Converse Uranium Project, Exploration, Development And Mine Operating Agreement

Exhibit 10.9 CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND
MINE OPERATING AGREEMENT between CANYON RESOURCES CORPORATION and NEW HORIZON URANIUM CORPORATION EFFECTIVE DATE: January 23, 2006


TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND CROSS-REFERENCES 1 1.1 Definitions 1 1.2 Cross-References 1 ARTICLE II NAME, PURPOSES AND TERM 1 2.1 General 1 2.2 Name 2 2.3 Purposes 2 2.4 Limitation 2 2.5 Term 2 ARTICLE III REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES 3 3.1 Representations and Warranties of Both Participants 3 3.2 Representations and Warranties of Canyon 3 3.3 Disclosures 5 3.4 Record Title 5 3.5 Loss of Title 5 3.6 Royalties, Production Taxes and Other Payments Based on Production 6 3.7 Indemnities/Limitation of Liability 6 ARTICLE IV RELATIONSHIP OF THE PARTICIPANTS 8 4.1 No Partnership 8 4.2 Federal Tax Elections and Allocations 8 4.3 State Income Tax 8 4.4 Tax Returns 8 4.5 Other Business Opportunities 8 4.6 Waiver of Rights to Partition or Other Division of Assets 9 4.7 Transfer or Termination of Rights to Properties 9 4.8 Implied Covenants 9 4.9 No Third Party Beneficiary Rights 9

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Page ARTICLE V CONTRIBUTIONS BY PARTICIPANTS 9 5.1 Participants' Initial Contributions 9 5.2 Failure to Make Initial Contribution 11 5.3 Additional Contributions 12 ARTICLE VI INTERESTS OF PARTICIPANTS 13 6.1 Initial Participating Interests 13 6.2 Changes in Participating Interests 13 6.3 Elimination of Minority Interest 14 6.4 Continuing Liabilities Upon Adjustments of Participating Interests 15 6.5 Documentation of Adjustments to Participating Interests 15 6.6 Grant of Lien and Security Interest 16 6.7 Subordination of Interests 16 ARTICLE VII MANAGEMENT COMMITTEE 16 7.1 Organization and Composition 16 7.2 Decisions 17 7.3 Meetings 17 7.4 Action Without Meeting in Person 18 7.5 Matters Requiring Approval 18 ARTICLE VIII MANAGER 18 8.1 Appointment 18 8.2 Powers and Duties of Manager 19 8.3 Standard of Care 23 8.4 Resignation; Deemed Offer to Resign 24 8.5 Payments To Manager 25 8.6 Transactions With Affiliates 25 8.7 Activities During Deadlock 25

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Page ARTICLE IX PROGRAMS AND BUDGETS 25 9.1 Initial Program and Budget 25 9.2 Operations Pursuant to Programs and Budgets 25 9.3 Presentation of Programs and Budgets 25 9.4 Review and Adoption of Proposed Programs and Budgets 26 9.5 Election to Participate 26 9.6 Recalculation or Restoration of Reduced Interest Based on Actual Expenditures 27 9.7 Pre-Feasibility Study Program and Budgets 28 9.8 Completion of Pre-Feasibility Studies and Selection of Approved Alternatives 30 9.9 Programs and Budgets for Feasibility Study 31 9.10 Development Programs and Budgets; Project Financing 31 9.11 Expansion or Modification Programs and Budgets 32 9.12 Budget Overruns; Program Changes 32 9.13 Emergency or Unexpected Expenditures 32 ARTICLE X ACCOUNTS AND SETTLEMENTS 33 10.1 Monthly Statements 33 10.2 Cash Calls 33 10.3 Failure to Meet Cash Calls 33 10.4 Cover Payment 34 10.5 Remedies 34 10.6 Audits 35 ARTICLE XI DISPOSITION OF PRODUCTION 36 11.1 Taking In Kind 36 11.2 Failure of Participant to Take In Kind 36 11.3 Hedging 36

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Page ARTICLE XII WITHDRAWAL AND TERMINATION 37 12.1 Termination by Expiration or Agreement 37 12.2 Termination by Deadlock 37 12.3 Withdrawal 37 12.4 Continuing Obligations and Environmental Liabilities 37 12.5 Disposition of Assets on Termination 37 12.6 Non-Compete Covenants 38 12.7 Right to Data After Termination 38 12.8 Continuing Authority 38 ARTICLE XIII ACQUISITIONS WITHIN AREA OF INTEREST 39 13.1 General 39 13.2 Notice to Non-Acquiring Participant 39 13.3 Option Exercised 39 13.4 Option Not Exercised 40 ARTICLE XIV ABANDONMENT AND SURRENDER OF PROPERTIES 40 ARTICLE XV SUPPLEMENTAL BUSINESS AGREEMENT 15.1 Supplemental Business Agreement 40 15.2 Subdivided Area of Interest 41 ARTICLE XVI TRANSFER OF INTEREST; PREEMPTIVE RIGHT 41 16.1 General 41 16.2 Limitations on Free Transferability 41 16.3 Preemptive Right 43 ARTICLE XVII DISPUTES 44 17.1 Governing Law 44 17.2 Venue 44 17.3 Alternative Dispute Resolution 44 17.4 Fees and Costs 45

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Page ARTICLE XVIII CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION 45 18.1 Business Information 45 18.2 Participant Information 45 18.3 Permitted Disclosure of Confidential Business Information 46 18.4 Disclosure Required By Law 46 18.5 Public Announcements 47 ARTICLE XIX GENERAL PROVISIONS 47 19.1 Notices 47 19.2 Gender 48 19.3 Currency 48 19.4 Headings 48 19.5 Waiver 48 19.6 Modification 48 19.7 Force Majeure 49 19.8 Rule Against Perpetuities 49 19.9 Further Assurances 49 19.10 Entire Agreement; Successors and Assigns 50 19.11 Memorandum 50 19.12 Counterparts 50 EXHIBIT A ASSETS AND AREA OF INTEREST EXHIBIT B ACCOUNTING PROCEDURES EXHIBIT C TAX MATTERS EXHIBIT D DEFINITIONS EXHIBIT E PRODUCTION ROYALTY EXHIBIT F INITIAL PROGRAM AND BUDGET

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CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT This CONVERSE URANIUM PROJECT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT (" Agreement" ) is made as of January 23, 2006 (" Effective Date" ) between Canyon Resources Corporation, a Delaware corporation (" Canyon" ), with an office located at 14142 Denver West Parkway, Suite 250, Golden, CO 80401 and New Horizon Uranium Corporation, a British Columbia corporation (" Horizon" ), with an office located at 2221 East Street, Suite 200, Golden, Colorado 80401. RECITALS A. Canyon owns or controls certain Properties and other Assets located in or concerning Converse and Niobrara Counties, State of Wyoming, which Properties and other Assets are described further in Exhibit A and defined in Exhibit D . B. Horizon wishes to participate with Canyon in the exploration, evaluation and if justified the development and mining of mineral resources within the Properties, and Canyon is willing to grant such rights to Horizon. NOW THEREFORE, in consideration of the covenants and conditions contained herein, Canyon and Horizon agree as follows: ARTICLE I
DEFINITIONS AND CROSS-REFERENCES 1.1 Definitions . The terms defined in Exhibit D and elsewhere shall have the defined meaning wherever used in this Agreement, including in Exhibits. 1.2 Cross-References . References to " Exhibits ," " Articles ," " Sections" and " Subsections" refer to Exhibits, Articles, Sections and Subsections of this Agreement. References to " Paragraphs" and " Subparagraphs" refer to paragraphs and subparagraphs of the referenced Exhibits. ARTICLE II
NAME, PURPOSES AND TERM 2.1 General . Canyon and Horizon hereby enter into this Agreement for the purposes hereinafter stated. All of the rights and obligations of the Participants in connection with the Assets or the Area of Interest and all Operations shall be subject to and governed by this Agreement.

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2.2 Name . The Assets shall be managed and operated by the Participants under the name of the " Converse Joint Venture" . The Manager shall accomplish any registration required by applicable assumed or fictitious name statutes and similar statutes. 2.3 Purposes . This Agreement is entered into for the following purposes and for no others, and shall serve as the exclusive means by which each of the Participants accomplishes such purposes: (a) to conduct Exploration within the Area of Interest, (b) to acquire additional real property and other interests within the Area of Interest including contractual rights of access and use of land, water, and utilities, (c) to evaluate the possible Development and Mining of the Properties, and, if justified, to engage in Development and Mining, (d) to engage in Operations on the Properties, (e) to engage in marketing Products, to the extent provided by Article XI , (f) to complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties, and (g) to perform any other activity necessary, appropriate, or incidental to any of the foregoing. 2.4 Limitation . Unless the Participants otherwise agree in writing, the Operations shall be limited to the purposes described in Section 2.3 , and nothing in this Agreement shall be construed to enlarge such purposes or to change the relationships of the Participants as set forth in Article IV . 2.5 Term . The term of this Agreement shall be for thirty (30) years from the Effective Date and for so long thereafter as Products are produced from the Properties on a continuous basis, and thereafter until all materials, supplies, equipment and infrastructure have been salvaged and disposed of, any required Environmental Compliance is completed and accepted and the Participants have agreed to a final accounting, unless the Business is earlier terminated as herein provided. For purposes hereof, Products shall be deemed to be produced from the Properties on a " continuous

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basis" so long as production in commercial quantities is not halted for more than one year for reasons other than Force Majeure as provided for in Section 19.7 . ARTICLE III
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES 3.1 Representations and Warranties of Both Participants . As of the Effective Date, each Participant warrants and represents to the other that: (a) it is a corporation duly organized and in good standing in its state or province of incorporation and it shall become qualified to do business and shall be in good standing in those states where necessary in order to carry out the purposes of this Agreement within thirty (30) calendar days following the Effective Date; (b) it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate, board of directors, shareholder, surface and mineral rights owner, lessor, lessee and other actions required to authorize it to enter into and perform this Agreement have been properly taken; (c) it will not breach any other agreement or arrangement by entering into or performing this Agreement; (d) it is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the permitting or implementation of Operations under this Agreement; and (e) this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms. 3.2 Representations and Warranties of Canyon . As of the Effective Date, Canyon makes the following representations and warranties to Horizon: (a) Canyon does not own any of the Properties in fee simple. (b) With respect to those Properties in which Canyon holds an interest under leases or other contracts: (i) Canyon is in exclusive possession of such Properties; (ii) Canyon has not received any notice of default of any of the terms or provisions of such leases or other contracts; (iii) Canyon has the authority under such leases or other contracts to perform fully its obligations under this Agreement; (iv) to Canyon' s knowledge, such leases and other contracts are valid and are in good standing; (v) Canyon has no knowledge of any act or omission or any condition on the Properties which could be considered or construed as a default under any such lease or other

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contract; and (vi) to Canyon' s knowledge, such Properties are free and clear of all Encumbrances or defects in title except for those specifically identified in Paragraph 1.1 of Exhibit A . (c) Canyon has delivered to or made available for inspection by Horizon all Existing Data in its possession or control, and true and correct copies of all leases or other contracts relating to the Properties. (d) With respect to unpatented mining claims located by Canyon that are included within the Properties, except as provided in Paragraph 1.1 of Exhibit A and subject to the paramount title of the United States: (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location and validation work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a manner consistent with that required of the Manager pursuant to Subsection 8.2(k) through the assessment year ending August 31, 2006; (v) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are free and clear of Encumbrances or defects in title; and (vii) Canyon has no knowledge of conflicting mining claims. Nothing in this Subsection, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable mineral deposit. (e) The Properties do not include any unpatented mining claims not located by Canyon. (f) With respect to the Properties, to Canyon' s knowledge, there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions affecting its interests in the Properties which have not been for fair consideration. (g) Except as to matters otherwise disclosed in writing to Horizon prior to the Effective Date, (i) to Canyon' s knowledge, the conditions existing on or with respect to the Properties and its ownership and operation of the Properties are not in violation of any Laws (including without limitation any Environmental Laws), nor causing or permitting any damage (including Environmental Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on the Properties or in the general vicinity of the Properties;

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(ii) to Canyon' s knowledge, there have been no past violations by it or by any of its predecessors in title of any Environmental Laws or other Laws affecting or pertaining to the Properties, nor any past creation of damage or threatened damage to the air, soil, surface waters, groundwater, flora, fauna, or other natural resources on, about or in the general vicinity of the Properties (" Environmental Damage" ); and (iii) Canyon has not received inquiry from or notice of a pending investigation from any governmental agency or of any administrative or judicial proceeding concerning the violation of any Laws. The representations and warranties set forth above shall survive the execution and delivery of any documents of Transfer provided under this Agreement. For a representation or warranty made to a Participant' s " knowledge ," the term " knowledge" shall mean actual knowledge on the part of the officers, employees, and agents of the representing Participant or of facts that would reasonably lead to the indicated conclusions. 3.3 Disclosures . Each of the Participants represents and warrants that at the time this Agreement is entered into and as of the Effective Date, if different, it is unaware of any material facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to the other Participant in order to prevent the representations and warranties in this Article from being materially misleading. Canyon has disclosed to Horizon all information it believes to be relevant concerning the Assets, including without limitation all information in its possession concerning Environmental Liabilities, and has provided to or made available for inspection by Horizon all such information, but does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information (except as provided in Section 3.2 ) or as to the boundaries or value of the Assets. Each Participant represents to the other that in negotiating and entering into this Agreement it has relied solely on its own appraisals and estimates as to the value of the Assets and upon its own geologic and engineering interpretations related thereto. 3.4 Record Title . Until directed otherwise by the Management Committee, title to the Assets shall be held by Canyon for Canyon and Horizon, as their Participating Interests are determined pursuant to this Agreement. 3.5 Loss of Title . Any failure or loss of title to the Assets, and all costs of defending title, shall be charged to the Business Account, except that all costs and losses arising out of or resulting from breach of the representations and warranties of Canyon or Horizon as to title shall be charged to Canyon or Horizon, as the case may be.

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3.6 Royalties, Production Taxes and Other Payments Based on Production . The Manager shall make all required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities with such payments subject to timely reimbursement from each Participant in proportion to its Participating Interest. The Manager undertakes to make such payments timely and otherwise in accordance with applicable laws and agreements. The Manager may require each Participant to advance its proportionate share and each Participant shall timely advance such funds. The Manager shall record all funds received in the Business Account and maintain evidence of timely payment for all such required payments. In the event that either Participant fails to advance or reimburse its proportionate share of any such required payment, the other Participant shall have the right to advance such funds to cover such payment and shall thereby become subrogated to the rights of such third party; provided, however , that the reimbursement or advance of funds by the paying Participant to cover the share of the other Participant shall not constitute acceptance by the paying Participant of any liability to such third party for the underlying obligation. 3.7 Indemnities/Limitation of Liability . (a) Each Participant shall indemnify the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates (collectively " Indemnified Participant" ) from and against the entire amount of any Material Loss. A " Material Loss" shall mean all costs, expenses, damages or liabilities, including attorneys' fees and other costs of litigation (either threatened or pending) arising out of or based on a breach by a Participant (" Indemnifying Participant" ) of any representation, warranty or covenant contained in this Agreement, including without limitation: (i) any failure by a Participant to timely advance or reimburse funds to the Manager for the Participant' s proportionate share of required royalties, production taxes and other payments out of production due to third parties as required by Section 3.6 ; (ii) any action taken for or obligation or responsibility assumed on behalf of the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates by a Participant, any of its directors, officers, employees, agents and attorneys, or Affiliates, in violation of Section 4.1 ; (iii) failure of a Participant or its Affiliates to comply with the non-compete or Area of Interest provisions of Section 12.6 or Article XIII ; (iv) any Transfer that causes termination of the tax partnership established by Section 4.2 , against which the transferring Participant shall indemnify the non-transferring Participant as provided in Article V of Exhibit C ; and

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(v) failure of a Participant or its Affiliates to comply with the preemptive right under Section 16.3 . A Material Loss shall not be deemed to have occurred until, in the aggregate, an Indemnified Participant incurs losses, costs, damages or liabilities in excess of One Hundred Thousand Dollars ($100,000) relating to breaches of warranties, representations and covenants contained in this Agreement. Canyon' s aggregate liability to all Indemnified Participants under this Section for breaches of the representations in Subsection 3.2(g) shall not, however, exceed Five Hundred Thousand Dollars ($500,000). (b) If any claim or demand is asserted against an Indemnified Participant in respect of which such Indemnified Participant may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Indemnifying Participant. The Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified Participant within thirty (30) days after its receipt of the notice of the claim or demand, to assume the entire control of (subject to the right of the Indemnified Participant to participate, at the Indemnified Participant' s expense and with counsel of the Indemnified Participant' s choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Participant' s expense, employment of counsel of the Indemnifying Participant' s choice. Any damages to the assets or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Participant, after the Indemnifying Participant has given notice that it will assume control of the defense, compromise, or settlement of the matter, shall be included in the damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified Participant. Any settlement or compromise of a matter by the Indemnifying Participant shall include a full release of claims against the Indemnified Participant which has arisen out of the indemnified claim or demand.

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ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS 4.1 No Partnership . Nothing contained in this Agreement shall be deemed to constitute either Participant the partner of the other, or, except as otherwise herein expressly provided, to constitute either Participant the agent or legal representative of the other, or to create any fiduciary relationship between them. The Participants do not intend to create, and this Agreement shall not be construed to create, any mining, commercial or other partnership. Neither Participant, nor any of its directors, officers, employees, agents and attorneys, or Affiliates, shall act for or assume any obligation or responsibility on behalf of the other Participant, except as otherwise expressly provided herein, and any such action or assumption by a Participant' s directors, officers, employees, agents and attorneys, or Affiliates shall be a breach by such Participant of this Agreement. The rights, duties, obligations and liabilities of the Participants shall be several and not joint or collective. Each Participant shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein, and it is the express purpose and intention of the Participants that their ownership of Assets and the rights acquired hereunder shall be as tenants in common. 4.2 Federal Tax Elections and Allocations . Without changing the effect of Section 4.1 , the relationship of the Participants shall constitute a tax partnership within the meaning of Section 761(a) of the United States Revenue Code of 1986. Tax elections and allocations shall be made as set forth in Exhibit C . 4.3 State Income Tax . To the extent permissible under applicable law, the relationship of the Participants shall be treated for state income tax purposes in the same manner as it is for federal income tax purposes. 4.4 Tax Returns . After approval of the Management Committee, any tax returns or other required tax forms shall be filed in accordance with Exhibit C . 4.5 Other Business Opportunities . Except as expressly provided in this Agreement, each Participant shall have the right to engage in and receive full benefits from any independent business activities or operations, whether or not competitive with this Business, without consulting with, or obligation to, the other Participant. The doctrines of " corporate opportunity" or " business opportunity" shall not be applied to this Business nor to any other activity or operation of either Participant. Neither Participant shall have any obligation to the other with respect to any opportunity to acquire any property outside the Area of Interest at any time, or, except as otherwise provided in Section 12.6 , within the Area of Interest after the termination of the Business. Unless otherwise agreed in writing, neither Participant shall have any obligation to process or otherwise treat any Products in any facility owned or controlled by such Participant.

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4.6 Waiver of Rights to Partition or Other Division of Assets . The Participants hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets except as provided in Article XV , including any such rights provided by Law. 4.7 Transfer or Termination of Rights to Properties . Except as otherwise provided in this Agreement or as expressly agreed to by the Participants in writing, neither Participant shall Transfer all or any part of its interest in the Assets or this Agreement or otherwise permit or cause such interests to terminate. 4.8 Implied Covenants . There are no implied covenants contained in this Agreement other than those of good faith and fair dealing. 4.9 No Third Party Beneficiary Rights . This Agreement shall be construed to benefit the Participants and their respective successors and assigns only, and shall not be construed to create third party beneficiary rights in any other party or in any governmental organization or agency, except to the extent required by Project Financing and as provided in Subsection 3.7(a) . ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS 5.1 Participants' Initial Contributions . (a) Canyon, as its Initial Contribution, hereby contributes the Assets described in Exhibit A to the purposes of this Agreement. The amount of Two Million Dollars ($2,000,000) shall be credited to Canyon' s Equity Account on the Effective Date with respect to Canyon' s Initial Contribution. (b) Subject to Horizon' s right of withdrawal as set forth in Section 5.2 , Horizon, as its Initial Contribution shall fund Operations under Subsection 5.1(e) totaling One Million Dollars ($1,000,000.00) on or before the third anniversary of the Effective Date, with Two Hundred Thousand Dollars ($200,000) of the Initial Contribution estimated as the minimum to be funded in the first year following the Effective Date, Three Hundred Thousand Dollars ($300,000) of the Initial Contribution estimated to be funded in the second year following the Effective Date, and the remaining Five Hundred Thousand Dollars ($500,000) of the Initial Contribution estimated to be funded in the third year following the Effective Date. All funding by Horizon in excess of the stated amount for each year shall be credited towards Horizon' s subsequent year(s) funding commitment. Horizon may elect, at any time during the period ending on the third anniversary of the Effective Date to complete the funding of the One Million Dollars ($1,000,000) Initial Contribution amount, including by lump sum payment made to the Business Account

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equal to the remaining unfunded portion of the One Million Dollar ($1,000,000) Initial Contribution amount. In determining whether Horizon' s funding obligation has been met, only costs that are properly chargeable to the Business Account under Exhibit B shall be included (" Qualifying Expenses" ); provided, however , Horizon shall not be entitled to an Administrative Charge during the time it is making Qualifying Expenses. Upon completion of the Initial Contribution funding, such amount shall be credited to Horizon' s Equity Account. (c) Upon Horizon' s completion of its Initial Contribution under Subsection 5.1(b) and concurrent with Horizon' s earn-in of its Initial Participating Interest set forth in Section 6.1 , Horizon shall tender to Canyon five hundred thousand (500,000) Horizon common shares for no additional consideration. Issuance of such common shares is subject to approval of Horizon' ...