and Additional Note, and Wits Basin issued Purchaser in lieu thereof a promissory note dated December19, 2008  in the aggregate principal amount of $10,241,000. Additionally, pursuant to Amendment No. 3, the parties modified certain terms of First Amended Note and Additional Note to, among other modifications, amend certain terms of Purchaser’s security interest to release from such security interest Wits Basin’s equity interest in CGMR HK and include in such security interest Wits Basin’s equity interest in the CGMR BVI. As a result of such modifications, on December 22, 2009, Debtor and Secured Party amended and superseded the terms of the Amended and Restated Pledge Agreement pursuant to a Second Amended and Restated Pledge Agreement (the “Second Amended Pledge Agreement”).

G.          On April 20, 2009 Purchaser purchased from Platinum Long Term Growth V, LLC (“Platinum”) the rights of Platinum under (i) that certain Note and Warrant Purchase Agreement dated on or around February 11, 2008 (the “Platinum Purchase Agreement”), pursuant to which Wits Basin issued Platinum that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 issued by Wits Basin in favor of Platinum on or around February 11, 2008 and (ii) that certain 10% Senior Secured Convertible Promissory Note in the principal amount of $110,000 issued by Wits Basin in favor of Platinum on or around July 10, 2008 (collectively, the notes issued to Platinum are referred to herein as the “Platinum Notes”). Wits Basin’s obligations under the Platinum Notes are secured pursuant to the terms of (i) that certain Security Agreement dated February 11, 2008 (the “Platinum Security Agreement”) by and between Wits Basin and Purchaser (as a successor-in-interest to Platinum) and (ii) that certain Amended and Restated Guaranty of Gregory Gold Producers, Incorporated (“Gregory Gold”) and Hunter Bates Mining Corporation (“Hunter Bates”), each of which were wholly owned subsidiaries of Wits Basin at such time. Pursuant to the Platinum Security Agreement, Purchaser holds a security interest in all of Wits Basin’s assets with the exception of equity interests and assets held in CGMR BVI, Wits Basin (BVI) Ltd., and Wits-China Acquisition, a wholly owned subsidiary of Wits Basin, to the extent such entities or assets are located in or relate to China and are subject to a lien in favor of Purchaser.

H.          On September 29, 2009, Hunter Bates Mining Corporation, a Minnesota corporation and a majority-owned subsidiary of Wits Basin (“Hunter Bates”), completed a share exchange transaction with Princeton Acquisitions, Inc., a Colorado corporation (“Princeton Acquisitions”), whereby all of the holders of outstanding shares of Hunter Bates were acquired by Princeton Acquisitions in consideration of, on a share-for-share basis, shares of Princeton Acquisitions common stock. To permit Wits Basin and Hunter Bates to (i) complete the share exchange transaction and (ii) transfer the equity of Gregory Gold Producers, Inc., a Colorado corporation and previously a wholly owned subsidiary of Wits Basin (“Gregory Gold”), Purchaser consented to the release of its pledge in Wits Basin’s shares of Hunter Bates and Gregory Gold, and agreed to take in lieu thereof a pledge of Wits Basin’s shares of Princeton Acquisitions.

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I.           On June 9, 2009, Purchaser loaned Issuer an additional $100,000 pursuant to the terms of the Second Amended Note. On September 1, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to terms of the Second Amended Note. On November 10, 2009, Purchaser loaned Issuer an additional $150,000 pursuant to the terms of the Second Amended Note (the “Additional Loans”). The terms of the Additional Loans included, without limitation, that Debtor’s payment obligations under the Additional Loans were to be secured by the Amended Security Agreement, amongst other forms of security.

J.           On December 14, 2009, Issuer entered into a financing arrangement with Kenglo One, Ltd., a company incorporated under the laws of Jersey (“Kenglo”), whereby Issuer issued Kenglo a secured promissory note in the principal amount of US$5,000,000. As a condition to the financing, Purchaser agreed to permit Issuer to grant Kenglo a security interest in certain assets of Debtors on a  pari passu basis with Purchaser.

K.          On or around the date hereof, Debtor and Secured Party entered into that certain Amendment No. 4 to the Purchase Agreement (“Amendment No. 4”) in an effort to consolidate the Second Amended Note and the Additional Loans, and Debtor issued Secured Party in lieu thereof a promissory note dated December 17, 2009  in the aggregate principal amount of $6,153,321.86 (the “Third Amended Note”).

L.          Pursuant to the terms of Amendment No. 4, Wits Basin and Purchaser wish to amend and restate the Second Amended Pledge Agreement to consolidate the pledge of securities of Wits Basin to Purchaser under the Second Amended Pledge Agreement and the Platinum Security Agreement into a single agreement under the terms and conditions set forth herein. This Agreement supersedes in its entirety the Second Amended Pledge Agreement, which shall have no continuing effect from the date hereof. Hunter Bates and Gregory Gold, each of which have provided Purchaser a guaranty of the obligations of Wits Basin and have entered into that certain Second Amended and Restated Security Agreement dated of even date herewith, have further agreed to be bound by the terms hereof.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing facts and premises hereby made a part of this Agreement, the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, Issuer and Purchaser agree as follows:

1.          Pledge. As security for the prompt payment and performance of the Secured Obligations (defined below) in full when due, whether at stated maturity, by acceleration or otherwise (including amounts that would become due but for the operation of the provisions of the United States Bankruptcy Code (11 U.S.C. Section 101, et seq.), as in effect from time to time, and any successor statute thereto (“Bankruptcy Code”)), each Pledgor by this Agreement pledges, grants, transfers, and assigns to Purchaser a security interest in all of such Pledgor’s right, title, and interest in and to the Collateral (defined below).

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For the purposes of this Agreement, with respect to each Pledgor, (a) “Collateral” means Pledgor’s interest from time to time in the Pledged Interests, the Future Rights, and the Proceeds, collectively; (b) “Pledged Interests” means (i) all Equity Interests of Pledgor, and (ii) the certificates or instruments representing such Equity Interests, if any; (c) “Equity Interests” means all securities, shares, units, options, warrants, interests, participations, or other equivalents (regardless of how designated) of, (I) with respect to Wits Basin, Kwagga Gold (Barbados) Ltd., Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) and CGMR BVI and (II) with respect to Hunter Bates, Gregory Gold; (d) “Future Rights” means: (x) all Equity Interests of Pledgor, and all securities convertible or exchangeable into, and all warrants, options, or other rights to purchase, Equity Interests of Pledgor; and (y) the certificates or instruments representing such Equity Interests, convertible or exchangeable securities, warrants, and other rights and all dividends, cash, options, warrants, rights, instruments, and other property or proceeds from time to time received, receivable, or otherwise distributed in respect of or in exchange for any or all of such Equity Interests; and (e) “Proceeds” means all proceeds (including proceeds of proceeds) of the Pledged Interests and Future Rights including all: (I) rights, benefits, distributions, premiums, profits, dividends, interest, cash, instruments, documents of title, accounts, contract rights, inventory, equipment, general intangibles, payment intangibles, deposit accounts, chattel paper, and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for, or as a replacement of or a substitution for, any of the Pledged Interests, Future Rights, or proceeds thereof (including any cash, Equity Interests, or other securities or instruments issued after any recapitalization, readjustment, reclassification, merger or consolidation with respect to Pledgor and any security entitlements, as defined in Section 8-102(a)(17) of the Uniform Commercial Code, with respect thereto); (II) “proceeds,” as such term is defined in Section 9-102(a)(64) of the Uniform Commercial Code; (III) proceeds of any insurance, indemnity, warranty, or guaranty (including guaranties of delivery) payable from time to time with respect to any of the Pledged Interests, Future Rights, or proceeds thereof; (VI) payments (in any form whatsoever) made or due and payable to Pledgor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Pledged Interests, Future Rights, or proceeds thereof; and (V) other amounts from time to time paid or payable under or in connection with any of the Pledged Interests, Future Rights, or proceeds thereof.

Notwithstanding any other provision of this Agreement to the contrary, Purchaser acknowledges and agrees that (A) (i) only Pledgor’s 50% interest in CGMR BVI shall constitute an Equity Interest of Wits Basin hereunder, and (ii) that any actions taken by Purchaser hereunder with respect to CGMR BVI or the related Equity Interest shall be subject to the terms of that certain Shareholders’ Agreement entered into on London Mining’s subscription into CGMR BVI (the “Shareholders’ Agreement”) and (B) that 1,839,000 shares of common stock of Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.) held by Wits Basin shall be excluded from the Collateral, Pledged Interests, Equity Interests and Future Rights as such terms are defined hereunder.

2.          Secured Obligations. The obligations secured by this Agreement (the “Secured Obligations”) are all liabilities, obligations, or undertakings owing by each Pledgor to Purchaser of any kind or description arising out of or outstanding under, advanced or issued pursuant to, or evidenced by this Agreement, or the other Investment Documents, as amended from time to time, irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, voluntary or involuntary, whether now existing or hereafter arising, and including all interest (including interest that accrues after the filing of a case under the Bankruptcy Code) and any and all costs, fees (including attorneys fees), and expenses which such Pledgor is required to pay pursuant to any of the foregoing, by law, or otherwise.

3.          Delivery and Registration of Collateral. With respect to each Pledgor:

(a)           All certificates or instruments representing or evidencing the Collateral shall be promptly delivered by Pledgor to Purchaser or Purchaser’s designees pursuant to this Agreement at a location designated by Purchaser and shall be held by or on behalf of Purchaser pursuant to this Agreement, and shall be in suitable form for transfer by delivery, or shall be accompanied by a duly executed instrument of transfer or assignment in blank, in form and substance satisfactory to Purchaser.

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(b)           Upon the occurrence and during the continuance of an Event of Default, Purchaser shall have the right, at any time in their discretion and without notice to Pledgor, to transfer to or to register on the books of a subsidiary or company of Pledgor of which Pledged Interests are held (or of any other Person maintaining records with respect to the Collateral) in the name of Purchaser or any of its nominees any or all of the Collateral. In addition, Purchaser shall have the right at any time to exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations. Notwithstanding the foregoing, in the event this Section 3(b) is applicable to Wits Basin’s equity interest in CGMR BVI, Purchaser’s rights shall be subject to the execution and delivery to CGMR BVI of a signed Deed of Adherence (as defined in the Shareholders’ Agreement), which Purchaser undertakes to execute.

(c)           If, at any time and from time to time, any Collateral (including any certificate or instrument representing or evidencing any Collateral) is in the possession of a Person other than Purchaser, Kenglo (who has agreed or will agree to the terms of an intercreditor agreement with Purchaser) or Pledgor (each, a “Holder”), then Pledgor shall immediately, at Purchaser’s option, either cause such Collateral to be delivered into Purchaser’s possession, or cause such Holder to enter into a control agreement, in form and substance satisfactory to Purchaser, and take all other steps deemed necessary by Purchaser to perfect the security interest of Purchaser in such Collateral, all pursuant to Sections 9-106 and 9-313 of the Uniform Commercial Code or other applicable law governing the perfection of Purchaser’s security interest in the Collateral in the possession of such Holder.

(d)           Any and all Collateral (including dividends, interest, and other cash distributions) at any time received or held by Pledgor shall be so received or held in trust for Purchaser, shall be segregated from other funds and property of Pledgor and shall be forthwith delivered to Purchaser in the same form as so received or held, with any necessary endorsements; provided that cash dividends or distributions received by Pledgor may be retained by Pledgor in accordance with Section 4.

(e)           If at any time, and from time to time, any Collateral consists of an uncertificated security or a security in book entry form, then Pledgor shall immediately cause such Collateral to be registered or entered, as the case may be, in the name of Purchaser, or otherwise cause Purchaser’s security interest thereon to be perfected in accordance with applicable law.

4.          Voting Rights and Dividends.

(a)           So long as no Event of Default shall have occurred and be continuing, Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of the Investment Documents and shall be entitled to receive and retain any cash dividends or distributions paid or distributed in respect of the Collateral;

(b)           Upon the occurrence and during the continuance of an Event of Default, all rights of Pledgor to exercise the voting and other consensual rights or receive and retain cash dividends or distributions that it would otherwise be entitled to exercise or receive and retain, as applicable pursuant to Section 4(a), shall cease, and all such rights shall thereupon become vested in Purchaser, who shall thereupon have the sole right to exercise such voting or other consensual rights and to receive and retain such cash dividends and distributions; provided that with respect to Wits Basin and the exercise of any rights (including the right to receive and retain dividends) relating to the its Equity Interest in CGMR BVI, such rights shall be subject to the terms of the Shareholders' Agreement. Wits Basin shall execute and deliver (or cause to be executed and delivered) to Purchaser all such proxies and other instruments as Purchaser may reasonably request for the purpose of enabling Purchaser to exercise the voting and other rights which they are entitled to exercise and to receive the dividends and distributions that they are entitled to receive and retain pursuant to the preceding sentence; provided that with respect to exercise of any rights (including the right to receive and retain dividends) relating to the Equity Interest in CGMR BVI, such rights shall be subject to the terms of the Shareholders' Agreement.

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5.          Release. On completion of any acquisition of all or part of Pledgor's equity interest in CGMR BVI by London Mining or a member of its Group (as defined in the Shareholders' Agreement) or a third party under the "Come Along" provisions of the Shareholders' Agreement undertaken in accordance with the terms of the Shareholders' Agreement (an "Acquisition"), the Pledgor's equity interest in CGMR BVI, or such part acquired, will automatically and irrevocably be released and Purchaser agrees to take any further action (including the execution, delivery and filing (as applicable) of any necessary documents or agreements) necessary to effect such release, and shall, prior to the completion of the Acquisition deliver to CGMR BVI all documents and items held by Purchaser pursuant to Section 3 of this agreement.

6.          Representations and Warranties. Each Pledgor represents, warrants, and covenants as follows:

(a)           Pledgor has the authority to pledge the Pledged Interests to Purchaser under the terms of this Agreement.

(b)           Pledgor has taken all steps it deems necessary or appropriate to be informed on a continuing basis of changes or potential changes affecting the Collateral (including rights of conversion and exchange, rights to subscribe, payment of dividends, reorganizations or recapitalization, tender offers and voting and registration rights), and Pledgor agrees that Purchaser shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto.

(c)           All information in this Agreement or hereafter supplied to Purchaser by or on behalf of Pledgor in writing with respect to the Collateral is, or in the case of information hereafter supplied will be, accurate and complete in all material respects.

(d)           Pledgor is and will be the sole legal and beneficial owner of the Collateral (including the Pledged Interests and all other Collateral acquired by Pledgor after the date hereof) free and clear of any adverse claim, Lien, or other right, title, or interest of any party, other than the Liens in favor of Purchaser and Kenglo.

(e)           This Agreement, and the filing of a UCC financing statement by Purchaser with the Minnesota Secretary of State and Colorado Secretary of State (as appropriate) describing the Collateral, creates a valid, perfected security interest in the Pledged Interests in favor of Purchaser securing payment of the Secured Obligations, and, except with respect to the filing of such UCC financing statements, all actions of Pledgor necessary to achieve such perfection have been duly taken.

(f)           Schedule 1 to this Agreement is true and correct and complete in all material respects. Without limiting the generality of the foregoing: (i) except as set forth on Schedule 1, all the Pledged Interests are in uncertificated form, and, except to the extent registered in the name of Purchaser or its nominees pursuant to the provisions of this Agreement and Kenglo pursuant to the terms of its security agreement with Debtor, are registered in the name of Pledgor; and (ii) as of the date of this Agreement, the Pledged Interests as to any subsidiary or company of which Pledged Interests are held (and with respect to Wits Basin, as to CGMR BVI) constitute at least the percentage of all the fully diluted issued and outstanding Equity Interests of such subsidiary or company (and CGMR BVI) as set forth in Schedule 1 to this Agreement.

(g)           There are no presently existing Future Rights or Proceeds owned by Pledgor.

(h)           The Pledged Interests have been duly authorized and validly issued and are fully paid and non-assessable.

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(i)           Neither the pledge of the Collateral pursuant to this Agreement nor the extensions of credit represented by the Secured Obligations violates Regulation T, U or X of the Board of Governors of the Federal Reserve System.

7.          Further Assurances. With respect to each Pledgor:

(a)           Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or reasonably desirable, or that Purchaser may request, in order to perfect and protect any security interest granted or purported to be granted by this Agreement or to enable Purchaser to exercise and enforce their rights and remedies under this Agreement with respect to any Collateral. Without limiting the generality of the foregoing, Pledgor will: (i) at the request of Purchaser, mark conspicuously each of its records pertaining to the Collateral with a legend, in form and substance reasonably satisfactory to Purchaser, indicating that such Collateral is subject to the security interest granted by this Agreement; (ii) execute such instruments or notices as may be necessary or reasonably desirable, or as Purchaser may request, in order to perfect and preserve the Liens granted or purported to be granted by this Agreement; (iii) allow inspection of the Collateral by Purchaser or Persons designated by Purchaser; and (iv) appear in and defend any action or proceeding that may affect Pledgor’s title to or Purchaser’s security interest in the Collateral.

(b)           Pledgor by this Agreement authorizes Purchaser to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral. A carbon, photographic, or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

(c)           Pledgor will furnish to Purchaser, upon the request of Purchaser: (i) a certificate executed by Pledgor, and dated as of the date of delivery to Purchaser, itemizing in such detail as Purchaser may request, the Collateral which, as of the date of such certificate, has been delivered to Purchaser by Pledgor pursuant to the provisions of this Agreement; and (ii) such statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Purchaser may request.

8.          Covenants of Pledgor. Each Pledgor shall:

(a)           To the extent it may lawfully do so, use its best efforts to prevent a subsidiary or company of which Pledged Interests are held from issuing Future Rights or Proceeds; and

(b)           Upon receipt by Pledgor of any material notice, report, or other communication from a subsidiary or company of which Pledged Interests are held or any Holder relating to all or any part of the Collateral, deliver such notice, report or other communication to Purchaser as soon as possible, but in no event later than five (5) days following the receipt thereof by Pledgor.

9.          Purchaser as Pledgor’s Attorneys-in-Fact.

(a)           Each Pledgor by this Agreement irrevocably appoints Purchaser as such Pledgor’s attorneys-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Purchaser or otherwise, to enter into any control agreements Purchaser deems necessary pursuant to Section 3 of this Agreement, and from time to time at Purchaser’s discretion, upon the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument that Purchaser may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including: (i) to receive, indorse, and collect all instruments made payable to such Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof to the extent permitted under this Agreement and to give full discharge for the same and to execute and file governmental notifications and reporting forms; or (ii) to arrange for the transfer of the Collateral on the books of a subsidiary or company of which Pledged Interests are held by such Pledgor or any other Person to the name of Purchaser or to the names of Purchaser’s nominees.

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(b)          In addition to the designation of Purchaser as Pledgor’s attorneys-in-fact in subsection (a), each Pledgor by this Agreement irrevocably appoints Purchaser as such Pledgor’s agents and attorneys-in-fact to make, execute and deliver after the occurrence and during the continuance of an Event of Default any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or any subsidiary or company of which Pledged Interests are held engage in business, in order to transfer or to more effectively transfer any of the Pledged Interests or otherwise enforce Purchaser’s rights under this Agreement.

10.        Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default:

(a)           Purchaser may exercise in respect of the Collateral, in addition to other rights and remedies provided for in this Agreement or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code (irrespective of whether the Uniform Commercial Code applies to the affected items of Collateral), and Purchaser may also without notice (except as specified below) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of Purchaser’s office or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Purchaser may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Collateral. To the maximum extent permitted by applicable law, Purchaser may be the purchaser of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply all or any part of the Secured Obligations as a credit on account of the purchase price of any Collateral payable at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and such Pledgor by this Agreement waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) calendar days notice to such Pledgor of the time and place of any public sale or the time after which a private sale is to be made shall constitute reasonable notification. Purchaser shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Purchaser may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. To the maximum extent permitted by law, each Pledgor by this Agreement waives any claims against Purchaser arising because the price at which any Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if Purchaser accepts the first offer received and do not offer such Collateral to more than one offeree.

(b)           Each Pledgor by this Agreement agrees that any sale or other disposition of the Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, or other financial institutions in the city and state where Purchaser is located in disposing of property similar to the Collateral shall be deemed to be commercially reasonable.

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(c)           Each Pledgor by this Agreement acknowledges that the sale by Purchaser of any Collateral pursuant to the terms hereof in compliance with the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect (the “Securities Act”), as well as applicable “Blue Sky” or other state securities laws may require strict limitations as to the manner in which Purchaser or any subsequent transferee of the Collateral may dispose thereof. Each Pledgor acknowledges and agrees that in order to protect Purchaser’s interest it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Each Pledgor has no objection to sale in such a manner and agrees that Purchaser shall have no obligation to obtain the maximum possible price for the Collateral. Without limiting the generality of the foregoing, such Pledgor agrees that upon the occurrence and during the continuation of an Event of Default, Purchaser may, subject to applicable law, from time to time attempt to sell all or any part of the Collateral by a private placement, restricting the bidders and prospective Purchaser to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, Purchaser may solicit offers to buy the Collateral or any part thereof for cash from a limited number of investors reasonably believed by Purchaser to be institutional investors or other accredited investors who might be interested in purchasing the Collateral. If Purchaser shall solicit such offers, then the acceptance by Purchaser of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral.

Each Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

(d)           EACH PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME PURCHASER DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION 10, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

(e)           Notwithstanding any term of this Agreement to the contrary, any rights or actions by Purchaser under this Section 10 relating to the CGMR BVI shall be subject to the terms of the Shareholders’ Agreement.

11.        Application of Proceeds. Upon the occurrence and during the continuance of an Event of Default, any cash held by Purchaser as Collateral and all cash Proceeds received by Purchaser in respect of any sale of, collection from, or other realization upon all or any part of the Collateral pursuant to the exercise by Purchaser of their remedies as secured creditors as provided in Section 10 shall be applied from time to time by Purchaser as provided in Section 9-615 of the Uniform Commercial Code.

12.        Indemnity and Expenses. Each Pledgor agrees:

(a)           To indemnify and hold harmless Purchaser and each of their directors, officers, employees, agents and affiliates from and against any and all claims, damages, demands, losses, obligations, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and expenses) in any way arising out of or in connection with this Agreement or the Secured Obligations, except to the extent the same shall arise as a result of the gross negligence or willful misconduct of the party seeking to be indemnified; and

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(b)           To pay and reimburse Purchaser upon demand for all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) that Purchaser may incur in connection with (i) the custody, use or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, including the reasonable expenses of re-taking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, (ii) the exercise or enforcement of any rights or remedies granted under this Agreement or under any of the other Investment Documents or otherwise available to them (whether at law, in equity or otherwise), or (iii) the failure by Pledgor to perform or observe any of the provisions hereof. The provisions of this Section shall survive the execution and delivery of this Agreement, the repayment of any of the Secured Obligations, and the termination of this Agreement or any other Investment Document.

13.        Duties of Purchaser. The powers conferred on Purchaser under this Agreement are solely to protect their interests in the Collateral and shall not impose on them any duty to exercise such powers. Except as provided in Section 9-207 of the Uniform Commercial Code, Purchaser shall have no duty with respect to the Collateral or any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any Collateral.

14.        Amendments; etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by any Pledgor from this Agreement shall in any event be effective unless the same shall be in writing and signed by Purchaser and such Pledgor, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Purchaser to exercise, and no delay in exercising any right under this Agreement, any other Investment Document, or otherwise with respect to any of the Secured Obligations, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement, any other Investment Document, or otherwise with respect to any of the Secured Obligations preclude any other or further exercise thereof or the exercise of any other right. The remedies provided for in this Agreement or otherwise with respect to any of the Secured Obligations are cumulative and not exclusive of any remedies provided by law.

15.        Notices. Unless otherwise specifically provided in this Agreement, all notices shall be in writing addressed to the respective party as set forth below, and may be personally served, faxed, or sent by overnight courier service or United States mail:

           If to Pledgors (respectively):

Wits Basin Precious Minerals Inc.

80 South Eighth Street, Suite 900

Minneapolis, MN  55402-8773

Attn: Mark Dacko, Chief Financial Officer

Facsimile: (612) 395-5276

Hunter Bates Mining Corporation

80 South Eighth Street, Suite 900

Minneapolis, MN  55402-8773

Attn: Mark Dacko, Chief Financial Officer

Facsimile: (612) 395-5276

Gregory Gold Producers, Inc.

80 South Eighth Street, Suite 900

Minneapolis, MN  55402-8773

Attn: Mark Dacko, Chief Financial Officer

Facsimile: (612) 395-5276

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with a copy to:

Maslon Edelman Borman & Brand, LLP

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN  55402-4140

Attn: Ranga Nutakki, Esq.

Facsimile: (612) 642-8311

           If to Purchaser:

China Gold, LLC

4520 Main Street, Suite 1650

Kansas City, MO  64111

Attn: C. Andrew Martin

Facsimile: 816-753-5117

with a copy to:

William M. Schutte, Esq.

Polsinelli Shalton Flanigan Suelthaus PC

6201 College Boulevard, Suite 500

Overland Park, KS  66211

Facsimile: 913-451-6205

Any notice given pursuant to this Section shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by fax, on the date of transmission if transmitted on a Business Day before 5:00 p.m. at the place of receipt or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two (2) days after delivery to such courier properly addressed; or (d) if by United States mail, four (4) Business Days after depositing in the United States mail, with postage prepaid and properly addressed. Any party to this Agreement may change the address or fax number at which it is to receive notices under this Agreement by notice to the other party in writing in the foregoing manner.

16.        Continuing Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall: (a) remain in full force and effect until the indefeasible payment in full of the Secured Obligations; (b) be binding upon each Pledgor and its successors and assigns; and (c) inure to the benefit of Purchaser and their successors, transferees, and assigns. Upon the indefeasible payment in full of the Secured Obligations, the security interests granted in this Agreement shall automatically terminate and all rights to the Collateral shall revert to Pledgors. Upon any such termination, Purchaser will, at each Pledgor’s expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence such termination. Such documents shall be prepared by such Pledgor and shall be in form and substance reasonably satisfactory to Purchaser.

17.        Security Interest Absolute. To the maximum extent permitted by law, all rights of Purchaser, all security interests under this Agreement, and all obligations of Pledgors under this Agreement, other than under the terms of the Shareholders' Agreement where applicable, shall be absolute and unconditional irrespective of:

(a)           any lack of validity or enforceability of any of the Secured Obligations or any other agreement or instrument relating thereto, including any of the Investment Documents;

(b)           any change in the time, manner, or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any of the Investment Documents, or any other agreement or instrument relating thereto;

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(c)           any exchange, release, or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from any guaranty for all or any of the Secured Obligations; or

(d)           any other circumstances that might otherwise constitute a defense available to, or a discharge of, any Pledgor.

18.        Construction. Section and subsection headings in this Agreement are included in this Agreement for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, the part includes the whole, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and other similar terms in this Agreement refer to this Agreement as a whole and not exclusively to any particular provision of this Agreement. Article, section, subsection, exhibit, and schedule references are to this Agreement unless otherwise specified. All of the exhibits or schedules attached to this Agreement shall be deemed incorporated in this Agreement by reference. Any reference to any of the following documents includes any and all alterations, amendments, restatements, extensions, modifications, renewals, or supplements thereto or thereof, as applicable: this Agreement or any of the other Investment Documents. No inference in favor of, or against, any party shall be drawn from the fact that such party has drafted any portion of this Agreement, each party having been represented by counsel of its choice in connection with the negotiation and preparation of this Agreement and the other Investment Documents.

19.        Interpretation. Neither this Agreement nor any uncertainty or ambiguity in this Agreement shall be construed or resolved against Purchaser or any Pledgor, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by both of the parties and their respective counsel and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties to this Agreement.

20.        Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

21.        Counterparts; Facsimile Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

22.        Waiver of Marshaling. Each of the Pledgors and Purchaser acknowledge and agree that in exercising any rights under or with respect to the Collateral: (a) Purchaser is under no obligation to marshal any Collateral; (b) may, in their absolute discretion, realize upon the Collateral in any order and in any manner they so elect; and (c) may, in their absolute discretion, apply the proceeds of any or all of the Collateral to the Secured Obligations in any order and in any manner they so elect. Each Pledgor and Purchaser waive any right to require the marshaling of any of the Collateral.

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23.        Conflict Among Provisions. In the event of a conflict between the terms, covenants and conditions of this Agreement and those of any other Investment Document (unless otherwise specifically provided), the terms, covenants and conditions of the document which shall enlarge the interest of Purchaser in the Collateral, afford Purchaser greater financial benefits or financial security or better assure payment of the Obligations in full, shall control; provided, however, that in the event of a conflict between any provision of this Agreement and the provisions of any other document, instrument or agreement which grants Purchaser a security interest in all or any part of the Pledged Interest, the provisions of this Agreement shall control.

24.        Sole and Absolute Discretion of Purchaser. Whenever pursuant to this Agreement (a) Purchaser exercises any right given to them to consent, approve or disapprove, (b) any arrangement, document, item or term is to be satisfactory to Purchaser, or (c) any other decision or determination is to be made by Purchaser, the decision of Purchaser to consent, approve or disapprove, all decisions that arrangements, documents, items, or terms are satisfactory or not satisfactory and all other decisions and determinations made by Purchaser, shall be in the sole and absolute discretion of Purchaser and shall be final and conclusive, except as may be otherwise expressly and specifically provided in this Agreement.

25.        Consent to Forum. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, EACH PLEDGOR BY THIS AGREEMENT CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN JOHNSON COUNTY, KANSAS OR FEDERAL COURT IN THE DISTRICT COURT OF KANSAS, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PLEDGOR AT THE ADDRESS STATED IN THE PURCHASE AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED IN THIS AGREEMENT AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. EACH PLEDGOR FURTHER AGREES NOT TO ASSERT AGAINST PURCHASER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED BY PURCHASER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THE INVESTMENT DOCUMENTS, PURCHASER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.

26.        Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO PURCHASER, EACH PLEDGOR BY THIS AGREEMENT WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH PURCHASER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE INVESTMENT DOCUMENTS, THE OBLIGATIONS, THE PLEDGED INTEREST, OR PURCHASER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

27.          Entire Agreement. This agreement, the Purchase Agreement, Amendment No. 4, the Third Amended Note and the Second Amended and Restated Security Agreement between the parties thereto dated on or around the date of the Agreement (i) constitute the final expression of the agreement between Pledgors and Purchaser concerning the Pledge; and (ii) may not be contradicted by evidence of any prior or contemporaneous oral agreements or understandings between Pledgors and Purchaser.  Neither this agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing executed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought.

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, Pledgor and Purchaser have caused this Agreement to be duly executed and delivered by their officers thereunto duly authorized as of the date first written above.

PLEDGORS:

Wits Basin Precious Minerals Inc.,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Hunter Bates Mining Corporation,

a Minnesota corporation

By:

/s/ Stephen D. King

Stephen D. King, Chief Executive Officer

Gregory Gold Producers, Inc.,

a Colorado corporation

By:

/s/ Stephen D. King

Stephen D. King, President

PURCHASER:

China Gold, LLC

a Kansas limited liability company

By:

Pioneer Holdings, LLC

Its:

Manager

By:

/s/ C. Andrew Martin

Name:  C. Andrew Martin

Title:    Manager

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SCHEDULE 1

Pledged Interests

Name of

Subsidiary/Entity

Jurisdiction

of

Organization

Type of

Interest

Number of

Shares/Units

(if applicable)

Certificate

Numbers

(if any)

Percentage of

Outstanding

Interests in

Subsidiary

WITS BASIN PRECIOUS MINERALS

Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.)1

Colorado

Common Stock

18,584,544

various

85
%

Kwagga Gold (Barbados) Limited

Barbados

Common Shares

1,884,615

2

35
%

China Global Mining Resources (BVI) Limited (1513743)

British Virgin Islands

Common Stock

100 B Shares

1

50
%

HUNTER BATES MINING CORPORATION

Gregory Gold Producers, Inc.

Colorado

Common Stock

100

1

100
%

1 Security interest excludes 1,839,000 shares of common stock of Standard Gold held by Wits Basin Precious Minerals Inc.

EX-10.73 19 v181039_ex10-73.htm

EXHIBIT 10.73

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER THAT THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD, TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

WITS BASIN PRECIOUS MINERALS INC.

Amended and Restated

10% Senior Secured Convertible Promissory Note

No. PP-1.1

$ 117,391.25

Dated:  December 17, 2009

For value received, WITS BASIN PRECIOUS MINERALS INC., a Minnesota corporation (the “Maker”), hereby promises to pay to the order of China Gold, LLC, a Kansas limited liability company with an address of 4520 Main Street, Suite 1650, Kansas City, MO 64111 (together with its successors, representatives, and permitted assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of One Hundred Seventeen Thousand Three Hundred Ninety-One Dollars and Twenty-Five Cents ($117,391.25), together with interest thereon.

All payments under or pursuant to this Note shall be made in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, instructions for which are attached hereto as Exhibit A.  The outstanding principal balance of this Note shall be due and payable on demand of Holder on or after February 15, 2010 (the “Maturity Date”) or at such earlier time as provided herein.

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ARTICLE I

Section 1.1            Purchase Agreement.  This Note was originally issued on February 11, 2008 (the “Original Issuance Date”) and was executed and delivered pursuant to the Note and Warrant Purchase Agreement, dated as of February 11, 2008 (the “Purchase Agreement”), by and between the Maker and the Holder, as a successor-in-interest to Platinum Long Term Growth V, LLC, a Delaware limited liability company pursuant to an assignment and transfer of this Note, the Purchase Agreement and other Transaction Documents completed on or around April 17, 2009, and reissued to Holder to reflect such assignment and transfer and a subsequent transfer by Holder of portions of the principal under this Note on or around June 8, 2009 (the “Existing Note”), with additional transfers of a portion of the Existing Note completed on September 1, 2009 and November 10, 2009.  This Amended and Restated 10% Senior Secured Convertible Promissory Note is issued to reflect certain modifications and amendments agreed between the parties.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement.  Holder has delivered the original version of the Existing Note to Maker marked “cancelled” on or prior to the date hereof, and agrees that such Existing Note shall no longer have any force or effect.

Section 1.2            Interest.  Beginning on the date hereof, the outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to ten percent (10%), payable at the end of each fiscal quarter in cash.  Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months, shall compound monthly and shall accrue commencing on the date hereof.  Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), the Maker will pay interest to the Holder, payable on demand, on the outstanding principal balance of and unpaid interest on the Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum.

Section 1.3            Payment of Principal; Prepayment.   The Principal Amount hereof shall be paid in full on the Maturity Date or, if earlier, upon acceleration of this Note in accordance with the terms hereof. Any amount of principal repaid hereunder may not be reborrowed.  The Maker may prepay all or any portion of the principal amount of this Note upon seven (7) business days’ prior written notice to the Holder without premium or penalty (other than as set forth in Section 3.6); provided, that, it is understood that the Maker shall be obligated to honor all conversion requests during such seven (7) business day period.

Section 1.4            Security Agreement.  The obligations of the Maker hereunder are secured by, among other things, a continuing security interest in certain assets of the Maker and certain of its subsidiaries pursuant to the terms of that certain Second Amended and Restated Security Agreement (the “Security Agreement”) dated on or around December 17, 2009 by and between Holder, Maker, Hunter Bates Mining Corporation (“Hunter Bates”) and Gregory Gold Producers, Inc. (“Gregory Gold”) and that certain Third Amended and Restated Pledge Agreement (the “Pledge Agreement”) dated on or around December 17, 2009 by and between Holder, Maker, Hunter Bates and Gregory Gold.

Section 1.5            Payment on Non-Business Days.  Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

Section 1.6             Transfer.  This Note may be transferred or sold, subject to the provisions of Section 5.8 of this Note, or pledged, hypothecated or otherwise granted as security by the Holder.

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Section 1.7           Replacement.  Upon receipt of a duly executed, notarized and unsecured written statement from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof) and a standard indemnity, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

ARTICLE II

EVENTS OF DEFAULT;  REMEDIES

Section 2.1             Events of Default.  The occurrence of any of the following events shall be an “Event of Default” under this Note:

(a)           any default in the payment of (1) the principal amount hereunder when due, or (2) interest on, or liquidated damages in respect of, this Note, within three (3) business days after the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise); or

(b)           the Maker shall fail to observe or perform any other covenant or agreement contained in this Note, which failure is not cured, if possible to cure, within 3 business days after notice of such default sent by the Holder; or

(c)           the suspension from listing, without subsequent listing on any one of, or the failure of the Common Stock to be listed on at least one of the OTC Bulletin Board, the American Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global Market, the Nasdaq Global Select Market or The New York Stock Exchange, Inc. for a period of five (5) consecutive Trading Days; or

(d)           the Maker’s notice to the Holder, including by way of public announcement, at any time, of its inability to comply (including for any of the reasons described in Section 3.7(a) hereof) or its intention not to comply with proper requests for conversion of this Note into shares of Common Stock; provided, that, an inability to convert this Note pursuant to the terms of Section 3.4 shall not constitute an Event of Default hereunder or under the other Transaction Documents; or

(e)           the Maker shall fail to (i) timely deliver the shares of Common Stock upon conversion of the Note or any interest accrued and unpaid, (ii) make the payment of any fees and/or liquidated damages under this the Purchase Agreement or the other Transaction Documents, which failure, in the case of (ii) above, is not remedied within three (3) business days after the Maker’s receipt of notice thereof from Holder; or

(f)            [Reserved]; or

(g)          default shall be made in the performance or observance of any material covenant, condition or agreement contained in the Purchase Agreement or any other Transaction Document  that is not covered by any other provisions of this Section 2.1 and such default is not fully cured within three (3) business days after the  Maker receives notice from the Holder of the occurrence thereof;  or

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(h)          any material representation or warranty made by the Maker herein or in the Purchase Agreement or any other Transaction Document shall prove to have been false or incorrect or breached in a material respect on the date as of which made; or

(i)            the Maker shall (A) default in any payment of any amount or amounts of principal of or interest on any Indebtedness (other than the Indebtedness hereunder) the aggregate principal amount of which Indebtedness is in excess of $200,000 or (B) default in the observance or performance of any other agreement or condition relating to any Indebtedness, that, in the aggregate, exceeds $200,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

(j)            the Maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

(k)          a proceeding or case shall be commenced in respect of the Maker, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days; or

(l)            the failure of the Maker to instruct its transfer agent to remove any legends from shares of Common Stock eligible to be sold under Rule 144 of the Securities Act and issue such unlegended certificates to the Holder within three (3) business days of the Holder’s request so long as the Holder has provided reasonable assurances to the Maker that such shares of Common Stock can be sold pursuant to Rule 144.

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Section 2.2            Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may at any time at its option, upon delivery of written notice to the Maker, declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described (i) in Sections 2.1(j) or (k) above, the outstanding principal balance and accrued interest hereunder shall be immediately due and payable without notice or demand of any kind, (ii) in Sections 2.1(b)-(i) and (l) above, the Holder, in its sole and absolute discretion, may (a) demand the prepayment of this Note pursuant to Section 3.6(a) hereof (to the extent permitted by Section 3.6(a) hereof), (b) demand that all or a portion of the principal amount of this Note then outstanding be converted in accordance with Article III hereof into shares of Common Stock at a Conversion Price equal to the lesser of (A) the Conversion Price on the date of such demand or (B) 85% of the lowest VWAP for the 10 Trading Days preceding the date of such demand, with all accrued and unpaid interest on such principal amount to be paid to the Holder in cash, or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement or applicable law and (iii) in the case of any Event of Default arising pursuant to Section 2.1(a) above, no acceleration shall be effective unless the Maker shall have been given at least two (2) business days’ prior written notice of such acceleration and opportunity to cure such Event of Default during such two (2) business day period.  No course of delay on the part of the Holder shall operate as a waiver thereof or otherwise prejudice the right of the Holder.  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

Section 2.3            Put; Special Conversion. If the seven trailing Trading Day VWAP of the Common Stock shall be less than $0.30 (as appropriately adjusted for splits, combinations and the like occurring after the Original Issuance Date), the Holder, at any time and from time to time thereafter and in its sole discretion, may (i) cause the Maker to prepay in cash all or any portion of this Note at a price equal to one hundred and fifteen percent (115%) of the aggregate principal amount of this Note being prepaid plus all accrued and unpaid interest applicable at the time of such request (such payment to be made within ten (10) business days of the request therefor), or (ii) demand that all or a portion of the principal amount of this Note then outstanding be converted in accordance with Article III hereof into shares of Common Stock at a Conversion Price equal to the lesser of (A) the Conversion Price on the date of such demand or (B) 85% of the lowest VWAP for the 10 Trading Days preceding the date of such demand, with all accrued and unpaid interest on such principal amount to be paid to the Holder in cash (such payment of interest to be made within five (5) business days of the request therefor).

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ARTICLE III

CONVERSION; ANTIDILUTION; PREPAYMENT

Section 3.1            Conversion Option.

(a)          At any time and from time to time on or after the Original Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holder (the “Conversion Option”), into such number of fully paid and non-assessable shares of Common Stock (the “Conversion Rate”) as is determined by dividing (x) that portion of the outstanding principal balance plus any accrued but unpaid interest under this Note as of such date that the Holder elects to convert by (y) the Conversion Price (as defined in Section 3.2 hereof) then in effect on the date on which the Holder faxes a notice of conversion (the “Conversion Notice”), duly executed, to the Maker (facsimile number: (612) 395-5276, Attn.: Mark D. Dacko) (the “Voluntary Conversion Date”), provided, however, that the Conversion Price shall be subject to adjustment as described in Section 3.5 below.  The Holder shall deliver this Note to the Maker at the address designated in the Purchase Agreement at such time that this Note is fully converted.  With respect to partial conversions of this Note, the Maker shall keep written records of the amount of this Note converted as of each Conversion Date.

Section 3.2            Conversion Price.  The term “Conversion Price” shall mean $0.18, subject to adjustment under Section 3.5 hereof; provided that, notwithstanding any other provision of this Note, in no event shall the Conversion Price, as adjusted, be less than $0.01 per share.

Section 3.3             Mechanics of Conversion.

(a)           Not later than three (3) Trading Days after any Conversion Date, the Maker or its designated transfer agent, as applicable, shall issue and deliver to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the Conversion Notice, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled.  In the alternative, not later than three (3) Trading Days after any Conversion Date, the Maker shall deliver to the applicable Holder by express courier a certificate or certificates which shall be free of restrictive legends and trading restrictions (other than those required by Section 5.1 of the Purchase Agreement) representing the number of shares of Common Stock being acquired upon the conversion of this Note (the “Delivery Date”).  Notwithstanding the foregoing to the contrary, the Maker or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on the Holder’s behalf via DWAC (or certificates free of restrictive legends) if such conversion is in connection with a sale and the Holder has complied with the applicable prospectus delivery requirements (as evidenced by documentation furnished to and reasonably satisfactory to the Maker) or such shares may be sold pursuant to Rule 144 (without restriction as to volume).  If in the case of any Conversion Notice such certificate or certificates are not delivered to or as directed by the applicable Holder by the Delivery Date, the Holder shall be entitled by written notice to the Maker at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Maker shall immediately return this Note tendered for conversion, whereupon the Maker and the Holder shall each be restored to their respective positions immediately prior to the delivery of such notice of revocation, except that any amounts described in Sections 3.3(b) and (c) shall be payable through the date notice of rescission is given to the Maker.

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(b)          The Maker understands that a delay in the delivery of the shares of Common Stock upon conversion of this Note beyond the Delivery Date could result in economic loss to the Holder.  If the Maker fails to deliver to the Holder such shares via DWAC (or, if applicable, certificates) by the Delivery Date, the Maker shall pay to such Holder, in cash, an amount per Trading Day for each Trading Day until such shares are delivered via DWAC or certificates are delivered (if applicable), together with interest on such amount at a rate of 10% per annum, accruing until such amount and any accrued interest thereon is paid in full, equal to the greater of (A) (i) 1% of the aggregate principal amount of the Notes requested to be converted for the first five (5) Trading Days after the Delivery Date and (ii) 2% of the aggregate principal amount of the Notes requested to be converted for each Trading Day thereafter and (B) $2,000 per day (which amount shall be paid as liquidated damages and not as a penalty).  Nothing herein shall limit a Holder’s right to pursue actual damages for the Maker’s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity (including, without limitation, a decree of specific performance and/or injunctive relief).  Notwithstanding anything to the contrary contained herein, the Holder shall be entitled to withdraw a Conversion Notice, and upon such withdrawal the Maker shall only be obligated to pay the liquidated damages accrued in accordance with this Section 3.3(b) through the date the Conversion Notice is withdrawn.

(c)           In addition to any other rights available to the Holder, if the Maker fails to cause its transfer agent to transmit via DWAC or transmit to the Holder a certificate or certificates representing the shares of Common Stock issuable upon conversion of this Note on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares of Common Stock issuable upon conversion of this Note which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Maker shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Common Stock issuable upon conversion of this Note that the Maker was required to deliver to the Holder in connection with the conversion at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Note and equivalent number of shares of Common Stock for which such conversion was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Maker timely complied with its conversion and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Maker shall be required to pay the Holder $1,000. The Holder shall provide the Maker written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Maker.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Maker’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

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Section 3.4             Ownership Cap and Certain Conversion Restrictions.

(a)           Notwithstanding anything to the contrary set forth in Section 3 of this Note, at no time may all or a portion of this Note be converted if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by the Holder at such time, the number of shares of Common Stock which would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) more than 4.99% of all of the Common Stock outstanding at such time; provided, however, that upon the Holder providing the Maker with sixty-one (61) days notice (pursuant to Section 4.1 hereof) (the “Waiver Notice”) that the Holder would like to waive this Section 3.4(a) with regard to any or all shares of Common Stock issuable upon conversion of this Note, this Section 3.4(a) will be of no force or effect with regard to all or a portion of the Note referenced in the Waiver Notice.

(b)           Notwithstanding anything to the contrary set forth in Section 3 of this Note, at no time may the Holder convert all or a portion of this Note if the number of shares of Common Stock to be issued pursuant to such conversion, when aggregated with all other shares of Common Stock owned by the Holder at such time, would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock outstanding at such time; provided, however, that upon the Holder providing the Maker with a Waiver Notice that the Holder would like to waive Section 3.4(b) of this Note with regard to any or all shares of Common Stock issuable upon conversion of this Note, this Section 3.4(b) shall be of no force or effect with regard to all or a portion of the Note referenced in the Waiver Notice.

Section 3.5            Adjustment of Conversion Price.

(a)           Until the Note has been paid in full or converted in full, the Conversion Price shall be subject to adjustment from time to time as follows:

(i)           Adjustments for Stock Splits and Combinations.  If the Maker shall at any time or from time to time after the Original Issuance Date, effect a stock split of the outstanding Common Stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased.  If the Maker shall at any time or from time to time after the Original Issuance Date, combine the outstanding shares of Common Stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased.  Any adjustments under this Section 3.5(a)(i) shall be effective at the close of business on the date the stock split or combination occurs.

(ii)           Adjustments for Certain Dividends and Distributions.  Other than with respect to a Subsidiary Dividend (as defined in the Purchase Agreement), if the Maker shall at any time or from time to time after the Original Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the applicable Conversion Price in effect immediately prior to such event shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying, the applicable Conversion Price then in effect by a fraction:

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(1)           the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and

(2)           the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

(iii)           Adjustment for Other Dividends and Distributions.  With the exception of the Subsidiary Dividend, if the Maker shall at any time or from time to time after the Original Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the holders of this Note shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Maker or other issuer (as applicable) which they would have received had this Note been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 3.5(a)(iii) with respect to the rights of the holders of this Note; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

(iv)           Adjustments for Reclassification, Exchange or Substitution.  If the Common Stock issuable upon conversion of this Note at any time or from time to time after the Original Issuance Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 3.5(a)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section 3.5(a)(v)), then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert this Note into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such Note might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

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(v)           Adjustments for Reorganization, Merger, Consolidation or Sales of Assets.  If at any time or from time to time after the Original Issuance Date there shall be a capital reorganization of the Maker (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3.5(a)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 3.5(a)(iv)), or a merger or consolidation of the Maker with or into another Person where the holders of outstanding voting securities prior to such merger or consolidation do not own over fifty percent (50%) of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Maker’s properties or assets to any other Person (an “Organic Change”), then as a part of such Organic Change, (A) if the surviving entity in any such Organic Change is a public company that is registered pursuant to the Securities Exchange Act of 1934, as amended, and its common stock is listed or quoted on a national exchange or the OTC Bulletin Board, an appropriate revision to the Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert such Note into the kind and amount of shares of stock and other securities or property of the Maker or any successor corporation resulting from Organic Change, and (B) if the surviving entity in any such Organic Change is not a public company that is registered pursuant to the Securities Exchange Act of 1934, as amended, or its common stock is not listed or quoted on a national exchange or the OTC Bulletin Board, the Holder shall have the right to demand prepayment pursuant to Section 3.6(b) hereof.  In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3.5(a)(v) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3.5(a)(v) (including any adjustment in the applicable Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of this Note) shall be applied after that event in as nearly an equivalent manner as may be practicable.

(vi)           Adjustments for Issuance of Additional Shares of Common Stock. In the event the Maker, shall, at any time, from time to time, issue or sell any additional shares of common stock (otherwise than as provided  in the foregoing subsections (i) through (v) of this Section 3.5(a) or pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior to the Original Issuance Date) (“Additional Shares of Common Stock”), at a price per share less than the Conversion Price then in effect or without consideration, then the Conversion Price upon each such issuance shall be reduced to a price determined by multiplying the Conversion Price then in effect by a fraction (A) the numerator of which is the total number of shares of Common Stock then outstanding plus the number of shares of Common Stock which the aggregate consideration received or to be received by the Company for the shares so issued (or deemed issued) would purchase at such Conversion Price, and (B) the denominator of which is the total number of shares of Common Stock then outstanding plus the number of shares of Common Stock so issued (or deemed issued).

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(vii)         Issuance of Common Stock Equivalents.  The provisions of this Section 3.5(a)(vii) shall apply if (a) the Maker, at any time after the Original Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible Securities”), other than the Note, or (b) any rights or warrants or options to purchase any such Common Stock or Convertible Securities (collectively, the “Common Stock Equivalents”), other than the Warrant issued pursuant to the Purchase Agreement, shall be issued or sold.  If the price per share for which Additional Shares of Common Stock may be issuable pursuant to any such Common Stock Equivalent shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance, amendment or adjustment shall be adjusted as provided in subsection (vi) of this Section 3.5(a), with the maximum number of shares of Common Stock issuable upon conversion or exercise of such Common Stock Equivalents being deemed to have be issued or sold by the Maker at the time of issuance or sale of such Common Stock Equivalents.  For purposes of this Section 3.5(a)(vii), the “price per share for which Additional Shares of Common Stock may be issuable” shall be determined by dividing (X) the total amount received or receivable by the Maker as consideration for the issue or sale of such Common Stock Equivalents, plus the minimum aggregate amount of additional consideration, if any, payable to the Maker upon the conversion or exercise thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exercise of all such Common Stock Equivalents. No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Common Stock Equivalents, and if any such issue or sale of Convertible Securities is made upon exercise of any Rights for which adjustment of the Conversion Price had been made pursuant to other provisions of Section 3.5(a), no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(viii)        Consideration for Stock.  In case any shares of Common Stock or any Common Stock Equivalents shall be issued or sold:

(1)           in connection with any merger or consolidation in which the Maker is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Maker shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefor shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board of Directors of the Maker, of such portion of the assets and business of the nonsurviving corporation as such Board may determine to be attributable to such shares of Common Stock, Convertible Securities, rights or warrants or options, as the case may be; or

(2)           in the event of any consolidation or merger of the Maker in which the Maker is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Maker shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Maker for stock or other securities of any corporation, the Maker shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation.  If any such calculation results in adjustment of the applicable Conversion Price, or the number of shares of Common Stock issuable upon conversion of the Notes, the determination of the applicable Conversion Price or the number of shares of Common Stock issuable upon conversion of the Notes immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment of the number of shares of Common Stock issuable upon conversion of the Notes.  In the event Common Stock is issued with other shares or securities or other assets of the Maker for consideration which covers both, the consideration computed as provided in this Section 3.5(a)(viii) shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Maker.

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(ix)           Superseding Adjustment.  If, at any time after any adjustment of the Conversion Price then in effect shall have been made pursuant to Section 3.5(a)(vii) as the result of any issuance of any Convertible Securities or Common Stock Equivalents, and (i) such Convertible Securities or Common Stock Equivalents, or the right of conversion or exchange in such other Common Stock Equivalents, shall expire, and all or a portion of such Convertible Securities or Common Stock Equivalents, or the right of conversion or exchange with respect to all or a portion of such other Common Stock Equivalents, as the case may be shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such Convertible Securities or Common Stock Equivalents, shall be increased solely by virtue of provisions therein contained for an automatic increase in such consideration per share upon the occurrence of a specified date or event, then any such previous adjustment to the Conversion Price of the Note shall be rescinded and annulled.  Upon the occurrence of an event set forth in this Section 3.5(a)(ix), there shall be a recomputation made of the effect of such Convertible Securities or Common Stock Equivalents on the basis of: (i) treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such Convertible Securities or Common Stock Equivalents or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and (ii) treating any such Convertible Securities or Common Stock Equivalents which then remain outstanding as having been granted or issued immediately after the time of such increase of the consideration per share for which shares of Common Stock or other property are issuable under such Convertible Securities or Common Stock Equivalents; whereupon a new adjustment of the Conversion Price then in effect shall be made, which new adjustment shall supersede the previous adjustment so rescinded and annulled.

(b)           Record Date.  In case the Maker shall take record of the holders of its Common Stock for the purpose of entitling them to subscribe for or purchase Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.

(c)           Certain Issues Excepted.  Anything herein to the contrary notwithstanding, the Maker shall not be required to make any adjustment to the Conversion Price in connection with the following: (a) issuances of shares of Common Stock or options to employees, officers or directors of the Maker pursuant to any stock or option plan existing on the date hereof if such grants are duly approved by a majority of the non-employee members of the Board of Directors of the Maker or a majority of the members of a committee of non-employee directors established for such purpose; (b) issuances of securities upon the exercise or exchange of or conversion of any securities issued hereunder and/or securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issuance Date, provided that such securities have not been amended since the Original Issuance Date to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions, provided any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Maker as determined in good faith by the Board of Directors of the Maker and in which the Maker receives benefits in addition to the investment of funds, but shall not include a transaction in which the Maker is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) shares of Common Stock (other than as set forth in (a) through (c) above and (e) below) in an aggregate amount not to exceed 5% of the number of shares of Common Stock outstanding on the Original Issuance Date and (e) the issuances set forth on Schedule 3.21 of the Purchase Agreement.

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(d)           No Impairment.  The Maker shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Maker, but will at all times in good faith, assist in the carrying out of all the provisions of this Section 3.5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the Holder against impairment.  In the event a Holder shall elect to convert any Notes as provided herein, the Maker cannot refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, violation of an agreement to which such Holder is a party or for any reason whatsoever, unless, an injunction from a court, or notice, restraining and or adjoining conversion of all or of said Notes shall have issued and the Maker posts a surety bond for the benefit of such Holder in an amount equal to one hundred thirty percent (130%) of the amount of the Notes the Holder has elected to convert, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder (as liquidated damages) in the event it obtains judgment.

(e)           Certificates as to Adjustments.  Upon occurrence of each adjustment or readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion of this Note pursuant to this Section 3.5, the Maker at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based.  The Maker shall, upon written request of the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate setting forth such adjustments and readjustments, the applicable Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of this Note.  Notwithstanding the foregoing, the Maker shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent (1%) of such adjusted amount.

(f)           Issue Taxes.  The Maker shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of this Note pursuant thereto; provided, however, that the Maker shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holder in connection with any such conversion.

(g)           Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of this Note.  In lieu of any fractional shares to which the Holder would otherwise be entitled, the Maker shall pay cash equal to the product of such fraction multiplied by the average of the Closing Bid Prices of the Common Stock for the five (5) consecutive Trading Days immediately preceding the Conversion Date.

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(h)           Reservation of Common Stock.  The Maker shall at all times when this Note shall be outstanding, reserve and keep available out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of this Note and all interest accrued thereon; provided that the number of shares of Common Stock so reserved shall on the date hereof be no less than one hundred percent (100%) of the number of shares of Common Stock for which this Note and all interest accrued thereon are at any time convertible.  The Maker shall, if necessary, use its best efforts from time to time and in accordance with Minnesota law, to increase the authorized number of shares of Common Stock if at any time the unissued number of authorized shares shall not be sufficient to satisfy the Maker’s obligations under this Section 3.5(h).

(i)           Regulatory Compliance.  If any shares of Common Stock to be reserved for the purpose of conversion of this Note or any interest accrued thereon require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Maker shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

Section 3.6            Prepayment.

(a)           Prepayment Upon an Event of Default.  Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default described in Sections 2.1(b)-(i) or (l) hereof, the Holder shall have the right, at such Holder’s option, to require the Maker to prepay in cash all or a portion of this Note at a price equal to one hundred and fifteen percent (115%) of the aggregate principal amount of this Note plus all accrued and unpaid interest applicable at the time of such request.  Nothing in this Section 3.6(a) shall limit the Holder’s rights under Section 2.2 hereof.

(b)           Prepayment Option Upon Major Transaction.  In addition to all other rights of the Holder contained herein, simultaneous with the occurrence of a Major Transaction (as defined below), the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of the Holder’s Notes in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) in the event at such time the Holder is unable to obtain the benefit of its conversion rights through the conversion of this Note and resale of the shares of Common Stock issuable upon conversion hereof in accordance with the terms of this Note and the other Transaction Documents or the Equity Conditions are not satisfied with respect to all such shares of Common Stock, the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by the Conversion Price on the date the Prepayment Price (as defined below) is demanded or otherwise due, multiplied by the VWAP on the date the Major Transaction Prepayment Price is demanded or otherwise due, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Major Transaction Prepayment Price”).

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(c)           Prepayment Option Upon Triggering Event.  In addition to all other rights of the Holder contained herein, after a Triggering Event (as defined below), the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by the Conversion Price on the date the Prepayment Price (as defined below) is demanded or otherwise due, multiplied by the VWAP on the date the Prepayment Price is demanded or otherwise due, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Triggering Event Prepayment Price,” and, collectively with the Major Transaction Prepayment Price, the “Prepayment Price”).

(d)           “Major Transaction.”  A “Major Transaction” shall be deemed to have occurred at such time as any of the following events:

(i)            the consolidation, merger or other business combination of the Maker with or into another Person (other than (A) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Maker or (B) a consolidation, merger or other business combination in which holders of the Maker’s voting power immediately prior to the transaction continue after the transaction to hold, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities).

(ii)           the sale or transfer of more than fifty percent (50%) of the Maker’s assets (based on the fair market value as determined in good faith by the Maker’s Board of Directors) other than inventory in the ordinary course of business in one or a related series of transactions; or

(iii)          closing of a purchase, tender or exchange offer made to the holders of more than fifty percent (50%) of the outstanding shares of Common Stock in which more than fifty percent (50%) of the outstanding shares of Common Stock were tendered and accepted.

(e)           [Intentionally omitted.]

(f)           “Triggering Event.”  A “Triggering Event” shall be deemed to have occurred at such time as any of the following events:

(i)            the suspension from listing, without subsequent listing on any one of, or the failure of the Common Stock to be listed on at least one of the OTC Bulletin Board, the American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or The New York Stock Exchange, Inc., for a period of five (5) consecutive Trading Days;

(ii)           the Maker’s notice to the Holder, including by way of public announcement, at any time, of its inability to comply (including for any of the reasons described in Section 3.7) or its intention not to comply with proper requests for conversion of this Note into shares of Common Stock; provided that such inability to convert due to the terms of Section 3.4 hereof shall not constitute a Triggering Event; or

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(iii)          the Maker’s failure to comply with a Conversion Notice tendered in accordance with the provisions of this Note within ten (10) business days after the receipt by the Maker of the Conversion Notice; provided that such inability to convert due to the terms of Section 3.4 hereof shall not constitute a Triggering Event; or

(iv)          the Maker deregisters its shares of Common Stock and as a result such shares of Common Stock are no longer publicly traded; or

(v)           the Maker consummates a “going private” transaction and as a result the Common Stock is no longer registered under Sections 12(b) or 12(g) of the Exchange Act.

(g)           [Intentionally omitted.]

(h)           Mechanics of Prepayment at Option of Holder Upon Major Transaction.  No sooner than twenty (20) days nor later than ten (10) days prior to the consummation of a Major Transaction, but not prior to the public announcement of such Major Transaction, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Major Transaction”) to the Holder of this Note.  At any time after receipt of a Notice of Major Transaction (or, in the event a Notice of Major Transaction is not delivered at least ten (10) days prior to a Major Transaction, at any time within ten (10) days prior to a Major Transaction), any holder of the Notes then outstanding may require the Maker to prepay, effective immediately prior to the consummation of such Major Transaction, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Major Transaction”) to the Maker, which Notice of Prepayment at Option of Holder Upon Major Transaction shall indicate (i) the principal amount of the Notes that such holder is electing to have prepaid and (ii) the applicable Major Transaction Prepayment Price, as calculated pursuant to Section 3.6(b) above.

(i)           Mechanics of Prepayment at Option of Holder Upon Triggering Event.  Within three (3) business days after the occurrence of a Triggering Event, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Triggering Event”) to the Holder.  At any time after the earlier of a holder’s receipt of a Notice of Triggering Event and such holder becoming aware of a Triggering Event, the Holder may require the Maker to prepay this Note by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Triggering Event”) to the Maker, which Notice of Prepayment at Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note that the Holder is electing to have prepaid and (ii) the applicable Triggering Event Prepayment Price, as calculated pursuant to Section 3.6(c) above.  The Holder shall only be permitted to require the Maker to prepay the Note pursuant to Section 3.6 hereof for the greater of a period of ten (10) days after receipt by such holder of a Notice of Triggering Event or for so long as such Triggering Event is continuing.

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(j)           Payment of Prepayment Price.  Upon the Maker’s receipt of a Notice of Prepayment at Option of Holder Upon Triggering Event or a Notice(s) of Prepayment at Option of Holder Upon Major Transaction from the Holder, the Maker shall deliver the applicable Triggering Event Prepayment Price, in the case of a prepayment pursuant to Section 3.6(i), to the Holder within five (5) business days after the Maker’s receipt of a Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case of a prepayment pursuant to Section 3.6(h), the Maker shall deliver the applicable Major Transaction Prepayment Price immediately prior to the consummation of the Major Transaction; provided that the Holder’s original Note shall have been so delivered to the Maker.  If the Maker shall fail to prepay the Note (other than pursuant to a dispute as to the arithmetic calculation of the Prepayment Price), in addition to any remedy the Holder may have under this Note and the Purchase Agreement, the applicable Prepayment Price payable in respect of the Note (or portion thereof) not prepaid shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.  Until the Maker pays such unpaid applicable Prepayment Price in full to the Holder, the Holder shall have the option (the “Void Optional Prepayment Option”) to, in lieu of prepayment, require the Maker to promptly return to the Holder all or that portion of the Note that was submitted for prepayment by such holder(s) under this Section 3.6 and for which the applicable Prepayment Price has not been paid, by sending written notice thereof to the Maker via facsimile (the “Void Optional Prepayment Notice”).  Upon the Maker’s receipt of such Void Optional Prepayment Notice and prior to payment of the full applicable Prepayment Price to the Holder, (i) the Notice of Prepayment at Option of Holder Upon Triggering Event or the Notice of Prepayment at Option of Holder Upon Major Transaction, as the case may be, shall be null and void with respect to the Note submitted for prepayment and for which the applicable Prepayment Price has not been paid, (ii) the Maker shall immediately return the Note submitted to the Maker by the Holder for prepayment under this Section 3.6(j) and for which the applicable Prepayment Price has not been paid and (iii) the Conversion Price of the Note shall be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the Void Optional Prepayment Notice is delivered to the Maker and (B) the lowest Closing Bid Price during the period beginning on the date on which the Notice of Prepayment of Option of Holder Upon Major Transaction or the Notice of Prepayment at Option of Holder Upon Triggering Event, as the case may be, is delivered to the Maker and ending on the date on which the Void Optional Prepayment Notice is delivered to the Maker; provided that no adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.  The Holder’s delivery of a Void Optional Prepayment Notice and exercise of its rights following such notice shall not affect the Maker’s obligations to make any payments which have accrued prior to the date of such notice.  Payments provided for in this Section 3.6 shall have priority to payments to other stockholders in connection with a Major Transaction.

Section 3.7            Inability to Fully Convert.

(a)           Holder’s Option if Maker Cannot Fully Convert.  If, upon the Maker’s receipt of a Conversion Notice, the Maker cannot issue shares of Common Stock for any reason (other than pursuant to the terms of Section 3.4 hereof), including, without limitation, because the Maker (x) does not have a sufficient number of shares of Common Stock authorized and available, or (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Maker or any of its securities from issuing all of the Common Stock which is to be issued to the Holder pursuant to a Conversion Notice, then the Maker shall issue as many shares of Common Stock as it is able to issue in accordance with the Holder’s Conversion Notice and, with respect to the unconverted portion of this Note, the Holder, solely at Holder’s option, can elect to:

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(i)            If the Maker’s inability to fully convert is pursuant to Section 3.7(a)(x) above, require the Maker to prepay that portion of this Note for which the Maker is unable to issue Common Stock in accordance with the Holder’s Conversion Notice (the “Mandatory Prepayment”) at a price per share equal to the Triggering Event Prepayment Price as of such Conversion Date (the “Mandatory Prepayment Price”);

(ii)           if the Maker’s inability to fully convert is pursuant to Section 3.7(a)(y) above, require the Maker to issue restricted shares of Common Stock in accordance with such holder’s Conversion Notice;

(iii)          void its Conversion Notice and retain or have returned, as the case may be, this Note that was to be converted pursuant to the Conversion Notice (provided that the Holder’s voiding its Conversion Notice shall not effect the Maker’s obligations to make any payments which have accrued prior to the date of such notice);

(iv)          exercise its Buy-In rights pursuant to and in accordance with the terms and provisions of Section 3.3(c) of this Note; provided that such inability to convert is not due to the terms of Section 3.4 hereof.

In the event the Holder shall elect to convert any portion of the Note as provided herein, the Maker cannot refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, violation of an agreement to which such Holder is a party or for any reason whatsoever, unless, an injunction from a court, on notice, restraining and or adjoining conversion of the Note shall have been issued and the Maker posts a surety bond for the benefit of such Holder in an amount equal to 130% of the principal amount of the Note the Holder has elected to convert, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder in the event it obtains judgment.

(b)           Mechanics of Fulfilling Holder’s Election.  The Maker shall immediately send via facsimile to the Holder, upon receipt of a facsimile copy of a Conversion Notice from the Holder which cannot be fully satisfied as described in Section 3.7(a) above, a notice of the Maker’s inability to fully satisfy the Conversion Notice (the “Inability to Fully Convert Notice”).  Such Inability to Fully Convert Notice shall indicate (i) the reason why the Maker is unable to fully satisfy such holder’s Conversion Notice, (ii) the amount of this Note which cannot be converted and (iii) the applicable Mandatory Prepayment Price.  The Holder shall notify the Maker of its election pursuant to Section 3.7(a) above by delivering written notice via facsimile to the Maker (“Notice in Response to Inability to Convert”).

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(c)           Payment of Prepayment Price.  If the Holder shall elect to have the Note prepaid pursuant to Section 3.7(a)(i) above, the Maker shall pay the Mandatory Prepayment Price to the Holder within thirty (30) days of the Maker’s receipt of the Holder’s Notice in Response to Inability to Convert, provided that prior to the Maker’s receipt of the Holder’s Notice in Response to Inability to Convert the Maker has not delivered a notice to the Holder stating, to the satisfaction of the Holder, that the event or condition resulting in the Mandatory Prepayment has been cured and all Conversion Shares issuable to the Holder can and will be delivered to the Holder in accordance with the terms of this Note.  If the Maker shall fail to pay the applicable Mandatory Prepayment Price to the Holder on the date that is one (1) business day following the 30-day period following the Maker’s receipt of the Holder’s Notice in Response to Inability to Convert (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Prepayment Price), in addition to any remedy the Holder may have under this Note and the Purchase Agreement, such unpaid amount shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.  Until the full Mandatory Prepayment Price is paid in full to the Holder, the Holder may (i) void the Mandatory Prepayment with respect to that portion of the Note for which the full Mandatory Prepayment Price has not been paid, (ii) receive back such Note, and (iii) require that the Conversion Price of such returned Note be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the Holder voided the Mandatory Prepayment and (B) the lowest Closing Bid Price during the period beginning on the Conversion Date and ending on the date the Holder voided the Mandatory Prepayment.

Section 3.8            No Rights as Shareholder.  Nothing contained in this Note shall be construed as conferring upon the Holder, prior to the conversion of this Note, the right to vote or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Maker or of any other matter, or any other rights as a shareholder of the Maker.

ARTICLE IV

COVENANTS

For so long as this Note is outstanding, without the prior written consent of the Holder:

Section 4.1            No Liens.  Other than Permitted Encumbrances, the Maker shall not, and shall not permit any Guarantor to, enter into, create, incur, assume or suffer to exist any liens, security interests, charges, claims or other encumbrances of any kind (collectively, “Liens”) ranking in priority to or pari passu with the liens provided to Holder under the Security Agreement and Pledge Agreement with respect to any of its assets now owned or hereafter acquired or any interest therein or any income or profits therefrom except for the Permitted Liens.

Section 4.2            No Indebtedness.  The Maker shall not, and shall not permit any Guarantor to, enter into, create, incur, assume or suffer to exist any Indebtedness, other than (i) Permitted Subordinated Indebtedness, (ii) Indebtedness existing on the date hereof and disclosed in the Commission Documents and (iii) purchase money security indebtedness for assets acquired by the Maker or the Guarantors in the ordinary course of their respective businesses, provided that such Indebtedness does not exceed the fair market value of the asset acquired by the Maker (“Permitted PMSI Debt”).

Section 4.3            Compliance with Transaction Documents.  The Maker shall, and shall cause the Guarantors to, comply with their respective obligations under this Note and the other Transaction Documents.

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ARTICLE V

MISCELLANEOUS

Section 5.1            Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy or facsimile at the address or number designated in the Purchase Agreement (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The Maker will give written notice to the Holder at least ten (10) days prior to the date on which the Maker takes a record (x) with respect to any dividend or distribution upon the Common Stock, (y) with respect to any pro rata subscription offer to holders of Common Stock or (z) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public.  The Maker will also give written notice to the Holder at least ten (10) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to the Holder prior to such information being made known to the public.

Section 5.2            Governing Law; Consent to Forum.  This Note shall be governed by the laws of the State of Kansas without giving effect to any choice of law rules thereof; provided, however, that if any of the collateral securing the Indebtedness shall be located in any jurisdiction other than Kansas, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Holder’s security interest, lien or mortgage upon such collateral and the enforcement of Holder’s other remedies in respect of such collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of Kansas.  AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, ISSUER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN JOHNSON COUNTY, KANSAS OR FEDERAL COURT IN THE DISTRICT OF KANSAS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.  ISSUER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.  ISSUER FURTHER AGREES NOT TO ASSERT AGAINST HOLDER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED BY HOLDER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THIS NOTE, THE OTHER INVESTMENT DOCUMENTS, HOLDER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.

Section 5.3            Headings.  Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

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Section 5.4            Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Maker to comply with the terms of this Note.  Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Maker (or the performance thereof).  The Maker acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Holder and that the remedy at law for any such breach may be inadequate. Therefore the Maker agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

Section 5.5            Enforcement Expenses.  The Maker agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.

Section 5.6            Binding Effect.   The obligations of the Maker and the Holder set forth herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof.

Section 5.7            Amendments.  This Note may not be modified or amended in any manner except in writing executed by the Maker and the Holder.

Section 5.8            Compliance with Securities Laws.  The Holder of this Note acknowledges that this Note is being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder shall not offer, sell or otherwise dispose of this Note.  This Note and any Note issued in substitution or replacement therefor shall be stamped or imprinted with a legend in substantially the following form:

“THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER THAT THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE MAY BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

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Section 5.9            Parties in Interest.  This Note shall be binding upon, inure to the benefit of and be enforceable by the Maker, the Holder and their respective successors and permitted assigns.

Section 5.10          Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 5.11          Maker Waivers; Dispute Resolution.  Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’ and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a)           No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(b)           THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

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(c)           In the case of a reasonable dispute as to the determination of the Closing Bid Price or the VWAP or the arithmetic calculation of the Conversion Price, any adjustment to the Conversion Price, liquidated damages amount, interest or dividend calculation, or any redemption price, redemption amount, adjusted Conversion Price, or similar calculation, or as to whether a subsequent issuance of securities is prohibited hereunder or would lead to an adjustment to the Conversion Price, the Maker shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt, or deemed receipt, of the Conversion Notice, any redemption notice, default notice or other event giving rise to such dispute, as the case may be, to the Holder. If, after a good faith effort by the parties, the Holder and the Maker are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Maker shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Closing Price or the VWAP to an independent, reputable investment bank selected by the Maker and approved by the Holder, which approval shall not be unreasonably withheld, (b) the disputed arithmetic calculation of the Conversion Price, adjusted Conversion Price or any redemption price, redemption amount or default amount to the Maker’s independent, outside accountant or (c) the disputed facts regarding whether a subsequent issuance of securities is prohibited hereunder or would lead to an adjustment to the Conversion Price (or any of the other above described facts not expressly designated to the investment bank or accountant), to an expert attorney from a nationally recognized outside law firm (having at least 100 attorneys and having with no prior relationship with the Maker) selected by the Maker and approved by the Holder.  The Maker, at the Maker’s expense, shall cause the investment bank, the accountant, the law firm, or other expert, as the case may be, to perform the determinations or calculations and notify the Maker and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s, accountant’s or attorney’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

Section 5.12          Definitions.  Terms used herein and not defined shall have the meanings set forth in the Purchase Agreement.  For the purposes hereof, the following terms shall have the following meanings:

“Closing Bid Price” shall mean, on any particular date (i) the last trading price per share of the Common Stock on such date on the OTC Bulletin Board or another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the last trading price on such exchange or quotation system on the date nearest preceding such date, or (ii) if the Common Stock is not then listed or traded on a registered national securities exchange or quoted on the OTC Bulletin Board, then the average of the “Pink Sheet” quotes for the relevant conversion period, as determined in good faith by the Holder, or (iii) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by the Maker and reasonably acceptable to the Holder.

“Equity Conditions” shall mean, during the period in question, (i) the Maker shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Conversion Notices of the Holder, if any, (ii) all liquidated damages and other amounts owing to the Holder in respect of this Note and the other Transaction Documents shall have been paid; (iii) (A) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares issued or issuable pursuant to the Transaction Documents or (B) there exists, under Rule 144 of the Securities Act, “current public information” with respect to the Maker and the Holder is permitted to resell the shares of Common Stock issued or issuable pursuant to the Transaction Documents pursuant to Rule 144 of the Securities Act, without any restriction as to volume, (iv) the Common Stock is trading on the Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed for trading on a Trading Market (and the Maker believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (v) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares issuable pursuant to the Transaction Documents, (vi) there is then existing no Event of Default or event which, with the passage of time or the giving of notice, would constitute an Event of Default, and (vii) no public announcement of a pending or proposed Major Transaction or Triggering Event has occurred.

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“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, current swap agreements, interest rate hedging agreements, interest rate swaps, or other financial products, (c) all capital lease obligations that exceed $10,000 in the aggregate in any fiscal year, (d) all obligations or liabilities secured by a lien or encumbrance on any asset of the Maker, irrespective of whether such obligation or liability is assumed, (e) all obligations for the deferred purchase price of assets, together with trade debt and other accounts payable that exceed $10,000 in the aggregate in any fiscal year, (f) all synthetic leases, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse) any of the foregoing obligations of any other person; provided, however, Indebtedness shall not include (a) usual and customary trade debt incurred in the ordinary course of business and (b) endorsements for collection or deposit in the ordinary course of business.

“Permitted Encumbrance” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Maker) have been established in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Maker’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Maker’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Maker and its consolidated subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens securing Permitted Subordinated Indebtedness, (d) Liens securing Permitted PMSI Debt, provided that Indebtedness is secured solely by Liens on the assets acquired with the proceeds of such Permitted PMSI Debt; (e) Liens in favor of Holder; (f) Liens in favor of Kenglo One Ltd; and (g) Permitted Liens, as defined in the Security Agreement.

“Permitted Subordinated Indebtedness” means Indebtedness incurred after the date hereof that (i) shall be expressly subordinate in right of payment to this Note in form and substance satisfactory to the Holder in its reasonable discretion, (ii) shall not be secured by any asset, agreement or other collateral, other than liens expressly subordinate to the liens securing this Note, and (iii) in the event of any bankruptcy, liquidation or other similar proceeding, shall provide for the payment in full of this Note prior to the payment of any amounts in respect thereof.

“Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

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“Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or a registered national securities exchange, or (b) if the Common Stock is not traded on the OTC Bulletin Board or a registered national securities exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“Trading Market” means the Over the Counter Bulletin Board, the New York Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global Markets, the Nasdaq Global Select Market or the American Stock Exchange.

“VWAP” means, for any date, (i) the daily volume weighted average price of the Common Stock for such date on the OTC Bulletin Board or national securities exchange as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (ii) if the Common Stock is not then listed or quoted on the OTC Bulletin Board or a national securities exchange and if prices for the Common Stock are then reported in the “Pink Sheets” published by the Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iii) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Maker.

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IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by its duly authorized officer as of the date first above indicated.

WITS BASIN PRECIOUS MINERALS INC.

By:

/s/ Stephen D. King

Name:

Stephen D. King

Title:

Chief Executive Officer

Signature Page

to Amended and Restated 10% Senior Secured Convertible Promissory Note

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EX-10.74 20 v181039_ex10-74.htm

EXHIBIT 10.74

WITS BASIN PRECIOUS MINERALS INC.

Amended and Restated

10% Senior Secured Promissory Note

Issuance Date:

December 17, 2009

Principal Amount:

$110,000

For value received, WITS BASIN PRECIOUS MINERALS INC., a Minnesota corporation (the “Maker”), hereby promises to pay to the order of China Gold, LLC, a Kansas limited liability company with an address of 4520 Main Street, Suite 1650, Kansas City, MO 64111 (together with its successors, representatives, and permitted assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of ONE HUNDRED AND TEN THOUSAND DOLLARS ($110,000), together with interest thereon.

All payments under or pursuant to this Note shall be made in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, as requested by the Holder.  The outstanding principal balance of this Note, together with all accrued and unpaid interest from the Original Issuance Date, shall be due and payable in full on February 15, 2010 (the “Maturity Date”) or at such earlier time as provided herein as provided herein.

This Note was originally issued on July 10, 2008 (the “Original Issuance Date”) and governed pursuant to the terms of that certain Note and Warrant Purchase Agreement, dated as of February 11, 2008 (the “Purchase Agreement”), by and between the Maker and the Holder, as a successor-in-interest to Platinum Long Term Growth V, LLC, a Delaware limited liability company (“Platinum”), pursuant to an assignment and transfer of this Note, the Purchase Agreement and other Transaction Documents completed on or around April 17, 2009, and is amended and restated hereby to reflect an extension of the Maturity Date (as defined below) from October 8, 2008 to February 15, 2010.  Holder has delivered the original version of the Note to Maker marked “cancelled” on or prior to the date hereof, and agrees that such original Note shall no longer have any force or effect.

ARTICLE I

PAYMENT

Section 1.1          Interest.  Beginning on the Original Issuance Date, the outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to ten percent (10%), payable in cash on the Maturity Date.  Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months, shall compound monthly and shall accrue commencing on the Issuance Date.  Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), the Maker will pay interest to the Holder, payable on demand, on the outstanding principal balance of and unpaid interest on the Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum.

1

Section 1.2          Payment of Principal; Prepayment.   The Principal Amount hereof shall be paid in full on the earliest of (i) the Maturity Date, (ii) the due date of any mandatory prepayment as set forth herein, or (iii) upon acceleration of this Note in accordance with the terms hereof. Any amount of principal repaid hereunder may not be reborrowed.  The Maker may prepay all or any portion of the principal amount of this Note upon not less than two (2) business days’ prior written notice to the Holder without premium or penalty.

Section 1.3          Security Agreement.  The obligations of the Maker hereunder are secured by, among other things, a continuing security interest in certain assets of the Maker and certain of its subsidiaries pursuant to the terms of that certain Second Amended and Restated Security Agreement (the “Security Agreement”) dated on or around December 17, 2009 by and between Holder, Maker, Hunter Bates Mining Corporation (“Hunter Bates”) and Gregory Gold Producers, Inc. (“Gregory Gold”) and that certain Third Amended and Restated Pledge Agreement (the “Pledge Agreement”) dated on or around December 17, 2009 by and between Holder, Maker, Hunter Bates and Gregory Gold.

Section 1.4          Payment on Non-Business Days.  Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

ARTICLE II

EVENTS OF DEFAULT;  REMEDIES

Section 2.1          Events of Default.  The occurrence of any of the following events shall be an “Event of Default” under this Note:

(a)           any default in the payment of (1) the principal amount hereunder when due, or (2) interest on, or liquidated damages in respect of, this Note, within three (3) business days after the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise); or

(b)           the Maker shall fail to observe or perform any other covenant or agreement contained in this Note, which failure is not cured, if possible to cure, within 3 business days after notice of such default sent by the Holder; or

(c)           default shall be made in the performance or observance of any material covenant, condition or agreement contained in the Purchase Agreement or any other Transaction Document (as defined in said Purchase Agreement);  or

(d)           any material representation or warranty made by the Maker herein or in the Purchase Agreement or any Transaction Document shall prove to have been false or incorrect or breached in a material respect on the date as of which made; or

-2-

(e)           the Maker shall (A) default in any payment of any amount or amounts of principal of or interest on any indebtedness (other than the indebtedness hereunder) the aggregate principal amount of which Indebtedness is in excess of $200,000 or (B) default in the observance or performance of any other agreement or condition relating to any indebtedness, that, in the aggregate, exceeds $200,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

(f)           the Maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

(g)           a proceeding or case shall be commenced in respect of the Maker, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days.

Section 2.2          Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may, at any time, at its option, declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  Upon an Event of Default, the Holder may proceed to exercise all rights and remedies against any and all collateral pledged to the Holder as security for this Note, including all collateral pledged under the Security Agreement.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Maker to comply with the terms of this Note.

-3-

ARTICLE III

MISCELLANEOUS

Section 3.1          Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy or facsimile at the address or number designated in the Purchase Agreement (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

Section 3.2          Governing Law; Consent to Forum.  This Note shall be governed by the laws of the State of Kansas without giving effect to any choice of law rules thereof; provided, however, that if any of the collateral securing the Indebtedness shall be located in any jurisdiction other than Kansas, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Holder’s security interest, lien or mortgage upon such collateral and the enforcement of Holder’s other remedies in respect of such collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of Kansas.  AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, ISSUER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN JOHNSON COUNTY, KANSAS OR FEDERAL COURT IN THE DISTRICT OF KANSAS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.  ISSUER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.  ISSUER FURTHER AGREES NOT TO ASSERT AGAINST HOLDER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED BY HOLDER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THIS NOTE, THE OTHER INVESTMENT DOCUMENTS, HOLDER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.

Section 3.3          Headings.  Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

Section 3.4          Binding Effect; Amendments.  The obligations of the Maker and the Holder set forth herein shall be binding upon the successors and assigns of each such party.  This Note may not be modified or amended in any manner except in writing executed by the Maker and the Holder.

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Section 3.5          Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 3.6          Maker Waivers; Dispute Resolution.  Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’ and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a)           No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(b)           THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

Section 3.7          Fees and Expenses. Upon execution of this Note, the Maker shall reimburse the Holder for reasonable and actual legal fees incurred by the Holder in the drafting and negotiation of this Note (which amount may be withheld by the Holder from amounts to be delivered to the Maker in connection with the issuance of this Note).  The Maker will pay on demand all costs of collection and attorneys’ fees paid or incurred by the Holder in enforcing the obligations of the Maker.  The Borrower represents and warrants that this Note is the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms.

-5-

IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by its duly authorized officer as of the date first above indicated.

WITS BASIN PRECIOUS MINERALS INC.

By:

/s/ Stephen D. King

Name:

Stephen D. King

Title:

Chief Executive Officer

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EX-10.75 21 v181039_ex10-75.htm

EXHIBIT 10.75

Wits Basin Precious Minerals Inc.

900 IDS Center

80 South 8th Street

Minneapolis MN 55402-8773

December 17, 2009

Pioneer Holdings, LLC

Attn: C. Andrew Martin

4520 Main Street, Suite 1650

Kansas City, MO  64111

Re:

Chile Loan

Dear Andrew:

The purpose of this letter is to confirm and formalize our agreements with respect to that certain loan by Pioneer Holdings, LLC (“Pioneer”) to Wits Basin Precious Minerals Inc. (together with any subsidiary created for the purposes of operations in Chile, “Wits Basin”) of $30,000 on May 11, 2009 (the “Loan”).

The Loan is to be repaid by Wits Basin to Pioneer prior to the payment of any distributions by Wits Basin relating to proceeds from its operations out of the property acquired in Chile; provided that, the Loan shall be earlier repaid at such time Wits Basin raises through debt or equity financing specifically relating to its prospects in Chile an aggregate of $100,000.  In addition to such repayment, Pioneer shall also be entitled to receive 50% of the first $540,000 in aggregate distributions of earnings, profits and/or cash relating to the Chile operations (resulting in a aggregate distribution to Pioneer of $270,000 in addition to the repayment of the original Loan).  In the event Wits Basin sells its rights in Chile to a third party, it will be required to repay the Loan out of any proceeds from such sale.

As additional consideration for the Loan, Pioneer shall also be entitled to receive (i) a non-dilutive net smelter right (the “NSR”) equal to two percent (2%) of Net Smelter Returns relating to the Chile property and (ii) a five-year warrant to purchase up to 3,000,000 shares of Wits Basin common stock at an exercise price of $0.01 per share.  For purposes of this letter agreement, “Net Smelter Returns” shall mean (i) all revenue received by or credited to the Company from purchases of mineral product on the Chile property (as determined by fair market value of such mineral product assuming arms’ length negotiation) (ii) less all direct expenses incurred by the Company in the extraction, transportation, processing and sale of such mineral product from the Chile property.  Notwithstanding the foregoing, Wits Basin shall have the right to repurchase, at any time, the NSR for a purchase price of $100,000.

If the terms referenced above are consistent with your understanding of our agreements, please acknowledge the terms of this letter below where noted.  If this does not comport with your understanding, please feel free to contact me at (678) 222-0291.   Thank you.

Sincerely,

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

Acknowledged and Agreed To:

Pioneer Holdings, LLC

By

/s/ C. Andrew Martin

C. Andrew Martin, Manager

EX-21 22 v181039_ex21.htm

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

(1) Wits-China Acquisition Corp. Inc., a Minnesota corporation, 100% owned by Wits Basin Precious Minerals Inc.

(2) Wits Basin (BVI) Ltd. a British Virgin Islands corporation, 100% owned by Wits Basin Precious Minerals Inc (f/k/a China Global Mining Resources Limited, renamed in January 2009).

(3) China Global Mining Resources (BVI) Limited, a British Virgin Islands corporation, effective March 17, 2009, 50% owned by Wits Basin Precious Minerals Inc.

(4) Standard Gold, Inc., a Colorado corporation, effective September 29, 2009, approximately 94% owned by Wits Basin Precious Minerals Inc.

EX-23.1 23 v181039_ex23-1.htm

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No.’s 333-68088 and 333-90532) and Form S-8 (No.’s 333-68166, 333-105031, 333-110590, 333-131268 and 333-137616) of Wits Basin Precious Minerals Inc., and subsidiaries of our report dated April 15, 2010, relating to the financial statements, which appears on page F-2 of this annual report on Form 10-K.

/s/ Moquist Thorvilson Kaufmann Kennedy & Pieper LLC

Minneapolis, Minnesota

April 15, 2010

EX-31.1 24 v181039_ex31-1.htm

EXHIBIT 31.1

CERTIFICATION

I, Stephen D. King, certify that:

1. I have reviewed this annual report on Form 10-K of Wits Basin Precious Minerals Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, and evaluated the effectiveness of our internal control over financial reporting, and printed in this report our conclusions about the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: April 15, 2010

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

Wits Basin Precious Minerals Inc.

EX-31.2 25 v181039_ex31-2.htm

EXHIBIT 31.2

CERTIFICATION

I, Mark D. Dacko, certify that:

1. I have reviewed this annual report on Form 10-K of Wits Basin Precious Minerals Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, and evaluated the effectiveness of our internal control over financial reporting, and printed in this report our conclusions about the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: April 15, 2010

By:

/s/ Mark D. Dacko

Mark D. Dacko

Chief Financial Officer

Wits Basin Precious Minerals Inc.

EX-32.1 26 v181039_ex32-1.htm

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Wits Basin Precious Minerals Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen D. King, the Chief Executive Officer of the Company, hereby certifies, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 15, 2010

By:

/s/ Stephen D. King

Stephen D. King

Chief Executive Officer

EX-32.2 27 v181039_ex32-2.htm

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Wits Basin Precious Minerals Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Dacko, the Chief Financial Officer of the Company, hereby certifies, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 15, 2010

By:

/s/ Mark D. Dacko

Mark D. Dacko

Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

	WITS BASIN PRECIOUS MINERALS INC.:

	By:	/s/ Stephen D. King
		Stephen D. King
		Chief Executive Officer

COMPANY:		LENDER:

WITS BASIN PRECIOUS MINERALS INC.		KENGLO ONE, LTD.

By:	/s/ Stephen D. King	By:	/s/ Ann Williams
Its:	CEO	Its:	Director

	LENDER:

	China Gold, LLC,
	a Kansas limited liability company

	By:	/s/ C. Andrew Martin
	Name:	C. Andrew Martin
	Title:	Manager

DEBTORS:	Wits Basin Precious Minerals Inc.,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Hunter Bates Mining Corporation,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Gregory Gold Producers, Inc.,
	a Colorado corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

SECURED PARTY:	Kenglo One, Ltd.
	a company incorporated under the laws of Jersey

	By:	/s/ Ann Williams
		Ann Williams, Director

GRANTOR:		HOLDER:

Wits Basin Precious Minerals Inc.		KENGLO ONE LTD.

By:	/s/ Stephen D. King	By:	/s/ Ann Williams
Stephen D. King, Chief Executive Officer		Its: Director

ISSUER:	WITS BASIN PRECIOUS MINERALS INC.,
	a Minnesota corporation

	By:	/s/ Stephen D. King
	Name:	Stephen D. King
	Title:	Chief Executive Officer

PURCHASER:	CHINA GOLD, LLC,
	a Kansas limited liability company

	By:	Pioneer Holdings, LLC
	Its:	Manager

		By:	/s/ C. Andrew Martin
		Name:	C. Andrew Martin
		Title:	Manager

DEBTOR:	Wits Basin Precious Minerals Inc.,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Hunter Bates Mining Corporation,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Gregory Gold Producers, Inc.,
	a Colorado corporation

	By:	/s/ Stephen D. King
		Stephen D. King, President

SECURED PARTY:	China Gold, LLC
	a Kansas limited liability company

	By:	Pioneer Holdings, LLC
	Its:	Manager

		By:	/s/ C. Andrew Martin
		Name:	C. Andrew Martin
		Title:	Manager

PLEDGORS:	Wits Basin Precious Minerals Inc.,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Hunter Bates Mining Corporation,
	a Minnesota corporation

	By:	/s/ Stephen D. King
		Stephen D. King, Chief Executive Officer

	Gregory Gold Producers, Inc.,
	a Colorado corporation

	By:	/s/ Stephen D. King
		Stephen D. King, President

Name of Subsidiary/Entity	Jurisdiction of Organization	Type of Interest	Number of Shares/Units (if applicable)	Certificate Numbers (if any)	Percentage of Outstanding Interests in Subsidiary

WITS BASIN PRECIOUS MINERALS

Standard Gold, Inc. (f/k/a Princeton Acquisitions, Inc.)1	Colorado	Common Stock	18,584,544	various	85	%

Kwagga Gold (Barbados) Limited	Barbados	Common Shares	1,884,615	2	35	%

China Global Mining Resources (BVI) Limited (1513743)	British Virgin Islands	Common Stock	100 B Shares	1	50	%

HUNTER BATES MINING CORPORATION

Gregory Gold Producers, Inc.	Colorado	Common Stock	100	1	100	%

	Sincerely,
	/s/ Stephen D. King
	Stephen D. King
	Chief Executive Officer