Exploration, Development And Mine Operating Agreement

EXHIBIT 10.1

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

This Agreement is made effective as of March 9, 2009 (" Effective Date" ) between MGC RESOURCES INC., a Nevada corporation, whose address for the purpose of this agreement is 600 Lola Street Suite 10, Helena, Montana 59601 (" MGC" ), and BARRICK GOLD EXPLORATION INC., a Delaware corporation with an office at 293 Spruce Road, Elko, Nevada 89801 (" Barrick" ).

RECITALS

A. MGC owns record title to or holds a leasehold or other contractual interest in certain fee lands and unpatented mining claims and millsites in Pershing County, State of Nevada, which properties are described in Exhibit A and defined in Exhibit C (the " Properties" ).

B. MGC desires to grant exclusively to Barrick all of MGC' s rights to explore, to develop and to exercise all other uses of the Properties incident to the exploration and development thereof, including without limitation, the reclamation of the Properties.

C. MGC further desires to grant to Barrick an exclusive right to earn an interest in and to enter into a joint venture with MGC for the purposes of developing and, if justified, mining of mineral resources within the Properties, all as set forth in this Agreement.

D. Barrick desires to explore, to develop, and to exercise all other uses of the Properties incident to the exploration thereof, including without limitation, the reclamation of the Properties.

E. Barrick further desires to earn an interest in and to enter into a joint venture with MGC for the purposes of developing and, if justified, mining of mineral resources within the Properties, all as set forth in this Agreement.

NOW THEREFORE, in consideration of the covenants and conditions contained herein, MGC and Barrick agree as follows:

ARTICLE I

DEFINITIONS AND CROSS-REFERENCES

A. Definitions . The terms defined in Exhibit C and elsewhere shall have the defined meaning wherever used in this Agreement, including in Exhibits.

B. 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.


C. Interpretation . Use of the word " including" in this Agreement shall mean " including without limitation."

ARTICLE II

NAME, PURPOSES AND TERM

D. General . MGC and Barrick hereby enter into this Agreement for the purposes hereinafter stated. All of the rights and obligations of the Participants in connection with the Assets, the Area of Interest and all Operations shall be subject to and governed by this Agreement.

E. Name . If the Participants elect to enter into a joint venture as provided in Section 5.4, the Assets shall be managed and operated by the Participants under the name of the Spring Valley Venture. The Manager shall accomplish any registration required by applicable assumed or fictitious name statutes and similar statutes.

F. 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:


1.

to conduct Exploration on the Properties or within the Area of Interest,


2.

to acquire additional interests in the Properties or within the Area of Interest.


3.

to evaluate the possible Development and Mining of the Properties, and, if justified, to engage in Development and Mining,


4.

to engage in Operations on the Properties,


5.

to engage in marketing Products, to the extent provided by Article XI,


6.

to complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties, and


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to perform any other activity necessary, appropriate, or incidental to any of the foregoing.

G. 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.

H. Term . Unless earlier terminated as provided herein, the term of this Agreement shall be for 20 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


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is completed and accepted and the Participants have agreed to a final accounting, unless this Agreement is earlier terminated as herein provided. For purposes hereof, Products shall be deemed to be produced from the Properties on a " continuous basis" so long as production in commercial quantities is not halted for more than 365 consecutive days.

ARTICLE III

REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES

I. Representations and Warranties of Both Participants . As of the Effective Date, each Participant warrants and represents to the other that:


1.

it is a corporation duly organized and in good standing in its state of incorporation and is qualified to do business and is in good standing in those states where necessary in order to carry out the purposes of this Agreement;


2.

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;


3.

it will not breach any other agreement or arrangement by entering into or performing this Agreement;


4.

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


5.

this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms. ; provided, however, that no representation is made as to (i) the remedy of specific performance or other equitable remedies for the enforcement of this Agreement or any other agreement contemplated hereby or (ii) rights to indemnity under this Agreement for securities law liability, and this representation is limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting generally the rights and remedies of creditors and secured parties.

J. Representations and Warranties of MGC . As of the Effective Date, MGC makes the following representations and warranties to Barrick:


1.

With respect to those Properties MGC owns in fee simple, if any, except as otherwise set forth in Exhibit A, MGC is in exclusive possession of such Properties and owns such Properties free and clear of all Encumbrances or defects in title arising by, through or under MGC except those specifically identified in Exhibit A.


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2.

With respect to those Properties in which MGC holds an interest under the Mining Leases or other contracts: (i) MGC is in exclusive possession of such Properties, except as otherwise set forth in Exhibit A; (ii) MGC has not received any notice of default of any of the terms or provisions of such Mining Leases and other contracts; (iii) MGC has the authority under such Mining Leases or other contracts to perform fully its obligations under this Agreement; (iv) to MGC' s knowledge, such Mining Leases and other contracts are valid and are in good standing; (v) MGC 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 Mining Leases or other contracts; and (vi) to MGC' s knowledge, such Properties are free and clear of all Encumbrances or defects in title arising by, through, or under MGC except for those Encumbrances specifically identified in Exhibit A.


3.

MGC has delivered to or made available for inspection by Barrick all Existing Data in its possession or control, and true and correct copies of all leases or other contracts relating to the Properties.


4.

With respect to unpatented mining claims and millsites located by MGC (the " MGC Located Claims" ) that are included within the Properties, as identified in Exhibit A, except as provided in 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) as required to hold the MGC Located Claims through the assessment year ending September 1, 2009; (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 arising by, through, or under MGC; and (vii) MGC has no knowledge and has not been notified by a third party of conflicting mining claims held or asserted by third parties. Nothing in this Subsection, however, shall be deemed to be a representation or a warranty that any of the MGC Located Claims contains a valuable mineral deposit or that the MGC Located Claims constitute a compact group of contiguous claims free of interior gaps or fractions.


5.

With respect to unpatented mining claims and millsites not located by MGC (the " MGC Acquired Claims" ) but which are included within the Properties, as identified in Exhibit A, except as provided in Exhibit A and subject to the paramount title of the United States: (i) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have


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been paid in a manner consistent with that required of the Manager pursuant to Subsection 8.2(k) as required to hold the MGC Acquired Claims through the assessment year ending September 1, 2009; (ii) 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; (iii) the claims are free and clear of Encumbrances or defects in title arising by, through, or under MGC; and (iv) MGC has no knowledge and has not been notified by a third party of conflicting mining claims. Nothing in this Subsection, however, shall be deemed to be a representation or a warranty that any of the MGC Acquired Claims contains a valuable discovery of minerals, or that the MGC Acquired Claims constitute a compact group of contiguous claims free of interior gaps or fractions.


6.

With respect to the Properties, except as set forth in Exhibit A, to MGC' s knowledge, there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions pertaining to the Properties to which MGC was a party which have not been for fair consideration.


7.

Except as to matters otherwise disclosed in writing (whether transmitted electronically, by facsimile, by courier, by mail, or in person) to Barrick prior to the Effective Date,

(i) to MGC' 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, other than as may be allowed under the Existing Permits;

(ii) to MGC' 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" ), other than as may be allowed under the Existing Permits; and

(iii) MGC 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.


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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, without independent inquiry.

K. Disclosures . Each of the Participants represents and warrants that 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. MGC has disclosed to Barrick all information it reasonably believes to be relevant concerning the Assets and has provided to or made available for inspection by Barrick all such information, but does not make any representation or warranty, express or implied, as to the accuracy, reliability 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 any mineral potential or mineralization associated therewith, and upon its own geologic and engineering interpretations related thereto.

L. Record Title . Until Barrick has earned its interest in the Properties as provided in Section 5.3, title to the Assets shall be held by MGC. If the Participants enter into a joint venture as provided in Section 5.4, title to the Assets shall be held by the Participants as tenants in common, subject to the terms and conditions of this Agreement, as their Participating Interests are determined pursuant to this Agreement.

M. Loss of Title . Prior to the time that Barrick has completed its Initial Contribution, any failure or loss of title to the Assets caused by the gross negligence or willful misconduct of Barrick, and all costs associated therewith, shall be borne solely by Barrick and not included in Exploration Expenditures. All costs of curing or defending title to the Assets with respect to claims asserted or litigation commenced during the Exploration Period shall be borne by Barrick and may be included in Exploration Expenditures. Any costs of curing or defending title to the Assets relating to claims asserted or litigation commenced prior to the Effective Date shall be borne solely by Midway. Upon completion of Barrick' s Initial Contribution, any failure or loss of title to the Assets, and all costs of defending title, shall be charged to the Business Account, except that throughout the term of this Agreement all costs and losses arising out of or resulting from breach of the representations and warranties of MGC as to title shall be charged to MGC.

N. Royalties, Production Taxes and Other Payments Based on Production . All required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities shall be determined and made by the Manager on behalf of each Participant in proportion to its Participating Interest, and charged against each Participant' s interest in the production of Products.


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O.

Indemnities/Limitation of Liability .


1.

Each Participant shall defend, indemnify and hold the other Participant, its directors, officers, employees, agents and attorneys, and Affiliates (collectively " Indemnified Participant" ) harmless from and against the entire amount of any Material Loss. A " Material Loss" shall mean all costs, expenses, damages or liabilities, including reasonable 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:

(iv) any Material Loss arising out of Operations conducted by it during the Exploration Period;

(v) 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;

(vi) failure of a Participant or its Affiliates to comply with the non-compete or provisions of Section 12.6;

(vii) failure of a Participant or its Affiliates to comply with the preemptive right under Section 15.3 and Exhibit G.

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 Two Hundred Thousand Dollars ($200,000.00) relating to breaches of warranties, representations and covenants contained in this Agreement.


2.

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 Indemnified Participant' s failure to provide such notice promptly, however, shall not relieve the Indemnifying Participant of any of its obligations under this Section 3.7 unless the Indemnifying Participant is materially prejudiced by such failure. At the request of any Indemnified Participant, the Indemnifying Participant shall defend the Indemnified Participant against any Liabilities for which the Indemnifying Participant is required to indemnify and hold harmless the Indemnified Parties pursuant to the indemnity provisions set forth in this Agreement. Subject to the Indemnified Participant' s approval, which shall not be unreasonably withheld, delayed or conditioned, the Indemnifying Participant shall retain legal counsel for the purpose of defending any Indemnified Participant in such suit or action. The Indemnified Participant


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shall have the right to retain legal counsel, at its expense, to participate in the defense of any such suit or action. No such suit or action shall be settled, discontinued, nor shall judgment be permitted to be entered without the written consent of the Indemnified Participant, which consent shall not be unreasonably withheld, delayed or conditioned. 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.

ARTICLE IV

RELATIONSHIP OF THE PARTICIPANTS

P. No Partnership . Nothing contained in this Agreement shall be deemed to constitute either Participant the partner or the venturer 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 or joint venture. 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.

Q. Federal Tax Elections and Allocations . The Participants elect to be excluded from Subchapter K of Section 761(a) of the United States Internal Revenue Code of 1986, as amended. The Participants shall make such filings as are required to exclude the Business from Subchapter K and shall report their shares of tax items of the Business in a manner consistent with an election out of Subchapter K.

R. 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.


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S. 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 the Business, without consulting with, or obligation to, the other Participant. The doctrines of " corporate opportunity" or " business opportunity" shall not be applied to the 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 Agreement. Unless otherwise agreed in writing, neither Participant shall have any obligation to mill, beneficiate or otherwise treat any Products in any facility owned or controlled by such Participant.

T. 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, including any such rights provided by Law.

U. Transfer or Termination of Rights to Properties . Except as otherwise provided in this Agreement, 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.

V. Implied Covenants . There are no implied covenants contained in this Agreement other than those of good faith and fair dealing.

W. 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.

ARTICLE V

CONTRIBUTIONS BY PARTICIPANTS

X. Exploration Rights and Obligations . During the Exploration Period and subject to Barrick making the Exploration Expenditures as provided in Section 5.2, MGC grants to Barrick the exclusive right to conduct Exploration on the Properties and the option to earn an undivided sixty percent (60%) interest in the Properties.


1.

Except as to the first year' s Exploration Expenditures, which is a firm commitment, and subject to Barrick incurring the minimum required annual Exploration Expenditures under Section 5.2 below, Barrick shall have the sole right to determine the nature, timing, scope, extent and method of all Operations during the Exploration Period, without any obligation to hold meetings of the Management Committee, to prepare Programs and Budgets for review, comment or approval by MGC, or to obtain the approval or consent of MGC or the Management Committee. Barrick shall conduct all such Operations in a manner consistent with the standards set forth in the first sentence of Section 8.3, and in


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conducting such Operations Barrick shall be required to fulfill all of the applicable obligations of the Manager set forth in Subsections 8.2(c), (e), (f), (g(i)), and (q). In addition, until Barrick has completed its Initial Contribution it shall not be entitled (without MGC' s prior written consent) or required to perform the activities described in Subsections 8.2(g), (i), and (l) that would otherwise require consent of the Management Committee or of both participants as applicable. For all such Operations, Barrick shall provide for accrual of reasonably anticipated Environmental Compliance expenses, which may be included as Exploration Expenditures, and upon completion of its Initial Contribution, Barrick shall transfer any accrued but unexpended amounts to the Environmental Compliance Fund established under Paragraph 2.14 of Exhibit B. Prior to completion of its Initial Contribution, Barrick, in lieu of any reporting requirements under Section 8.2, shall:

(i) within 60 days following each anniversary of the Effective Date, provide MGC with a reasonably detailed written report of all Operations conducted during the preceding Agreement year, with a copy of all data, in digital format, including PDF, JPG, ASCII, DXF, Access, Excel, PowerPoint software/file formats copied to an Annual, Comprehensive Project Data update CD or DVD. The annual report will also include a statement of Exploration Expenditures incurred during the annual period in question (as well as such back-up information as is reasonably necessary for MGC to confirm the reported amounts and nature of the reported Exploration Expenditures) and a summary of the upcoming year' s planned Operations;

(ii) provide MGC with quarterly update reports, including all material data received during the period, including assays, drill logs and drill hole locations within thirty (30) days following the end of each calendar quarter, which shall include a current estimate of Exploration Expenditures incurred; and

(iii) make available for inspection and copying by MGC when reasonably requested by MGC all factual data and information and interpretive reports, studies and analyses concerning the Properties, and make all core and other samples available for inspection by MGC.

Barrick makes no representation or warranty, express or implied, as to the accuracy of the data and information provided to MGC in accordance with (i), (ii) and (iii) above, but does represent and warrant that the data and information will be complete, in a form that can be independently verified as per industry standards and timely, and will consist of all of the material data and information available for the periods covered.


2.

MGC shall provide Barrick with written notice of any exceptions it may have to the annual statement of Exploration Expenditures submitted to it as provided


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above within three months after receipt of the statement. Failure to provide such notice within the three-month period shall constitute acceptance by MGC of the stated Exploration Expenditures. During that three-month period, as reasonably requested by MGC, Barrick shall make available to MGC and its representatives all back-up data and information used by Barrick to calculate the repo ...