Magnus Int'l Resources 8K, Cooperative Joint Venture Contract

COOPERATIVE JOINT VENTURE CONTRACT
between
BRIGADE 209 OF THE

NUCLEAR INDUSTRY OF YUNNAN PROVINCE, CHINA
and
GOLDEN RIVER RESOURCES CORP. Vancouver, British Columbia
For the Establishment of
(YUNNAN WESTERN MINING LTD.)



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TABLE OF CONTENTS



Page

Preliminary Statements .......................................................................................................................... 3
Article 1: Parties to this Contract............................................................................................................ 4
Article 2: Definitions .............................................................................................................................. 4
Article 3: Establishment and Legal Form of the Cooperative Company.................................................... 8
Article 4: Purpose, Scope of Business and Phases of Activity.................................................................. 9
Article 5: Total Amount of Investment and Registered Capital; .............................................................. 10
Assignment of Cooperative Company Interests .................................................................................... 10
Article 6: Responsibilities of the Parties................................................................................................. 15
Article 7: Mutual Representations ......... . ............................................................................................ 17
Article 8: Warranties and Undertakings ................................................................................................ 18
Article 9: Sale of Cooperative Company Products................................................................................ 18
Article 10: Board of Directors ............................................................................................................. 19
Article 11: Management Organization................................................................................................... 22
Article 12: Conduct of Operations........................................................................................................ 22
Article 13: Purchase and Supply of Materials, Equipment and Services ................................................. 24
Article 14: Labour Management........................................................................................................... 24
Article 15: Financial Affairs and Accounting; Distribution of Profits ....................................................... 25
Article 16: Taxation and Insurance........................................................................................................ 27
Article 17: Confidentiality .................................................................................................................... 28
Article 18: Contract Tenn..................................................................................................................... 30
Article 19: Termination and Liquidation................................................................................................. 30
Article 20: Breach of Contract.............................................................................................................. 32
Article 21: Non-Competition ............................................................................................................... 32
Article 22: Force Majeure ................................................................................................................... 33
Article 23: Settlement of Disputes......................................................................................................... 33
Article 24: Applicable Law................................................................................................................... 34
Article 25: Miscellaneous Provisions .................................................................................................... 35



LIST OF APPENDICES
Appendix 1: Sketch Map of "Cooperation Area"
Appendix 2: Maps of Exploration Licenses 5300000310347 and 5300000310348
Appendix 3: Mining Permits 5300009940016 and 5300000140012 and corner coordinates of Maiwoba /Guoyuan and Guang Lin Po "Operating Mines" respectively.





COOPERATIVE JOINT VENTURE CONTRACT

THIS CONTRACT is entered into on August 29, 2003 between Brigade 209 of the Nuclear Industry of Yunnan, Yunnan Province, China, (hereinafter referred to as "Party



A") and Golden River Resources Corp. of Vancouver, British Columbia (hereinafter referred to as "Party B").

Preliminary Statements

Taking into consideration that:



All mineral resources within the territory of the People's Republic of China (hereinafter referred to as "China") are owned by the State of the People's Republic of China.

(1) Party B is willing to provide funds, to cooperate with Party A in carrying
out mineral resource exploration and both Party A and Party B are
willing to invest jointly, share the risk together and share exploration
results within a certain geographical area.
(2) The Government of Yunnan Province of China (hereinafter referred to as
"Yunnan") is encouraging the establishment of cooperative enterprises in
Yunnan.

In China the right of mineral exploration and mining is conferred through the issuance of permits, and the holder of an exploration permit or mining permit shall fulfill its business and obligations in accordance with the Mineral Resources Law of the People's Republic of China and other applicable laws and regulations.

Party A has acquired the 209 Exploration Permits (both as defined in Article 2 of this Contract) and shall assist in the formation of a Sino-Foreign cooperative enterprise for further mineral exploration within the Cooperation Area (as defined in Article 2). If a mineral deposit of economic value is discovered through exploration, then the Cooperative enterprise shall apply to expand its scope of business to include mining and shall promptly apply for mining permits and develop and utilize the mineral deposit.



Party A and Party B, after friendly consultation conducted in accordance with the principle of equality and mutual benefit, have agreed, in accordance with China's laws, regulations and relevant rules, to enter into this Contract which both Parties hereby shall abide by.




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Article 1: Parties to this Contract

1.1 The Parties to this Contract are:



Party A: Brigade 209 of the Nuclear Industry of Yunnan Province, China a registered institutional legal person with its legal address at No. 182, West Donfeng Road, Kunming City, Yunnan Province, People's Republic of China.

Legal Representative Person o£ Party A:

Name: Mr. Cheng Hui Ming Position: Director
Nationality: Chinese
Resident of: China

(2) Party B: Golden River Resources Corp., a company duly registered under the laws of British Columbia with its legal address at Suite 1450, 789 West Ponder Street, Vancouver, British Columbia, Canada.



Legal Representative Person of Party B

Name: Jason Birmingham
Position: President
Nationality: Canadian
Resident of: Canada

1.2 Change of Legal Representative Person

Each Party shall have the right to change its legal representative person and if a change occurs such Party is obligated to notify the other Parry by written notification of the name, position, nationality and limits of rights of its new legal or authorized representative. One Party shall reimburse the other Party for direct losses the other Party incurs as a result of one Party not notifying the other Party in a timely manner of a change of its legal representative person.


Article 2: Definitions

Unless otherwise provided herein, the following words and terms used in this Contract shall have the meanings set forth below:



2.1 "209 Exploration Permits" means Exploration Permit Nos. 5300000310347 and 5300000310348 both issued on 2003.05.07 concerning an area within the Zhefang Area, Luxi City, Dehong Prefecture, Yunnan Province, held by Party A as of the




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date of execution of this Contract and all other exploration permits issued to Party A which cover areas within the Cooperation Area as shown in Appendix 1.

2.2 "Affiliate" means, in relation to Party A, any superior enterprise or department of Party A and any enterprise or other entity which is directly or indirectly subordinate to, or controlled by, Party A or the department-in-charge of Party A; stock the term "control" meaning ownership of fifty percent or more of the registered capital or voting, or the power to appoint the general manager, factory chief or other principal person in charge of an enterprise or other entity.

2.3 "Affiliate" means, in relation to Party B, any company which, directly or indirectly, is controlled by, under common control with, or in control of, Party B; the term "control'' meaning ownership of fifty percent or more of the voting stock or registered capital, or the power to appoint or elect a majority of the directors, or the power to direct the management, of a company.

2.4 "Articles of Association" means the Articles of Association of the Cooperative Company signed by Party A and Parry B and approved by the Examination and Approval Authority simultaneously with this Contract.

2.5 "Board of Directors" means the board of directors of the Cooperative Company.

2.6 "Budget" means a detailed estimate and schedule of all costs to be incurred pursuant to a Program to be implemented by the Cooperative Company approved by the Board of Directors in accordance with Article 12.3.

2.7 "Budget Period" means one year unless otherwise determined by the Board of Directors.

2.8 "Business Day" means a day other than Saturday, Sunday or statutory holiday in China or Canada.

2.9 "Business License" means the business license of the Cooperative Company issued by the China State Administration for Industry and Commerce or its authorized local administration for industry and commerce.

2.10 "Contract Term" means the term of this Contract as set forth in Article 18.

2.11 "Cooperation Area" means that distinct area of 147.09 square kilometers which is within the following set of coordinates set out and marked for ease of reference on the map included as Appendix 1, or other area as the Parties mutually agree upon.

2.12 "Cooperation Area Licenses" means the 209 Exploration Permits and all other Exploration Permits acquired by Party A within the Cooperation Area prior to the issuance of the Business License, including the Exploration Permits to be issued to Party A as a result of its application on 2003.05.07 for a permit covering a 147.09 square kilometer area within the Cooperation Area.

2.13 "Cooperative Company" means the Sino-Foreign enterprise registered and formed by Party A and Patty B pursuant to this Contract and in accordance with the Law of




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the People's Republic of China on Sino-Foreign Cooperative Enterprises and other relevant laws of China.

2.14 "Costs" means all costs, expenses, charges and outlays, direct and indirect, made or incurred by or on behalf of the Cooperative Company or General Manager in respect of operations of the Cooperative Company from the date of execution of this Contract including, without limiting the generality of the foregoing, all field office costs, costs of Exploration, permitting, Development and Mining, which costs shall include the salaries, benefits and travel expenses or persons engaged in operations of the Cooperative Company.

2.15 "Development" means all preparation for the removal from the ground and recovery of Products, including the preparation of feasibility studies, engineering, permitting, construction, installation or purchase of plant and infrastructure, leach pads, a mill or processing plant or any other facilities to be used for the mining, transporting, handling, milling, processing or other beneficiation of Products.

2.16 "Effective Date" means the effective date of this Contract, which shall be the date on which this Contract and the Articles of Association have been approved by the Examination and Approval Authority.

2.17 "Examination and Approval Authority" means the government department or agency authorized under the China State Council rules regarding the examination and approval of foreign investment projects to examine and approve this Contract and the Articles of Association.

2.18 "Exploration" means all activities directed toward ascertaining the existence, location, quantity, quality or commercial value of deposits of Minerals, including prospecting, trenching, drilling, sampling, surveying, metallurgical testing, economic pre-feasibility studies, environmental impact studies, researching and perfecting titles to use land and Exploration Permits

2.19 "Exploration Permits" means all rights to conduct Exploration for Minerals within the Cooperation Area and other such rights granted by the Permit Issuing Authority.

2.20 "Formal Approvals" means the fulfillment of the conditions listed in Article 5.5(1) to (4).

2.21 "Management Personnel" means the Cooperative Company's General Manager, Deputy General Manager and other management personnel who report directly to the General Manager.

2.22 "Minerals" means all metals and minerals, including gold.




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2.23 "Mineral Data" means all geological, geochemical and geophysical data and prospecting data, survey results, drill logs, assays and other similar data, and includes access to drill core samples.

2.24 "Mining" means all activities to recover Products, including the mining, extracting, producing, handling, treating, heap leaching, beneficiation or other processing of Minerals including the production of refinable concentrates, regardless of the method, and all operating and reclamation activities except the extraction of materials for testing purposes.

2.25 "Mining Licenses" means all rights to conduct Mining for Minerals within the Cooperation Area granted by the Permit Issuing Authority.

2.26 "Other Entity" means any natural person, legal person or other organization, enterprise or entity other than Party A or Party B.

2.27 "Participation Ratio" of each Party means, its share in distributions of profits and its share in the distribution of proceeds of liquidation in accordance with Article 15.11 and Article 19.5, respectively. The Participation Ratio and interest in the registered capital of the Cooperative Company of Party A and of Party B shall be determined in accordance with the provisions of Article 5.4(2) and Article 5.6(5)

2.28 "Permit Issuing Authority" means the Ministry of Land and Resources of China or the Departments of Land and Resources of various provinces, autonomous districts, district governments and municipalities directly under the Central Government. '

2.29 "Phase 1 " and "Phase 2", mean the first and second phase, respectively, of the activities of the Cooperative Company as more particularly described in Article 4.3.

2.30 "Phase 1 Feasibility Study Report" means the feasibility study report compiled by Patty A on behalf of both Parties in accordance with the relevant laws and regulations in China relating to the formation of a Cooperative Company, which report must be approved by the appropriate department or authority in charge.

2.31 "Products" means all Minerals produced from Mining Licenses or other rights owned by the Cooperative Company, including all gold dore concentrate, and other products produced therefrom.




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2.32 "Program" means a reasonably detailed description of operations to he conducted and objectives to be accomplished by the Cooperative Company for a Budget Period, approved by the Board of Directors in accordance with Article 12.3.

2.33 "Three Funds" means the social insurance, medical insurance and housing fund as required to be established in accordance with applicable laws in China.


Article 3: Establishment and Legal Form of the Cooperative Company

3.1 The Parties hereby agree to establish the Cooperative Company in accordance with the relevant laws and regulations of China and the provisions of this Contract. Promptly following the signature of this Contract, both Parties shall sign the Cooperative Company's Articles of Association. Party A will handle application procedures for the approval of this Contract and the Articles of Association, the procedures for enterprise name pre-registration, and the procedures for enterprise registration. Party B will cooperate with Party A in providing documents and information required from Party B in connection therewith

3.2 Party A shall provide to Party B photocopies of all application documents and materials submitted to government departments in connection with the applications and procedures described in Article 3.1, and promptly upon receipt shall provide to Party B photocopies of all correspondence, official replies, approval certificates, the Business License and any other documents received from government departments. In addition, Party A shall provide to Party B, within sixty (6Q) days from issuance of the Business License, notarized copies of the Business License and of the official replies and approval certificates for the Phase 1 Feasibility Study Report, this Contract and the Articles of Association.

3.3 The Cooperative Company shall commence operations upon the issuance of its Business License.

3.4 The name of the Cooperative Company shall be "Yunnan Western Mining Ltd." in English.

3.5 The legal address of the Cooperative Company shall be No. 182, West Dongfeng Road, Kunming City, Yunnan Province, People's Republic of China.

3.6 The Cooperative Company may establish branch offices with the consent of the Board of Directors and approval from the relevant governmental authorities in China.

3.7 The Cooperative Company shall be an enterprise legal person registered and formed by Party A and Party B pursuant to this Contract and in accordance with the laws of China. The activities of the Cooperative Company shall comply with the provisions of the laws, decrees and regulations of China, and its lawful rights and interests shall be protected by the laws of China.




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3.8 The Cooperative Company shall be a limited liability company. The liability of each Party to the Cooperative Company shall be limited to its contribution to the Cooperative Company's registered capital in accordance with Article 5, which provides that Party A shall, as its cooperative condition, transfer the Cooperation Area Licenses to the Cooperative Company and Party B's contribution to the registered capital of the Cooperative Company shall be Three Million and Ten Thousand US Dollars (US$3,010,000), which for all intents and purposes will be used for the exploration and development of the Exploration Licenses and for the ongoing operations of the Cooperative Company during Phase l. Creditors of the Cooperative Company shall have recourse only to the assets of the Cooperative Company and shall not be entitled to compensation, damages or other remedies from any of the Parties.



Article 4: Purpose, Scope of Business and Phases of Activity

4.1 The purpose of the Cooperative Company is to use advanced technology and scientific management techniques to conduct Exploration activities in China, and to obtain satisfactory economic benefits for the Parties.

4.2 The Cooperative Company's scope of business shall be to conduct Exploration for mineral deposits of all precious metals and non-ferrous metals.

4.3 The activities of the Cooperative Company shall be divided into two phases as follows:



(1) Phase 1: Within the schedule described in Article 5.3(2), Party A shall transfer, as its cooperative condition, the Cooperation Area Licenses to the Cooperative Company, accounting for a ten percent (10%) equity interest in the registered capital of the Cooperative Company, while Party B shall contribute Three Million and Ten Thousand US Dollars (US$3,010,000) to the registered capital of the Cooperative Company, accounting for a ninety percent (90%) equity interest in the registered capital and Participation Ratio of the Cooperative Company.

(2) Phase 3: After the completion of Phase 2, any increase in the registered capital of or total investment of the Cooperative Company shall be contributed One Hundred Percent (100%) by Party B, and Party A shall not be required to make any further contribution to the Cooperative Company to retain its ten percent (10%) of the registered capital and Participation Ratio of the Cooperative Company.



4.4 The Parties confirm that their objective is for the Cooperative Company's scope of business to include the right to conduct Exploration for deposits of precious metals and non-ferrous metals as contemplated in Article 4.2. The Parties shall cooperate with one another and with the Cooperative Company to obtain any additional regulatory approvals and registrations that are required by applicable laws and regulations of China




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in order that the restricted nature of the Cooperative Company's scope of business is expanded to permit the Cooperative Company to also undertake Development and Mining of all Minerals including, if applicable, approvals from appropriate State authorities of China.



Article 5: Total Amount of Investment and Registered Capital;
Assignment of Cooperative Company Interests

5.1 The Cooperative Company's total investment shall be Three Million and Ten Thousand US Dollars (US$3,010,000) and the Cooperative Company's registered capital shall be Three Million and Ten Thousand US Dollars (US$3,010,000).

5.2

(1) Party A shall, as its cooperative condition, transfer to the Cooperative Company the Cooperation Area Licenses and Party A shall have a ten percent (10%) share of the Cooperative Company's registered capital.

(2) The contribution to the registered capital of the Cooperative Company by Party B is Three Million and Ten Thousand US Dollars (US$3,010,000), representing a ninety percent (90%) share of the Cooperative Company's registered capital. Party B shall make its contribution to the registered capital in United States Dollars cash.

5.3



(1) Subject to the provisions of Article 5.5, the Parties shall make their contribution to registered capital in accordance with the timetable set forth in Article 5.3(2) . If the overdue contribution has not been made within thirty (30) days of notification of default, the other Party shall have the right to terminate this Contract and claim damages from the breaching Party.

(2) The timetable for capital contributions is as follows:

(i) Party A shall, as its cooperative condition pursuant to Article 5.2, transfer to the Cooperative Company the Cooperation Area Licenses. Party A shall apply to transfer the Cooperation Area Licenses to the Cooperative Company within fifteen (15) days of the issuance of the Business License; and

(ii) Party B will contribute a minimum of Five Hundred Thousand US Dollars (US$500,000) to the registered capital of the Cooperative Company within 12 months of the issuance of the Business License, the first Two Hundred Thousand US Dollars (US$200,000) to be contributed 15 days upon issuance of the Business License. Party B will earn its interest in the Cooperative Company as follows:



(A) Upon contribution of a cumulative total of One Million US Dollars (US$1,000,000) to the registered capital of the




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Cooperative Company, Party B will have earned and owned a 30% interest in the Cooperative Company.

(B) For each additional One Million US Dollars (US$1,000,000) contributed by Party B to the registered. capital of the Cooperative Company, Party B shall earn and own a further 30% interest in the Cooperative Company to a maximum of 90% upon contribution of a cumulative total of Three Million and Ten Thousand US Dollars (US$3,010,000) to the registered capital of the Cooperative Company.

(3) Notwithstanding Article 5.3(2)(ii), Party B may, at its sole discretion, elect to make contributions to the capital of the Cooperative Company in advance of the dates specified in Article 5.3(2)(ii), provided that during Phase 1, Party B shall contribute sufficient funds on an annual basis to the Cooperative Company to permit it to undertake the minimum exploration expenditures on the Cooperative Area Licenses as required by law.



5.4

(1) Each time Party B makes a contribution to the Cooperative Company's registered capital, a Chinese registered accountant engaged by the Board of Directors shall promptly verify the contribution and issue a capital verification report to the Cooperative Company within sixty (60) days from the date of the contribution. Within thirty (30) days from receipt of the capital verification report, the Cooperative Company shall issue an investment certificate to such Party in the form prescribed by the applicable regulations in China, signed by the Chairman and the ViceadChairman of the Board and sealed with the Cooperative Company's seal, and a copy shall be submitted to the Examination and Approval Authority for the record. The General Manager shall maintain a file of all capital verification reports and copies of all investment certificates that have been issued to the Parties.

(2) The Parties interests in the registered capital of the Cooperative Company and heir respective Participation Ratios shall be adjusted each time a Party makes a contribution to the registered capital, in accordance with the following formula:



BI = (C x 90%)/ US$3,010,000
AI = 100% - BI

Where:

BI = Party B's Participation Ratio and percentage interest in the registered capital C = dollar value of all contributions to the registered capital by Party B
Al = Party A's Participation Ratio and percentage interest in the registered capital

5.5 Party B shall not be obligated to make any contribution to the Cooperative Company's registered capital pursuant to Article 5.3(2)(ii) or Article 5.6(3) if any of the following conditions has not been satisfied or waived in writing by Party B:




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(1) following signature by both Parties, this Contract and the Articles of Association have been approved by the Examination and Approval Authority without altering their terms and conditions and without imposing any additional obligations on either Party or the Cooperative Company, unless Party B has been notified in advance of and consented in writing to such alterations or additional obligations;

(2) the Business License has been issued without altering the Cooperative Company's business scope as set forth in Article 4.2, unless Party B has been notified in advance of and consented in writing to such alteration;

(3) issuance or transfer to the Cooperative Company in its name of the Cooperation Area Licenses, free and clear of all liens and liabilities;

(4) issuance or transfer to the Cooperative Company of all other regulatory approvals, registrations, permits, licenses, certificates and rights ...