Exhibit 10.11(b) GOLDEN EAGLE OPERATING AGREEMENT

Exhibit 10.11(b)

GOLDEN EAGLE

OPERATING AGREEMENT

between

SANTA FE PACIFIC GOLD CORPORATION

and

HECLA MINING COMPANY

TABLE OF CONTENTS

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II - REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS;
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Capacity of Participants . . . . . . . . . . . . . . . . . . . 5
2.2 Indemnifications . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Record Title . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Joint Loss of Title . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III - NAME, PURPOSES AND TERM . . . . . . . . . . . . . . . . . . 8
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Effective Date and Term . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV - RELATIONSHIP OF THE PARTICIPANTS . . . . . . . . . . . . . . 9
4.1 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Federal Tax Elections and Allocations . . . . . . . . . . . . . 10
4.3 State Income Tax . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Other Business Opportunities . . . . . . . . . . . . . . . . . 10
4.6 Waiver of Right to Partition . . . . . . . . . . . . . . . . . 10
4.7 Transfer or Termination of Rights to Properties . . . . . . . . 11
4.8 Implied Covenants . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE V - CONTRIBUTIONS BY PARTICIPANTS . . . . . . . . . . . . . . . . 11
5.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Additional Cash Contributions . . . . . . . . . . . . . . . . . 12

ARTICLE VI - INTERESTS OF PARTICIPANTS . . . . . . . . . . . . . . . . . 12
6.1 Initial Participating Interests . . . . . . . . . . . . . . . . 12
6.2 Changes in Participating Interests . . . . . . . . . . . . . . 12
6.3 Voluntary Reduction in Participation . . . . . . . . . . . . . 14
6.4 Default in Making Contributions . . . . . . . . . . . . . . . . 15
6.5 Elimination of Minority Interest . . . . . . . . . . . . . . . 17
6.6 Continuing Liabilities Upon Adjustments of Participating
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VII - MANAGEMENT COMMITTEE . . . . . . . . . . . . . . . . . . . 19
7.1 Organization and Composition . . . . . . . . . . . . . . . . . 19

7.2 Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Action Without Meeting . . . . . . . . . . . . . . . . . . . . 21
7.5 Matters Requiring Approval . . . . . . . . . . . . . . . . . . 21

ARTICLE VIII - MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Powers and Duties of Manager . . . . . . . . . . . . . . . . . 22
8.3 Standard of Care . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Resignation; Deemed Offer to Resign . . . . . . . . . . . . . . 28
8.5 Payments to Manager . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Transactions With Affiliates . . . . . . . . . . . . . . . . . 29
8.7 Review of Accounting Procedure . . . . . . . . . . . . . . . . 29

ARTICLE IX - PROGRAMS AND BUDGETS . . . . . . . . . . . . . . . . . . . . 30
9.1 Operations Pursuant to Programs and Budgets . . . . . . . . . . 30
9.2 Types of Programs . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Preparation, Presentation and Content of Programs and Budgets . 31
(a) Content of Programs . . . . . . . . . . . . . . . . . . . 31
(b) Content of Budgets . . . . . . . . . . . . . . . . . . . . 31
(c) Initial Program and Budget . . . . . . . . . . . . . . . . 31
(d) Duration . . . . . . . . . . . . . . . . . . . . . . . . . 32
(e) Review . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Definition of Areas . . . . . . . . . . . . . . . . . . . . . . 32
9.5 Submittal and Approval of Proposed Programs and Budgets . . . . 33
(a) Preparation and Submittal of Manager's Program and Budget 33
(b) Feasibility Study . . . . . . . . . . . . . . . . . . . . 33
(c) Separate Mining Program . . . . . . . . . . . . . . . . . 34
(d) Revision of Initial Program and Budget . . . . . . . . . . 35
9.6 Election to Participate . . . . . . . . . . . . . . . . . . . . 35
(a) Deadline for Election . . . . . . . . . . . . . . . . . . 35
(b) Contributions Schedule . . . . . . . . . . . . . . . . . . 35
9.7 Subsequent Programs . . . . . . . . . . . . . . . . . . . . . . 36
9.8 Budget Overruns; Program Changes . . . . . . . . . . . . . . . 36
9.9 Emergency Expenditures . . . . . . . . . . . . . . . . . . . . 36
9.10 Interim Program and Budget. . . . . . . . . . . . . . . . . . . 37
9.11 Expenditures Following Designation of Second Production Area. . 37

ARTICLE X - ACCOUNTS AND SETTLEMENTS . . . . . . . . . . . . . . . . . . 37
10.1 Monthly Statements . . . . . . . . . . . . . . . . . . . . . . 37
10.2 Cash Calls . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.3 Failure to Meet Cash Calls . . . . . . . . . . . . . . . . . . 37
10.4 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE XI - DISPOSITION OF PRODUCTION . . . . . . . . . . . . . . . . . 38

11.1 Taking in Kind . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Failure to Take in Kind . . . . . . . . . . . . . . . . . . . . 39

ARTICLE XII - WITHDRAWAL AND TERMINATION . . . . . . . . . . . . . . . . 39
12.1 Termination by Expiration or Agreement . . . . . . . . . . . . 39
12.2 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.3 Continuing Obligations . . . . . . . . . . . . . . . . . . . . 41
12.4 Disposition of Assets on Termination . . . . . . . . . . . . . 41
12.5 Transfer Covenants . . . . . . . . . . . . . . . . . . . . . . 42
12.6 Right to Data After Termination . . . . . . . . . . . . . . . . 42
12.7 Continuing Authority . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE XIII - AREA OF INTEREST . . . . . . . . . . . . . . . . . . . . . 43
13.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.2 Notice to Nonacquiring Participant . . . . . . . . . . . . . . 43
13.3 Option Exercised . . . . . . . . . . . . . . . . . . . . . . . 44
13.4 Option Not Exercised . . . . . . . . . . . . . . . . . . . . . 44
13.5 Lands Owned or Controlled by Hecla Within the Area of Interest 44

ARTICLE XIV - ABANDONMENT AND SURRENDER OF PROPERTIES . . . . . . . . . . 46
14.1 Surrender or Abandonment of Property . . . . . . . . . . . . . 46
14.2 Reacquisition . . . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE XV - TRANSFER OF INTEREST . . . . . . . . . . . . . . . . . . . . 47
15.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.2 Limitations on Free Transferability . . . . . . . . . . . . . . 47
15.3 Preemptive Right . . . . . . . . . . . . . . . . . . . . . . . 49
15.4 Exceptions to Preemptive Right . . . . . . . . . . . . . . . . 50

ARTICLE XVI - CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 50
16.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
16.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . 51
16.3 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . 51
16.4 Duration of Confidentiality . . . . . . . . . . . . . . . . . . 52

ARTICLE XVII - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 52
17.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.3 Modification . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.4 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 54
17.6 Rule Against Perpetuities . . . . . . . . . . . . . . . . . . . 54
17.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 55
17.8 Survival of Terms and Conditions . . . . . . . . . . . . . . . 55
17.9 Entire Agreement; Successors and Assigns . . . . . . . . . . . 55

iii

17.10 Memorandum . . . . . . . . . . . . . . . . . . . . . . . . 55
17.11 Severability . . . . . . . . . . . . . . . . . . . . . . . 55
17.12 Paragraph Headings . . . . . . . . . . . . . . . . . . . . 56
17.13 Monetary Amounts . . . . . . . . . . . . . . . . . . . . . 56

EXHIBITS

EXHIBIT A: Part I: Properties and Title Exceptions
Part II: Area of Interest

EXHIBIT B: Accounting Procedures

EXHIBIT C: Insurance

EXHIBIT D: Net Smelter Returns Definition

EXHIBIT E: Initial Exploration Program and Budget

EXHIBIT F: Reporting and Inspection

OPERATING AGREEMENT

THIS AGREEMENT is made effective as of September 6, 1996 between Santa
Fe Pacific Gold Corporation, a Delaware corporation, ("Santa Fe") and Hecla
Mining Company, a Delaware corporation ("Hecla").

RECITALS

A. Pursuant to the Earn-in Agreement dated September 6, 1996, Santa
Fe has obtained a 75% undivided interest in the Joint Properties.

B. Hecla owns a 25% undivided interest in the Joint Properties.

C. Santa Fe and Hecla wish to participate in the exploration,
evaluation, development and mining of mineral resources within the Joint
Properties, or hereafter within the Properties, all as provided in this
Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, Santa Fe and Hecla agree as follows:

ARTICLE I

DEFINITIONS

1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.

1.2 "Affiliate" means any person, partnership, joint venture, limited
liability company, corporation or other form of enterprise which directly or
indirectly controls, is controlled by, or is under common control with, a
Participant. For purposes of the preceding sentence, "control" means
possession, directly or indirectly, of the power to direct or cause direction
of management and policies through ownership of voting securities, contract,
voting trust or otherwise.

1.3 "Agreement" means this Operating Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which
are incorporated herein by this reference.

1.4 "Area" or "Areas" shall refer to one or more of the types of Areas
as defined in Section 9.4.

1.5 "Area of Interest" means the area described in Part II of Exhibit
A.

1.6 "Assets" means the Properties, Products and all other real and
personal property, tangible and intangible, held for the benefit of the
Participants hereunder.

1.7 "Budget" means a detailed estimate of all costs to be incurred by
the Participants with respect to a Program and a schedule of cash advances to
be made by the Participants.

1.8 "Development" means preparation for the removal and recovery of
Products, including drilling, test mining, mine feasibility studies, and
other such work.

1.9 "Development Program" means that type of Program defined in Section
9.2(b).

1.10 "Earn-in Agreement" means the Amended and Restated Golden Eagle
Earn-in Agreement to which this Operating Agreement was attached .

1.11 "Effective Date" means the date set forth in the initial paragraph
of this Agreement.

1.12 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.

1.13 "Exploration Area" means an area as defined in Section 9.4.

1.14 "Exploration Program" means a Program as defined in Section 9.2(a).

1.15 "Feasibility Study" means a study of the feasibility of developing
and operating a mine on the Properties, including an analysis of economic,
engineering, environmental,

-2-

regulatory and other considerations, and containing the level of detail
customary in the industry for a bankable feasibility study which may, if
necessary, be presented to financial institutions for the purpose of seeking
and ultimately obtaining financing for the development of a mine.

1.16 "Hecla's Properties" means the properties described in Exhibit A to
the Earn-in Agreement.

1.17 "Initial Contribution" means that contribution each Participant has
made as shown in Section 5.1.

1.18 "Initial Feasibility Study" means the Feasibility Study delivered
pursuant to Section 5.5 of the Earn-in Agreement.

1.19 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.

1.20 "Joint Properties" means the Properties defined as "Joint
Properties" under the Earn-in Agreement and described in Part 1 of Exhibit A
hereto which are to be jointly contributed by the Participants on the
Effective Date hereof.

1.21 "Management Committee" means the committee established under
Article VII.

1.22 "Manager" means the person or entity appointed under Article
VIII to manage Operations, or any successor Manager.

1.23 "Mining" means the mining, extracting, producing, handling,
milling or other processing of Products.

1.24 "Mining Program" means that type of Program defined in Section
9.2(c).

1.25 "Net Smelter Returns" means certain amounts calculated as
provided in Exhibit D, which may be payable to a Participant under Sections
6.4(b)(ii) and 6.5, and which may be taken in kind in accordance with the
terms of Exhibit D.

-3-

1.26 "Non-Consent Program" means a Program adopted by the Management
Committee to which a Participant elects not to contribute.

1.27 "Operations" means the activities carried out under this
Agreement.

1.28 "Participant" and "Participants" mean the persons or entities
that from time to time have Participating Interests.

1.29 "Participating Interest" means the percentage interest
representing the operating interest of a Participant in Assets and all other
rights and obligations arising under this Agreement, as such interest may
from time to time be adjusted hereunder. However, following the designation
of a Production Area pursuant to Section 9.4, there shall be two measures of
Participating Interests: (1) Participating Interests in the Production Area,
and (2) Participating Interests in the Exploration Area. Both measures shall
be concurrently calculated and maintained for each Participant.
Participating Interests shall be calculated to three decimal places and
rounded to two ( E.G., 1.519% rounded to 1.52%). Decimals of .005 or more
shall be rounded up to .01, decimals of less than .005 shall be rounded down.
The initial Participating Interests of the Participants are set forth in
Section 6.1.

1.30 "Prime Rate" means the interest rate quoted as "Prime" by the
Chase Manhattan Bank, at its head office, as said rate may change from day to
day (which quoted rate may not be the lowest rate at which the Bank loans
funds).

1.31 "Production Area" means any portion of the Properties segregated
for either Mining or Development as provided in Section 9.4

1.32 "Products" means all ores, minerals and mineral resources
produced from the Properties under this Agreement.

-4-

1.33 "Program" means a description in reasonable detail of Operations
to be conducted and objectives to be accomplished by the Manager for a year
or any longer period.

1.34 "Properties" means those interests in real property described in
Part 1 of Exhibit A, any "Mineral Properties" as defined under the Earn-in
Agreement and jointly contributed to the purposes of this Operating Agreement
pursuant to Section 5.4 of the Earn-in Agreement, and all other interests in
real property within the Area of Interest which are made subject to this
Agreement pursuant to Article XIII.

1.35 "Separate Mining Program" means a Program as defined in Section
9.5(c).

1.36 "Transfer" means sell, grant, assign, lease, sublease, release,
encumber, pledge or otherwise commit or dispose of.

1.37 "Venture" means the business arrangement of the Participants
under this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNIFICATION

2.1 CAPACITY OF PARTICIPANTS. Each of the Participants represents and
warrants as follows:

(a) that it is a corporation duly incorporated and in good
standing in its place of incorporation and that it is qualified to do
business and is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this Agreement;

(b) that it has the capacity to enter into and perform this
Agreement and all transactions contemplated herein and that all corporate and
other actions required to authorize it to enter into and perform this
Agreement have been properly taken;

-5-

(d) that this Agreement has been duly executed and delivered by it
and is valid and binding upon it in accordance with its terms.

2.2 INDEMNIFICATIONS. Santa Fe shall be soley responsible for and
shall indemnify, defend, and hold harmless Hecla and its directors, officers,
employees, agents, attorneys, and Affiliates from and against any and all
environmental and other liabilities, losses, claims, damages, costs, expenses
(including without limitation any remediation or reclamation expenses, fine,
penalties, judgments, litigation costs and attorneys' fees), enforcement
activities and causes of action to the extent and only to the extent that
they arise from Santa Fe's Earn-in Acitivites on or for the benefit of the
Mineral Properties during the term of the Earn-in Agreement. Notwithstanding
any provision of this Agreement to the contrary, Hecla shall be solely
responsible for, and shall indemnify, defend, and hold harmless Santa Fe and
its directors, officers, employees, agents, attorneys and Affiliates from and
against, any and all environmental and other liabilities, losses, claims,
demands, damages, costs, expenses (including without limitation any
reclamation or remediation expenses, fines, penalties, judgments, litigation
costs and attorneys' fees) enforcement actions and causes of action (whether
or not pending, and including but not limited to those certain lawsuits known
as Washington Wilderness, et al. vs. Hecla Mining Company, Cause No.
95CS233-FVS, ▇▇▇ ▇▇▇▇▇▇▇, et ux., et al. v. Hecla Mining Co., Cause No.
95201356-7, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ v. Hecla Mining Co., Cause No.
95-2-00004-9), to the extent and only to the extent that they arise from the
activities other than activities of Santa Fe, its agents or contractors,
conducted at any time prior to the effective date of the Earn-in Agreement on
the Properties or on lands owned or controlled as of the Effective

-6-

Date by Hecla within the Area of Interest, or on nearby lands involved in
Hecla's Republic Unit operations, regardless of whether such liability, loss,
claim, demand, damage, cost, expense (including without limitation any
reclamation and remediation expenses, fines, penalties, judgments, litigation
costs and attorneys' fees) enforcement actions and causes of action arises or
accrues before the effective date of the Earn-in Agreement, during the term
of the Earn-in Agreement or this Agreement, or after termination or
expiration of the Term of this Agreement for any reason. Notwithstanding any
other provision of this Agreement, Hecla shall have the continuing right to
access the Mineral Properties to perform such sampling, testing and
reclamation or remediation activities as Hecla in its sole discretion and
judgment deems necessary or convenient in order to perform its obligations
pursuant to this Section 2.2. of this Agreement, and the Manager shall not
unreasonably interfere with any of Hecla's activities associated therewith.
In the event the Manager unreasonably prohibits Hecla's access to or
activities on any parcel of lands for such purposes, the Participants shall
thereby be deemed to assume, in proportion to their Participating Interests
associated with such parcel, all of Hecla's obligations under this Section
2.2 of this Agreement with respect to any such parcel of land; provided, the
Manager shall have no right to exclude Hecla from lands that are not a part
of or yet added to the Mineral Properties.

2.3 RECORD TITLE. Each Participant shall have an undivided interest in
the Properties equal to its Participating Interest as adjusted from time to
time. Title to all other Assets shall be held in the name of the Manager for
the benefit of the Participants in proportion to their Participating
Interests as adjusted from time to time.

2.4 JOINT LOSS OF TITLE. Any failure or loss of title to the Assets,
and all costs of defending title, shall be charged to the Joint Account,
except that all costs and losses arising out

-7-

of or resulting from breach of the representations and warranties of a
Participant shall be charged to that Participant.

ARTICLE III

NAME, PURPOSES AND TERM

3.1 GENERAL. Santa Fe and Hecla hereby enter into this Agreement for
the purposes hereinafter stated, and they agree that all of their rights and
all of the Operations on or in connection with the Properties shall be
subject to and governed by this Agreement.

3.2 NAME. The name of this Venture shall be the Golden Eagle Venture.
The Manager shall accomplish any registration required by applicable assumed
or fictitious name statutes and similar statutes.

3.3 PURPOSES. This Agreement is entered into for the following
purposes and for no others, and shall serve as the exclusive means by which
the Participants, or either of them, accomplish such purposes:

(a) to conduct Exploration on the Properties.

(b) to engage in Development and Mining Operations in the
Production Area specified in the Initial Feasibility Study.

(d) to engage in Development and Mining Operations on the
Properties,

(e) to engage in the storage, or removal and storage, of Products,
to the extent permitted by Article XI, and

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

-8-

3.4 LIMITATION. Unless the Participants otherwise agree in writing,
the Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.

3.5 EFFECTIVE DATE AND TERM. The term of this Agreement shall be for
twenty (20) years from the Effective Date and for so long thereafter as
Products are produced from any of the Properties, unless the Agreement is
earlier terminated as herein provided.

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, nor, except
as otherwise herein expressly provided, to constitute either Participant the
agent or legal representative of the other, nor to create any fiduciary
relationship between them. It is not the intention of the Participants to
create, nor shall this Agreement be construed to create, any mining,
commercial or other partnership. Neither Participant shall have any
authority to act for or to assume any obligation or responsibility on behalf
of the other Participant, except as otherwise expressly provided herein. 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. Each Participant shall
indemnify, defend and hold harmless the other Participant, its directors,
officers, employees, agents and attorneys from and against any and all
losses, claims, damages and liabilities (including litigation costs and
attorneys' fees) arising out of any act or any assumption of liability by the
indemnifying Participant, or any of its directors, officers, employees,
agents and attorneys done or undertaken, or apparently done or undertaken, on

-9-

behalf of the other Participant, except pursuant to the authority expressly
granted herein or as otherwise agreed in writing between the Participants.

4.2 FEDERAL TAX ELECTIONS AND ALLOCATIONS. The Participants agree that
their relationship shall not constitute a tax partnership within the meaning
of Section 761(a) of the United States Internal Revenue Code of 1986, as
amended.

4.3 STATE INCOME TAX. The Participants also agree that their
relationship shall be treated for state income tax purposes in the same
manner as it is for Federal income tax purposes.

4.4 TAX RETURNS. Each of the Parties shall prepare and file any tax
returns or other tax forms required for its interest in the Venture.

4.5 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in
and receive full benefits from business activities, whether or not
competitive with the Operations, without consulting the other. The doctrines
of "corporate opportunity" or "business opportunity" shall not be applied to
any other activity, venture, or operation of either Participant, and, except
as otherwise provided in Section 12.5, 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 within the Area of
Interest after the termination of this Agreement. Unless otherwise agreed in
writing, no Participant shall have any obligation to mill, beneficiate or
otherwise treat any Products or any other Participant's share of Products in
any facility owned or controlled by such Participant.

4.6 WAIVER OF RIGHT TO PARTITION. 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 statute.

-10-

4.7 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.

4.8 IMPLIED COVENANTS. There are no implied covenants contained in
this Agreement other than those of good faith and fair dealing.

4.9 EMPLOYEES. Employees of the Manager are not and shall not be
deemed employees of the non-managing Participant or of the Venture.

ARTICLE V

CONTRIBUTIONS BY PARTICIPANTS

5.1 CONTRIBUTIONS.

(a) Hecla, as its initial contribution, contributes its entire
interest in the Joint Properties and any Properties owned or controlled by
Hecla and made subject to this Operating Agreement after the effective date
, together with its entire interest in any Area of Interest Properties
acquired after entry into this Operating Agreement, for the purposes of
this Agreement. The value of Hecla's Initial Contribution shall be deemed to
be the amount resulting from dividing Santa Fe's deemed Initial Contribution
(as determined under Section 5.1(b)), by three (3).

(b) Santa Fe, as its initial contribution, contributes its entire
interest in the Joint Properties and any Properties owned or controlled by
Santa Fe and made subject to this Operating Agreement after the effective
date, together with its entire interest in any Area of Interest Properties
acquired after entry in this Operating Agreement, to the purposes of this
Agreement. The value of Santa Fe's initial contribution shall be deemed to
be the total of all Earn-in Expenditures made by Santa Fe, plus $2,500,000.

-11-

5.2 ADDITIONAL CASH CONTRIBUTIONS. The Participants, subject to
Section 9.11 and any election permitted by Section 6.3, shall be obligated to
contribute funds to adopted Programs and Budgets in proportion to their
respective Participating Interests in the affected Exploration or Production
Area.

ARTICLE VI

INTERESTS OF PARTICIPANTS

6.1 INITIAL PARTICIPATING INTERESTS. The Participants shall have the
following initial Participating Interests in all Assets:

Santa Fe - 75%

Hecla - 25%

Unless changed pursuant to other provisions of this Agreement, all costs and
liabilities incurred in the Operations shall be borne and paid, and all
Assets acquired and Products mined by the Operations shall be owned by the
Participants in proportion to the above percentage Participating Interests.

6.2 CHANGES IN PARTICIPATING INTERESTS. A Participant's Participating
Interest shall be changed as follows:

(a) Upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest in the affected Exploration or
Production Area; or

(b) In the event of default by a Participant in making its
agreed-upon contribution to an adopted Program and Budget, followed by an
election by the other Participant to invoke Section 6.4(b); or

-12-

(d) Transfer by a Participant of less than all its Participating
Interest in accordance with Article XV; or

(e) Acquisition of less than all of the Participating Interest of
the other Participant, however arising.

The Production Area specified in the Initial Feasibility Study and any
additional Area or Areas designated as Production Area or Areas in accordance
with Section 9.4, shall be treated separately for calculation of
Participating Interests and the Participants' Participating Interests in that
Area will be designated and calculated separately from the Participating
Interests relating to the Exploration Area. The Manager hereby allocates the
Participants' Initial Contributions to the Production Area specified in the
Initial Feasibility Study. When an additional Area is initially designated
as a Production Area, the Manager shall, no later than three months after the
establishment of such Area by adoption of the Program, allocate a cost to
such Area, which cost will be approximately equal to the aggregate of the
amounts which in the reasonable opinion of the Manager have been expended on
the lands that comprise such Area. The amount allocated shall be divided
between the Participants in direct proportion to their respective
Participating Interests in that Area's lands immediately preceding the
allocation. All expenditure amounts not so allocated to the Production Area
shall be deemed allocated to the Exploration Area. A Participant's
Participating Interest in an Area designated as a Production Area shall be
determined from amounts allocated thereto and amounts thereafter contributed
pursuant to work programs and budgets for the Production Area. Participating
Interests in such Production Area shall not be affected by changes in
Participants' Participating

-13-

Interests in the Exploration Area. A Participant's Participating Interest in
the Exploration Area shall be based upon amounts contributed or deemed
contributed to the Exploration Area, excluding amounts allocated to a
Production Area.

The Manager also shall, within three months after establishment of a
Production Area, allocate all personal property owned by the Venture (and not
previously allocated to a Production Area) to either the Production Area
specified in the Initial Feasibility Study, the newly established Production
Area or the Exploration Area, and thereafter the Participating Interests of
the Participants in such personal property shall be equal to the
Participants' respective Participating Interests in the relevant Area as
adjusted from time to time.

6.3 VOLUNTARY REDUCTION IN PARTICIPATION.

(a) Pursuant to Section 9.6, a Participant may elect to limit its
contributions to an adopted Program and Budget to some lesser amount than its
Participating Interest share of program expenditures in the affected
Exploration or Production Area, or (2) elect to make no contribution.

(b) If a Participant elects to contribute to an adopted Program
and Budget in some amount less than its Participating Interest in the
relevant Exploration or Production Area, or not to contribute at all, then
the Participating Interest of each Participant in the relevant Area shall be
recalculated at the time of election by dividing: (i) the sum of (1) the
agreed value of the Participant's initial contribution, apportioned to such
Area pursuant to Sections 5.1 and 6.2, plus (2) the total of the
Participant's prior contributions to such Area under Section 5.2 or allocated
to such Area under Section 6.2, plus (3) the amount, if any, which the
Participant has elected to contribute to the adopted Program and Budget; by
(ii) the sum of (1), (2) and (3) above for all Participants; and then
multiplying the result by one hundred.

-14-

(c) If the consenting Participant(s) in a Non-Consent Program
fail(s) to spend at least 90% of the Budget associated with the relevant
Program, then the non-consenting Participant shall be entitled, within 30
days of being notified of completion of the reduced Program, to pay its share
of the expenditures actually made by the consenting Participant and thereby
maintain its Participating Interest in the affected Area. If the
non-consenting Participant fails to contribute within such 30 day period, its
Participating Interest shall be reduced in accordance with the foregoing
provisions.

6.4 DEFAULT IN MAKING CONTRIBUTIONS.

(a) If a Participant defaults in making a contribution or cash
call required by an adopted Program and Budget to which that Participant has
elected to contribute under Section 9.6, the non-defaulting Participant may
advance the defaulted contribution on behalf of the defaulting Participant
and treat the same, together with any accrued interest, as a demand loan
bearing interest from the date of the advance at the rate provided in
Section 10.3. The failure to repay said loan upon demand shall be a default.
Each Participant hereby grants to the other a lien upon its interest in the
Properties and a security interest in its rights under this Agreement and in
its Participating Interest in other Assets, and the proceeds therefrom, to
secure any loan made hereunder, including interest thereon, reasonable
attorneys fees and all other reasonable costs and expenses incurred in
recovering the loan with interest and in enforcing such lien or security
interest, or both. A non-defaulting Participant may elect the applicable
remedy under this Section 6.4(a) or under 6.4(b), or, to the extent a
Participant has a lien or security interest under applicable law, it shall be
entitled to its rights and remedies at law and in equity. All such remedies
shall be cumulative. The election of one or more remedies shall not
constitute a wavier of the right to elect any other remedies. At any time at
the request of either Participant,

-15-

the Participants shall prepare, execute and deliver and file or record such
instrument or instruments as are necessary to perfect such liens and security
interests. Each Participant hereby irrevocably appoints the other its
attorney-in-fact to execute, file and record all instruments necessary to
perfect or effectuate the provisions of this Section 6.4(a).

(b) The Participants acknowledge that if a Participant defaults in
making a contribution, or a cash call, or in repaying a loan, as required
hereunder, it will be difficult to measure the damages resulting from such
default. In the event of such default, as reasonable liquidated damages, the
non-defaulting Participant may, with respect to any such default not cured
within 60 days after notice to the defaulting Participant of such default,
elect one of the following remedies by giving notice to the defaulting
Participant:

(i) For a default relating exclusively to an Exploration
Program and corresponding Budget, the non-defaulting Participant may
elect to have the defaulting Participant's Participating Interest in the
Exploration Area permanently reduced as provided in Section 6.3(b), and
further reduced by multiplying the result by 90%. Amounts treated as a
loan pursuant to Section 6.4(a) and interest thereon shall be included
in the calculation of the defaulting Participant's reduced Participating
Interest. The non-defaulting Participant's Participating Interest in
the Exploration Area shall, at such time, become the difference between
100% and the further reduced Participating Interest. Such reductions
shall be effective as of the date of the default.

(ii) For a default relating to a Development or Mining Program
and corresponding Budget, at the non-defaulting Participant's election,
the defaulting Participant shall be deemed to have withdrawn from the
relevant Production Area under Section 12.2, and its Participating
Interest in the Production Area shall be converted to

-16-

a Net Smelter Returns ("NSR") interest based upon the appropriate NSR
interest determined pursuant to Section 6.5, except that the NSR
percentage as determined pursuant to Section 6.5 shall be reduced by
one-half (i.e., a 3% NSR shall be a 1.5% NSR and a 1% NSR shall be a
0.5% NSR), and the defaulting Participant shall have the opportunity to
receive only such NSR on Products, if any, from the Production Area as
defined at the time of the default until such time as the defaulting
Participant has received an amount equal to its contributions to such
Production Area. The defaulting Participant shall thereafter have no
further right, title or interest in the relevant Production Area.

6.5 ELIMINATION OF MINORITY INTEREST.

(a) Upon the reduction of a Participant's Participating Interest
in an Exploration Area or Production Area to less than 15%, the Participant's
Participating Interest in that Area shall be converted as follows: (1) to a
3% Net Smelter Returns interest on Products, if any, produced from Properties
in such Area that are held as an undivided fee simple estate (including
patented mining claims) with no production or other type of royalty,
overriding royalty, advance royalty or rental obligation that existed, or was
contemplated by agreement to arise in the future, as of the effective date of
the Earn-in Agreement, and/or (b) to a 1% Net Smelter Returns interest on
Products, if any, produced from all other Properties in such Area. Such
Participant shall be deemed to have transferred to the remaining Participant
its Participating Interest in the relevant Area, but this transfer will not
include its Participating Interest in the remainder of the Properties. Such
transfer will be without cost and free and clear of royalties, liens, or
other encumbrances arising by, through or under such transferring
Participant, except those royalties and other exceptions to title described
in Part 1 of Exhibit A (if any), Section 6.4, this Section 6.5, and those
other interests and exceptions to which both Participants have

-17-

given their written consent after the date of this Agreement. The
transferring Participant shall execute and deliver all instruments as may be
necessary to effect the transfer of its Participating Interest in the
relevant Area. The transfer under this Section 6.5(a) shall not relieve the
transferring Participant of its share of liabilities to third persons
(whether such accrued before or after such transfer) arising out of
Operations conducted on the relevant Area prior to the transfer. The
transferring Participant's share of such liability shall be equal to its
Participating Interest in the relevant Area at the time such liability was
incurred.

(b) Subject to Section 15.2(k), the Net Smelter Returns interest
provided under this Section 6.5 shall be freely transferable by the
Participant receiving it notwithstanding any other provisions of this
Agreement, and it shall be binding upon and inure to the benefit of the
Participants and their respective successors and assigns.

6.6 CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS.
No reduction of a Participant's Participating Interest under this Article VI
shall relieve such Participant of its share of any reclamation or other
liability arising out of Operations conducted prior to such reduction,
whether it accrues before or after such reduction, whether it was known or
unknown at that time, and whether it becomes an enforceable right before or
after such reduction. For purposes of this Article VI, such Participant's
share of such liability shall be equal to its Participating Interest in the
relevant Exploration or Production Area at the earliest time such liability,
or condition giving rise to such liability, was created or incurred. The
increased Participating Interest accruing to a Participant as a result of the
reduction of the other Participant's Participating Interest shall be free of
royalties, liens or other encumbrances arising by, through or under such
other Participant, other than those existing at the time of entry into this
Agreement or those to which both Participants have given their written
consent. An

-18-

adjustment to a Participating Interest need not be evidenced during the term
of this Agreement by the execution and recording of appropriate instruments,
but each Participant's Participating Interest in each Exploration and
Production Area shall be shown in the books of the Manager. However, either
Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments reasonably necessary to evidence such
adjustment, or to grant or confirm a Net Smelter Returns interest arising
under this Article VI, in form sufficient for recording in the jurisdiction
where the Properties are located.

ARTICLE VII

MANAGEMENT COMMITTEE

7.1 ORGANIZATION AND COMPOSITION. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall
consist of two member(s) appointed by Hecla and two member(s) appointed by
Santa Fe. Each Participant may appoint one or more alternates to act in the
absence of a regular member. Any alternate so acting shall be deemed a
member. Appointments shall be made or changed by notice to the other
Participant prior to the meeting at which the member is to act.

7.2 DECISIONS.

(a) Each Participant, acting through its appointed members, shall
have one vote on the Management Committee. The votes shall be weighted
according to each Participant's Participating Interest in the relevant
Exploration or Production area, and decisions shall be made by a majority
vote. In case of a deadlock on a proposed Program and Budget or on any other
management matters relating to this Agreement or the Golden Eagle Venture
that

-19-

require a majority approval of the Management Committee, the Manager shall
make the final decision.

(b) Notwithstanding the provisions of Section 7.2(a), the
following decisions shall require unanimous approval of the Participating
Interests in the relevant Exploration or Production Area.

(i) Conduct of any business unrelated to Exploration,
Mining, or Development;

(ii) Institution of litigation, arbitration or settlement of
any dispute except for disputes involving less than $200,000;

(iii) Borrowing or entering into any form of credit
arrangement which involves the pledge of all or part of non-Manager's
Participating Interest;

(iv) Acquisition or disposition of Assets valued at over
$200,000; and

(v) Cessation of or material reduction in Operations, except
as provided in Section 17.4.

(vi) Change of tax partnership status of the Venture from that
specified in Sections 4.2 and 4.3.

(vii) An increase in the capital expenditures contemplated
in the Initial Feasibility Study by more than 25%.

7.3 MEETINGS. The Management Committee shall hold regular meetings at
least quarterly at a place to be designated by the Manager, or at other
mutually agreed places. The Manager shall give 30 days notice to the
Participants of such regular meetings. Additionally, either Participant may
call a special meeting upon 15 days notice to the Manager and the other
Participant. In case of emergency, reasonable notice of a special meeting to
consider the

-20-

emergency matter only shall suffice. There shall be a quorum if at least one
member representing each Participant is present in person or by conference
telephone; provided, however, that if a quorum is not present, those members
in attendance may adjourn the meeting to the same time and place seven days
later, and provided further that a quorum shall be deemed present at the
adjourned meeting if at least one Participant is represented. Each notice of
a regular meeting shall include an itemized agenda prepared by the Manager in
the case of a regular meeting, or by the Participant calling the meeting in
the case of a special meeting, but any matters may be considered in any type
of meeting with the consent of all Participants. The Manager shall prepare
minutes of all meetings and shall distribute copies of such minutes to the
Participants within 10 days after the meeting. The minutes, when signed by
all Participants, shall be the official record of the decisions made by the
Management Committee and shall be binding on the Manager and the
Participants. If personnel employed in Operations are required to attend a
Management Committee meeting, reasonable costs incurred in connection with
such attendance shall be a Venture cost. All other costs of attendance shall
be paid by the Participants individually.

7.4 ACTION WITHOUT MEETING. In addition to or in lieu of meetings, the
Management Committee may hold telephone conferences, so long as all decisions
are immediately confirmed in writing by the Participants.

7.5 MATTERS REQUIRING APPROVAL. Except as otherwise delegated to the
Manager in Section 8.2, the Management Committee shall have exclusive
authority to determine all management matters related to this Agreement.

-21-

ARTICLE VIII

MANAGER

8.1 APPOINTMENT. The Participants hereby appoint Santa Fe as the
Manager with overall management responsibility for Operations. Santa Fe
hereby agrees to serve until it resigns as provided in Section 8.4.

8.2 POWERS AND DUTIES OF MANAGER. Subject to the terms and provisions
of this Agreement, the Manager shall have the following powers, duties and
obligations which shall be discharged in accordance with adopted Programs and
Budgets:

(a) The Manager shall manage, direct and control Operations and
shall prepare and present to the Management Committee proposed Programs and
Budgets as provided in Article IX.

(b) The Manager shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if it lacks
sufficient funds to carry out its responsibilities under this Agreement.

(c) The Manager shall: (i) purchase or otherwise acquire all
material, supplies, equipment, water, utility and transportation services
required for Operations, such purchases and acquisitions to be made on the
best terms available, taking into account all circumstances; (ii) obtain
such customary warranties and guarantees as are available in connection with
such purchases and acquisitions; and (iii) keep the Assets free and clear of
all liens and encumbrances, except for those existing at the time of, or
created concurrent with, the acquisition of such Assets, or mechanic's or
materialmen's liens which shall be released or

-22-

discharged in a diligent manner, or liens and encumbrances specifically
approved by the Management Committee.

(d) The Manager shall: (i) make or arrange for all payments
required by leases, subleases, surface use agreements, licenses, permits,
contracts and other agreements related to the Assets; (ii) pay all taxes,
assessments and like charges on Operations and Assets except taxes determined
or measured by a Participant's sales revenue or net income; and (iii) do all
other acts reasonably necessary to maintain the Assets. The Manager shall
have the right to contest in the courts or otherwise, the validity or amount
of any taxes, assessments or charges if the Manager deems them to be
unlawful, unjust, unequal or excessive, or to undertake such other steps or
proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the
Manager shall be required to pay them, but in no event shall the Manager
permit or allow title to the Assets to be lost as the result of the
nonpayment of any taxes, assessments or like charges.

(e) The Manager shall: (i) apply for all necessary permits,
licenses and approvals; (ii) comply with applicable federal, state and local
laws and regulations; (iii) notify promptly the Management Committee of any
allegations of substantial violation thereof; and (iv) prepare and file all
reports or notices required for Operations. Except in cases of gross
negligence or willful misconduct, the Manager shall not be in breach of this
provision if a violation has occurred, and the Manager has timely cured or
disposed of such violation through performance, or payment of fines and
penalties. Manager shall be solely responsible for fines and penalties paid
to cure or dispose of a violation caused by Manager's gross negligence or
willful misconduct.

-23-

(f) The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or administrative
proceedings arising out of Operations. The non-managing Participant shall
have the right to participate, at its own expense, in such litigation or
administrative proceedings. The non-managing Participant shall approve in
advance any settlement involving payments, commitments or obligations in
excess of $200,000 in cash or value.

(g) The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit C.

(h) The Manager may dispose of Assets, whether by
abandonment, surrender or Transfer in the ordinary course of business, except
that Properties may be abandoned or surrendered only as provided in Article
XIV. However, without prior authorization from the Management Committee, the
Manager shall not: (i) dispose of Assets in any one transaction having a
value in excess of $50,000; (ii) enter into any sales contracts or
commitments for Product; (iii) begin a liquidation of the Venture; or (iv)
dispose of all or a substantial part of the Assets necessary to achieve the
purposes of the Venture.

(i) The Manager shall have the right to carry out its
responsibilities hereunder through agents, Affiliates or independent
contractors.

(j) The Manager shall perform or cause to be performed during the
term of this Agreement all assessment and other work or pay fees or rental
payments required by law in order to maintain any unpatented mining claims
that are included in the Properties. The Manager shall have the right to
perform any assessment work pursuant to a common plan of Exploration,
Development or Mining, and continued actual occupancy of such claims and
sites shall not be required. The Manager shall not be liable on account of
any determination by any

-24-

court or governmental agency that work performed by the Manager does not
constitute required annual assessment work or occupancy for the purposes of
preserving or maintaining ownership of the claims, provided that any work
done is in accordance with the adopted Program and Budget. The Manager shall
timely record with the appropriate county and file with the appropriate
United States agency, affidavits in proper form attesting to the performance
of assessment work or notices of intent to hold in proper form, and
allocating therein, to or for the benefit of each claim, at least any minimum
amount, if any, required by law to maintain such claim or site.

(k) If authorized by the Management Committee, the Manager may:
(i) locate, amend or relocate any unpatented mining claim or mill site or
tunnel site, (ii) locate any fractions resulting from such amendment or
relocation, (iii) apply for patents or mining leases or other forms of
mineral tenure for any such unpatented claims or sites, (iv) abandon any
unpatented mining claims for the purpose of locating mill sites or otherwise
acquiring from the United States rights to the ground covered thereby, (v)
abandon any unpatented mill sites for the purpose of locating mining claims
or otherwise acquiring from the United States rights to the ground covered
thereby, (vi) exchange with or convey to the United States any of the
Properties for the purpose of acquiring rights to the ground covered thereby
or other adjacent ground, and (vii) convert any unpatented claims or mill
sites into one or more leases or other forms of mineral tenure pursuant to
any federal law hereafter enacted.

(l) The Manager shall keep and maintain all required accounting
and financial records pursuant to the Accounting Procedure and in accordance
with customary cost accounting practices in the mining industry.

-25-

(m) The Manager shall keep each Participant on the Management
Committee advised of all Operations by submitting to each the data and
information described in Exhibit F attached hereto within a reasonable time
after such data and information is acquired by the Manager. At all
reasonable times the Manager shall provide the Management Committee or the
representative of any Participant, upon the request of any member of the
Management Committee, access to, and the right to inspect, audit and copy all
maps, drill logs, core tests, reports, surveys, assays, analyses, production
reports, operations, technical, accounting and financial records, and other
information acquired in Operations that has not been provided pursuant to
Exhibit F; such information will be provided to the Management Committee at
the cost of the Venture and if additional copies are required by a
Participant, they will be paid for by that Participant. In addition, the
Manager shall allow the non-managing Participant, at the latter's sole risk
and expense, and subject to reasonable safety regulations, to inspect the
Assets and Operations at all reasonable times, so long as the inspecting
Participant does not unreasonably interfere with Operations.

(n) The Manager shall prepare or have prepared and submit to the
Management Committee a report containing a description and analysis of the
methods and costs and all other relevant aspects of reclaiming the Properties
pursuant to the requirements of applicable laws, rules and regulations
governing the reclamation of the Properties, the purpose of which shall be to
establish a fund to finance costs and expense anticipated to be incurred in
connection with the reclamation or reclamation bonding of the Properties.
The Management Committee shall determine, based upon the reclamation report,
the total cost, including capital budget, which the Management Committee
reasonably estimates will be required to reclaim the Properties, including a
schedule of the timing of the capital requirements for such purpose, and

-26-

shall promptly establish a reclamation fund to meet such capital requirements
and any bonding or financial assurance requirements. The reclamation fund
shall be funded by contribution of the Participants, in proportion to their
Participating Interest in the area or areas to which the reclamation fund
relates, in such amounts and at such times as the Management Committee shall
determine. The amounts determined by the Management Committee for Purposes
of funding the reclamation fund shall be included in the applicable Programs
and Budgets for the related periods. Any unused portion of a reclamation
fund remaining after reclamation of the area or areas to which the
reclamation fund relates shall be distributed to the Participants in the same
proportion as their respective contributions to the reclamation fund;
provided, however, that a Participant's right to such distribution, if any,
shall only apply so long as the Participant retains a Participating Interest
in the area or areas to which the reclamation fund relates.

(o) The Manager may conduct environmental audits or reviews on an
annual or as needed basis, and the cost and expense of such audits or reviews
shall be charged to the joint account and shall be borne by the Participants
proportionately based on their Participating Interest at the time of the
audit or review.

(p) The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing.

The Manager shall not be in default of any duty under this Section 8.2
if its failure to perform results from the failure of the non-managing
Participant to perform acts or to contribute amounts required of it by this
Agreement.

8.3 STANDARD OF CARE. The Manager shall conduct all Operations in a
good, workmanlike and efficient manner, in accordance with sound mining and
other applicable industry standards and practices, and in accordance with the
terms and provisions of leases,

-27-

subleases, licenses, permits, plans of operation, contracts and other
agreements pertaining to Assets. The Manager shall not be liable to the
non-managing Participant for any act or omission resulting in damage or loss
to the Venture except to the extent caused by or attributable to the
Manager's wilful misconduct or gross negligence.

8.4 RESIGNATION; DEEMED OFFER TO RESIGN. The Manager may resign upon 3
months' prior notice to the other Participant, in which case the other
Participant may elect to become the new Manager by notice to the resigning
Participant within 30 days after the notice of resignation. If any of the
following shall occur, the Manager shall be deemed to have offered to resign,
which offer shall be accepted by the other Participant, if at all, within 90
days following such deemed offer:

(a) The Participating Interest of the Manager with respect to any
Exploration Area or Production Area becomes less than that of another
Participant; or

(b) The Manager fails to perform or in good faith commence a
material obligation imposed upon it under this Agreement and action to cure
said failure is not initiated within 60 days after notice from the other
Participant demanding performance; or

(d) A receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for a substantial part of its assets is
appointed and such appointment is neither made ineffective nor discharged
within 60 days after the making thereof, or such appointment is consented to,
requested by, or acquiesced in by the Manager; or

(e) The Manager commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or consents
to the entry of an

-28-

order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of any substantial
part of its assets; or makes a general assignment for the benefit of
creditors; or fails generally to pay its or Venture debts as such debts
become due; or takes corporate or other action in furtherance of any of the
foregoing; or

(f) Entry is made against the Manager of a judgment, decree or
order for relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any applicable
bankruptcy, insolvency or other similar law of any jurisdiction now or
hereafter in effect.

8.5 PAYMENTS TO MANAGER. The Manager shall be compensated for its
services and reimbursed for its costs hereunder in accordance with the
Accounting Procedure.

8.6 TRANSACTIONS WITH AFFILIATES. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no less favorable to the
Venture than would be the case in arm's-length transactions.

8.7 REVIEW OF ACCOUNTING PROCEDURE. It is the intent of the Manager
and the Participants that the Manager shall not lose or profit by reason of
its duties and responsibilities as Manager. The Accounting Procedure
attached as Exhibit B shall be reviewed by the Management Committee upon the
request of the Manager or any Participant to assure that the Manager
(directly or through its Affiliates) does not make a profit or suffer a loss
from serving as Manager. The Management Committee shall, in good faith,
endeavor to agree on modifications to the Accounting Procedure that will
remedy any alleged unfairness or inequity.

-30-

ARTICLE IX

PROGRAMS AND BUDGETS

9.1 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. Unless otherwise
provided herein, Operations shall be conducted, expenses shall be incurred,
and Assets shall be acquired only pursuant to adopted Programs and Budgets.

9.2 TYPES OF PROGRAMS. Four general types of Programs may be
proposed: Maintenance Programs, Exploration Programs, Development Programs
and Mining Programs.

(a) A "Maintenance Program" shall be a program designed to
maintain the Joint Property until such time as an Exploration Program,
Development Program or Mining Program may be proposed and adopted.

(b) An "Exploration Program" shall be a Program conducted within
an Exploration Area, and it shall include but not be limited to geological
mapping, geochemical sampling, geophysical surveys, drilling and other such
work expended to ascertain the existence, location, quantity, and quality of
deposits of Products on the Properties.

(c) A "Development Program" shall be a Program conducted within a
Production Area that shall include but not be limited to drilling, test
mining, preparing any Feasibility Study other than the Initial Feasibility
Study, and other such work in preparation for the removal and recovery of
Products on the Properties, but does not encompass, by itself, construction,
operation, maintenance, and attendant activities designed to bring a Mine on
any of the Properties into production in reasonable commercial quantities.

(d) A "Mining Program" shall be a Program conducted within a
Production Area that is designed to bring a Mine into production in
reasonable commercial quantities, and that provides for its subsequent
operation. It shall include but not be limited to engineering and

-30-

design work, and work expended toward development of deposits of Products, as
well as construction, operation, maintenance, mine expansions and attendant
activities.

9.3 PREPARATION, PRESENTATION AND CONTENT OF PROGRAMS AND BUDGETS.

(a) CONTENT OF PROGRAMS. Proposed Programs and Budgets shall be
prepared by the Manager. Each Program shall be accompanied by and include a
corresponding Budget and shall designate precisely the area on which
Operations are to be performed, describe work to be performed, and state the
estimated period of time required to perform the work. Each Program shall
state whether it is an Exploration Program, Development Program or Mining
Program. Each Development or Mining Program shall designate the Production
Area to which it relates.

(b) CONTENT OF BUDGETS. Each Budget shall be prepared in
reasonable detail and shall set forth each expenditure of $20,000 or more for
a budgeted item which, under generally accepted accounting treatment, would
be capitalized. Each Budget for an Exploration Program, as near as is
practicable, shall show the estimated expenditures for each calendar quarter
covered by the Budget period. Each Budget for any Development or Mining
Program, as near as is practicable, shall show the estimated expenditures for
each month covered by the Budget period.

(c) INITIAL PROGRAM AND BUDGET. Any other provision of this
Agreement notwithstanding, Santa Fe shall have no obligation to propose a
Program and Budget other than for a Maintenance Program. The initial Program
and Budget proposed following contribution of the Mineral Properties shall be
(i) supplied by the Manager; (ii) based upon the Initial Feasibility Study;
(iii) propose a Development and Mining Program for the Production Area

-31-

specified therein; (iv) commenced on the effective date of this Agreement,
and (v) incorporated herewith as Exhibit E.

(d) DURATION. A Maintenance Program need not be for any specific
duration but shall not exceed a period of six years. An Exploration Program
and Budget is anticipated to be for a period of one calendar year. A
Development or Mining Program and Budget is anticipated to extend for a
period of at least one year, but may extend for such longer period as is
reasonably necessary to complete the Program. It is anticipated that only
one Program will be carried out at a time within each Exploration or
Production Area.

(e) REVIEW. Each adopted Program and Budget, regardless of
length, shall be reviewed at least once a year at a regular meeting of the
Management Committee. During the period encompassed by any Program and
Budget, and at least 2 months prior to its expiration, a proposed Program and
Budget for the succeeding period shall be prepared by the Manager and
submitted to the Participants.

9.4 DEFINITION OF AREAS. There are two types of Areas: a single
Exploration Area and one or more Production Area. The Exploration Area shall
consist of all of the Properties that have not been designated as a
Production Area. A Production Area shall be that portion of the Properties
designated in a Feasibility Study and other portions of the Properties that
may be so designated by either a Development Program or a Mining Program. A
Production Area shall be segregated from the Exploration Area for Development
or Mining, and shall not encompass an area greater in size than is reasonably
necessary to carry out the Program. Upon designation of a Production Area,
the Manager will allocate costs and personal property to the Area pursuant to
Section 6.2 within three months. Also, such Area shall thereafter be treated
separately as to reports, accounting, expense records, and Participating
Interests; it shall be subject to this

-32-

Agreement as a separate unit for accounting, operating, and other purposes.
No more than one Program may be adopted and concurrently carried out by the
Management Committee for all or any part of a designated Production Area.

9.5 SUBMITTAL AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS.

(a) PREPARATION AND SUBMITTAL OF MANAGER'S PROGRAM AND BUDGET. At
least two months prior to implementation of a Program and Budget, Manager
shall prepare and submit a proposed Program and Budget to the Management
Committee. Within thirty days after Manager submits a proposed Program and
Budget to the Management Committee, the non-managing Participant shall submit
to the Management Committee:

(i) Notice that the non-managing Participant approves of the
Program and Budget; or

(ii) Proposed modifications of the proposed Program and
Budget, which shall include detailed specific objections regarding the
proposed Program and Budget.
If a non-managing Participant fails to give either of the foregoing responses
within the allotted time, the failure shall be deemed a disapproval by the
non-managing Participant of the Manager's proposed Program and Budget. If a
non-managing Participant makes a timely submission to the Management
Committee pursuant to Section 9.5(a)(ii), then the Management Committee shall
within the following 30 days meet to consider the proposed Program and Budget
and proposed modifications. At that meeting, the Management Committee shall
seek to develop a Program and Budget acceptable to both the Participants. In
the event of a deadlock, the Manager shall make the final determination as to
the Program and Budget.

(b) FEASIBILITY STUDY. Any Participant may propose to the
Management Committee at any time that a Feasibility Study, in addition to the
Initial Feasibility Study,

-33-

evaluate the feasibility of opening or expanding a mine on a particular area
of the Properties be conducted on behalf of the Venture. If the Management
Committee does not approve of the preparation of such Feasibility Study, then
the Participant proposing it may cause such Feasibility Study to be prepared
at its sole expense. Promptly upon completion of the Feasibility Study, the
Participant preparing it shall present it to the Management Committee for
evaluation. If a Separate Mining Program, as defined in Section 9.5(c), or
Mining Program is then adopted, based primarily on the Feasibility Study, any
Participant that did not contribute to the costs of preparing the Feasibility
Study, shall either reimburse the Participant who prepared the Feasibility
Study in proportion to the Participating Interest in the relevant Production
Area of the non-preparing Participant plus an additional penalty of fifteen
percent (15%) of the amount of such reimbursement, or be diluted in a like
amount in accordance with Section 6.3(b).

(c) SEPARATE MINING PROGRAM. After completion of a Feasibility
Study, if the Manager does not propose a Mining Program for the relevant
Production Area upon the expiration of the current Program, or if the Manager
proposes a Mining Program but it is not adopted in the first vote by the
Management Committee on such proposal, then the non-managing Participant may
propose a Mining Program for the relevant Production Area, to be considered
by the Participants in accordance with the procedures set forth in Section
9.5(a). If that Mining Program is not adopted by the Management Committee,
then the non-managing Participant may elect by written notice to the
Management Committee to conduct its Mining Program as a Separate Mining
Program. The other Participants (including the Manager) shall then elect
whether to contribute to the Separate Mining Program in accordance with the
procedure set forth in Section 9.6, and their respective Participating
Interests in the relevant Production Area shall be calculated in accordance
with Section 6.3.

-34-

(d) REVISION OF INITIAL PROGRAM AND BUDGET. Following
commencement of the Initial Program and Budget associated with the Initial
Feasibility Study, Santa Fe may revise such Initial Program and Budget. If
the revision would increase the capital expenditures contemplated in the
Initial Feasibility Study by more than 25%, the revision shall be treated as
a proposal requiring a unanimous decision of the Management Committee as
provided in Section 7.2(b)(vii). If the revision would increase the capital
expenditures contemplated in the Initial Feasibility Study by 25% or less,
Hecla may elect to participate in the additional capital expenditures, or to
participate only to the extent of its participation as originally elected for
the Initial Program and Budget (in which case it shall be subject to dilution
based upon its election not to contribute to the additional capital
expenditures under the revision).

9.6 ELECTION TO PARTICIPATE.

(a) DEADLINE FOR ELECTION. By notice to the Management Committee
within 20 days after the adoption of a Program and Budget, a Participant may
elect to contribute to such Program and Budget in some lesser amount than its
Participating Interest in the relevant Area, or not to contribute at all, in
which cases its Participating Interest in the relevant area shall be
recalculated as provided in Section 6.3. If a Participant fails to make such
an election within the 20 days, the Participant shall be deemed to have
elected not to contribute to such Program and Budget in proportion to its
Participating Interest in the relevant Area as of the beginning of the period
covered by the Program and Budget.

(b) CONTRIBUTIONS SCHEDULE. Contributions for an Exploration
Program shall be made at the beginning of each calendar quarter of the Budget
period. Contributions for a Development or Mining Program shall be made at
the beginning of each month of the Budget

-35-

period. An election to contribute to a Program may not be changed or
modified as to a Participant's percentage contribution during the course of
the Program.

9.7 SUBSEQUENT PROGRAMS. A subsequent Program relating to an Area for
which a prior Program has been adopted under the provisions of this Article
IX may be proposed and conducted pursuant to this Agreement. A Participant
may participate in any subsequent Program at the level of the Participant's
Participating Interest in that Area unless the Participant's Participating
Interest has been converted to a Net Smelter Returns Interest pursuant to
Section 6.5.

9.8 BUDGET OVERRUNS; PROGRAM CHANGES. The Manager shall immediately
notify the Management Committee of any material departure from an adopted
Program and Budget. If the Manager exceeds an adopted Budget by more than
15%, then the excess over 15%, unless directly caused by an emergency
expenditure made pursuant to Section 9.9 or unless otherwise unanimously
authorized by the Management Committee, shall be for the sole account of the
Manager and such excess shall not be included in the calculations of the
Participating Interests. Budget overruns of 15% or less shall be borne by
the Participants in proportion to their respective Participating Interests in
the affected Area as of the time the overrun occurs.

9.9 EMERGENCY EXPENDITURES. In case of emergency, the Manager may take
any reasonable action it deems necessary to protect life, limb or property,
to protect the Assets or to comply with law or government regulation. The
Manager shall promptly notify the Participants of the emergency expenditure,
and the Manager shall be reimbursed for all resulting costs by the
Participants in proportion to their respective Participating Interests in the
affected Area at the time the emergency expenditures are incurred.

-36-

9.10 INTERIM PROGRAM AND BUDGET. If the Management Committee for any
reason has failed to have adopted a Program and Budget to succeed an expiring
or completed prior Program and Budget, the Manager shall continue operations
at levels necessary to maintain the Assets and to comply with any and all
legal obligations of the Venture.

9.11 EXPENDITURES FOLLOWING DESIGNATION OF SECOND PRODUCTION AREA.
Notwithstanding any other provision of this Agreement, after the designation
of a second Production Area, Santa Fe shall pay the first $3,000,000 of
Hecla's obligations hereunder for any Program and Budget covering such
Production Area. Santa Fe shall be entitled to recoup the entire $3,000,000
from Hecla's share of any proceeds from Products from such Production Area.

ARTICLE X

ACCOUNTS AND SETTLEMENTS

10.1 MONTHLY STATEMENTS. The Manager shall promptly submit to the
Management Committee monthly statements of accounts reflecting in reasonable
detail the charges and credits to the Joint Account during the preceding
month.

10.2 CASH CALLS. On the basis of the adopted Program and Budget, the
Manager may submit to each Participant prior to the last day of each month, a
billing for estimated cash requirements for the next month. Within 10 days
after receipt of each billing, each Participant shall advance to the Manager
its proportionate share of the estimated amount. Time is of the essence of
payment of such ▇▇▇▇▇▇▇▇. All funds in excess of immediate cash requirements
shall be invested in interest-bearing accounts in a bank to be selected by
the Management Committee, for the benefit of the Joint Account.

10.3 FAILURE TO MEET CASH CALLS. A Participant that fails to meet cash
calls in the amount and at the times specified in Section 10.2 shall be in
default, and the amounts of the

-37-

defaulted cash call shall bear interest from the date due at an annual rate
equal to 3 percentage points over the Prime Rate, but in no event shall said
rate of interest exceed the maximum permitted by law. The non-defaulting
Participant shall have those rights, remedies and elections specified in
Section 6.4.

10.4 AUDITS. Upon request made by any Participant within 24 months
following the end of any calendar year (or, if the Management Committee has
adopted an accounting period other than the calendar year, within 24 months
after the end of such period), the Manager shall order an audit of the
accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon the Manager for
discrepancies disclosed by such audit shall be made not more than 3 months
after receipt of the audit report. Failure to make any such exception or
claim within the 3 month period shall mean the audit is correct and binding
upon the Participants. The audits shall be conducted by a firm of certified
public accountants selected by the Manager.

ARTICLE XI

DISPOSITION OF PRODUCTION

11.1 TAKING IN KIND. Unless otherwise provided herein, each Participant
hereto owning a Participating Interest shall on a monthly basis, take in kind
or separately dispose of its share of the Products produced from the
Properties. That share shall be defined by the Participant's Participating
Interest in the Production Area from which the Products are produced. Risk
of loss of any Products held for each Participant's respective account shall
be borne by such Participant, provided that such loss is not caused by the
Manager's gross negligence, intentional misconduct, or bad faith. Each
Participant shall take possession of such Products at the mine site or the
depository where held after all processing, smelting and/or refining of the

-38-

Products is completed, and will thereafter bear the responsibilities and
costs of transportation, security and related expenses, and shall, at its own
expense, construct, operate and maintain any facilities necessary to receive,
store and dispose of its share of production.

11.2 FAILURE TO TAKE IN KIND. If a Participant fails to take in kind or
separately dispose of its share of Products as required by Section 11.1 after
10 days notice by the Manager, the Manager may either charge the delinquent
Participant 150% of the cost and expense of storing such Products or the
Manager may act as the delinquent Participant's agent to have an independent
contractor remove the Products and store them for the delinquent
Participant's account.

ARTICLE XII

WITHDRAWAL AND TERMINATION

12.1 TERMINATION BY EXPIRATION OR AGREEMENT. This Agreement shall
terminate as expressly provided in this Agreement, unless earlier terminated
by written agreement. At any time after any consecutive six year period
during which operations hereunder are conducted solely pursuant to
Maintenance Program(s) or Exploration Program(s), or a combination thereof,
as defined under Section 9.2, Santa Fe may, at its sole election and for any
reason, terminate this Agreement by providing written notice to Hecla. Upon
any termination by written agreement or any termination pursuant to the
immediately preceding sentence, the parties shall, unless otherwise agreed to
in writing as part of a termination agreement, retain undivided interests in
the Properties located within each Area in proportion to the parties'
Participating Interest in each such Area. Prior to September 6, 2002,
neither Participant shall have the right unilaterally to terminate this
Agreement; provided, however, if termination results at any time after the
Effective Date pursuant to the withdrawal provisions of Section 12.2, then
the

-39-

withdrawing Participant shall convey its interests to the other Participant
in accordance with Section 12.2(b).

12.2 WITHDRAWAL.

(a) A Participant may withdraw as a Participant from an
Exploration or Production Area in any of three ways. First, a Participant at
any time may withdraw voluntarily by giving notice to the other Participant
of the effective date of withdrawal, which shall be the later of the end of
the then current Program and Budget for the relevant Area or at least 30 days
after the date of the notice ("voluntary withdrawal"). Second, if a
Participant fails to make a contribution under Section 6.4(b)(ii), upon
election pursuant to that Section, it will be deemed to have withdrawn from
the relevant Area. Third, if a Participant allows its Participating Interest
in an Exploration or Production Area to be reduced to less than 15% under
Section 6.5, then it will be deemed to have withdrawn from the relevant Area.

(b) Upon withdrawal from an Exploration or Production Area, this
Agreement shall terminate with respect to such Area and the withdrawing
Participant shall be deemed to have transferred to the remaining Participant
its Participating Interest in the relevant Area, without cost and free and
clear of royalties, liens or other encumbrances arising by, through or under
such withdrawing Participant, except those royalties and other exceptions to
title described in Part 1 of Exhibit A, Section 6.4(b)(ii) and Section 6.5,
and those other interests and exceptions to which both Participants have
given their written consent after the date of this Agreement. The
withdrawing Participant shall execute and deliver all instruments as may be
necessary to effect the transfer of its Participating Interest in the
relevant Area. Any withdrawal under this Section 12.2 shall not relieve the
withdrawing Participant of its share of liabilities to third persons (whether
such accrues before or after such withdrawal) arising out of Operations

-40-

conducted hereunder within the relevant Area prior to such withdrawal. For
purposes of this Section 12.2, the withdrawing Participant's share of such
liabilities shall be equal to its Participating Interest in the relevant Area
where the liability was incurred at the earliest time such liability was
created or incurred.

12.3 CONTINUING OBLIGATIONS. On termination of this Agreement under
Section 12.1 with respect to an Area, or with respect to both Areas, as the
case may be, the Participants shall remain liable for continuing obligations
hereunder until final settlement of all accounts. Such continuing
obligations include liability for all amounts chargeable with respect to any
Budget to which the withdrawing Participant is committed, including costs
incurred pursuant to such Budget after the effective date of withdrawal but
not in excess of the most recent cost estimates committed to, or approved by,
such withdrawing Participant. The withdrawing Participant shall also remain
liable for any liability arising out of Operations conducted on the relevant
Area or Areas prior to the withdrawal, whether the liability accrues before
or after such withdrawal from the relevant Area or Areas.

12.4 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination
of this Agreement under Section 12.1 with respect to all Properties, the
Manager shall take all action necessary to wind up the activities of the
Venture, and all costs and expenses incurred in connection with the
termination of the Venture shall be expenses chargeable to the Venture. The
Assets shall first be paid, applied, or distributed in satisfaction of all
liabilities of the Venture to third parties and then to satisfy any debts,
obligations, or liabilities owed to the Participants. Before distributing
any funds or Assets to Participants, the Manager shall have the right to
segregate amounts which, in the Manager's reasonable judgment, are necessary
to discharge continuing obligations or to purchase for the account of
Participants, bonds or other securities

-41-

for the performance of such obligations. The foregoing shall not be
construed to include the repayment of any Participant's capital contributions
or Capital Account balance. Thereafter, any remaining cash and all other
Assets shall be distributed (in undivided interests unless otherwise agreed)
to the Participants. No Participant shall receive a distribution of any
interest in Products or proceeds from the sale thereof if such Participant's
Participating Interest therein has been terminated pursuant to this
Agreement.

12.5 TRANSFER COVENANTS. A Participant that withdraws pursuant to
Section 12.2, is a "withdrawing Participant" as the term is used in this
Section. If a withdrawing Participant, or the Affiliate of a withdrawing
Participant, acquires any interest from a third party within the Area of
Interest for twelve (12) months after the effective date of withdrawal, such
withdrawing Participant or Affiliate shall be obligated to offer to convey to
the non-withdrawing Participant, without cost, any such property or interest
so acquired. Such offer shall be made in writing and can be accepted by the
non-withdrawing Participant at any time within 45 days after it receives the
offer.

12.6 RIGHT TO DATA AFTER TERMINATION. After termination of this
Agreement pursuant to Section 12.1, each Participant shall be entitled to
copies of all information acquired hereunder before the effective date of
termination not previously furnished to it, but a Participant shall not be
entitled to any such copies pertaining solely to an Area withdrawn from after
withdrawal.

12.7 CONTINUING AUTHORITY. On termination of this Agreement under
Section 12.1 with respect to all Properties or the withdrawal of a
Participant pursuant to Section 12.2 with respect to all Properties, the
Manager shall have the power and authority, subject to control of the
Management Committee, if any, to do all things on behalf of the Participants
which are reasonably necessary or convenient to: (a) wind up Operations and
(b) complete any transaction

-42-

and satisfy any obligation, unfinished or unsatisfied, at the time of such
termination or withdrawal, if the transaction or obligation arises out of
Operations prior to such termination or withdrawal. The Manager shall have
the power and authority to grant or receive extensions of time or change the
method of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture, mortgage
Assets, and take any other reasonable action in any matter with respect to
which the former Participants continue to have, or appear or are alleged to
have, a common interest or a common liability.

ARTICLE XIII

AREA OF INTEREST

13.1 GENERAL. Any interest or right to acquire any interest in real
property within the Area of Interest acquired during the term of this
Agreement by or on behalf of a Participant or any Affiliate shall be subject
to the terms and provisions of this Agreement. Sections 13.2, 13.3 and 13.4
of this Article XIII shall only apply to acquisitions from third parties of
any interest within the Area of Interest.

13.2 NOTICE TO NONACQUIRING PARTICIPANT. Within 30 days after the
acquisition of any interest or the right to acquire any interest in real
property wholly or partially within the Area of Interest (except real
property acquired by the Manager pursuant to a Program), the acquiring
Participant shall notify the other Participant of such acquisition. The
acquiring Participant's notice shall describe in detail the acquisition, the
lands and minerals covered thereby, the cost thereof, committed work
expenditures and reclamation obligations, and the reasons why the acquiring
Participant believes that the acquisition of the interest is in the best
interests of the Participants under this Agreement. In addition to such
notice, the acquiring Participant shall provide the non-acquiring
Participants with copies of all instruments documenting the

-43-

acquisition, and shall keep any and all other information concerning the
acquired interest available for inspection by the other Participant.

13.3 OPTION EXERCISED. If, within 30 days after receiving the acquiring
Participant's notice, the other Participant notifies the acquiring
Participant of its election to accept a proportionate interest in the
acquired interest equal to its Participating Interest in the Exploration or
Production Area of which the acquired interest would be a part, the acquiring
Participant shall convey to the other Participant, by appropriate conveyance,
such a proportionate undivided interest therein. The acquired interest shall
become a part of the Properties for all purposes of this Agreement
immediately upon the notice of such other Participant's election to accept
the proportionate interest therein. Such other Participant shall promptly
pay to the acquiring Participant its proportionate share of the latter's
actual out-of-pocket acquisition costs.

13.4 OPTION NOT EXERCISED. If the other Participant does not give such
notice within the 30 day period set forth in Section 13.3, it shall have no
interest in the acquired interest, and the acquired interest shall not be a
part of the Properties or be subject to this Agreement.

13.5 LANDS OWNED OR CONTROLLED BY HECLA WITHIN THE AREA OF INTEREST.

(a) Certain lands that are currently owned and controlled by Hecla
within the Area of Interest are excluded from Hecla's Properties for the
purposes of this Agreement. The excluded lands are identified on Exhibit A.
Santa Fe may, at its sole election and without further exchange of
consideration, subject the excluded lands, or any part or parts thereof, to
this Agreement by providing written notice(s) of its election to Hecla. Such
notice(s) shall specify the excluded lands, or parts thereof, for which the
election is made. Effective upon receipt of Santa Fe's notice, the
properties specified in such notice shall become a part of the Properties,
and Hecla shall, without further exchange of consideration, execute,
acknowledge

-44-

and deliver a good and sufficient deed or assignment of an undivided interest
in the formerly excluded lands equal to Santa Fe's Participating Interest in
all Assets at the time the election is made.

(b) Santa Fe's election(s) to subject excluded lands to this
Agreement under this Section 13.5 may be made at any time commencing with the
Effective Date and continuing through the earlier of 21 years from the
Effective Date or one year after Hecla hereafter notifies Santa Fe in writing
that all of the excluded lands (which remain excluded as of the time of the
notice) have become unencumbered by permitting or bonding requirements or
environmental or reclamation obligations owing to any local, state or federal
agency and are no longer the subject of any existing or threatened
governmental investigation or enforcement proceeding or public or private
litigation. Upon the expiration of such election period, Hecla may dispose
of any portion of the excluded lands for which an election has not been made.

(c) Santa Fe's election rights identified in this Section 13.5 are
not limited to a single election, but may be exercised from time to time on
various portions of the excluded lands.

(d) Notwithstanding any other provision of this Agreement, all
fixtures and facilities located on the surface of either Hecla's Properties
or the excluded lands are and shall remain the sole and separate property of
Hecla, and no election by Santa Fe respecting Hecla's Properties or the
excluded lands shall create any current or future property right in Santa Fe
to such fixtures and facilities; provided, however, Santa Fe may include in
any election under this Section such mineral-bearing materials located at or
in Hecla's surface facilities as Santa Fe may specify in making the election.
Santa Fe agrees to cooperate with Hecla to ensure Hecla has full access to
such fixtures and facilities for any purposes including, but not limited to,
the

-45-

dismantling, salvaging, closure, restoration, remediation, monitoring,
maintenance or sale of all or part of such fixtures and facilities.

ARTICLE XIV

ABANDONMENT AND SURRENDER OF PROPERTIES

14.1 SURRENDER OR ABANDONMENT OF PROPERTY. The Management Committee may
authorize the Manager to surrender or abandon part or all of the Properties.
If the Management Committee authorizes any such surrender or abandonment over
the objection of a Participant, the Participant that desires to abandon or
surrender shall transfer to the objecting Participant, by appropriate
conveyance and without cost to the surrendering Participant, all of the
surrendering Participant's interest in the property to be abandoned or
surrendered, and the abandoned or surrendered property shall cease to be part
of the Properties. If Properties to be abandoned or surrendered are included
in a mining lease or sublease, abandonment shall be conducted in accordance
with and only to the extent permitted by any appurtenant mining lease or
sublease. Any Transfer under this Section 14.1 shall not relieve the
transferring Participant of its share of liabilities to third persons arising
out of Operations conducted prior to such Transfer. Any assignment of an
interest pursuant to this Section 14.1 shall not reduce or change the
transferor's Participating Interest.

14.2 REACQUISITION. If any Properties are abandoned or surrendered
under the provisions of this Article XIV, then, unless this Agreement is
earlier terminated, neither Participant nor any Affiliate thereof shall
acquire any interest in such Properties or a right to acquire such Properties
for a period of 2 years following the date of such abandonment or surrender.
If a Participant reacquires any Properties in violation of this Section 14.2,
the other Participant may elect by notice to the reacquiring Participant
within 45 days after it has actual

-46-

notice of such reacquisition, to have such properties made subject to the
terms of this Agreement. In the event such an election is made, the
reacquired properties shall thereafter be treated as Properties, and the
costs of reacquisition shall be borne solely by the reacquiring Participant
and shall not be included for purposes of calculating the Participants'
respective Participating Interests.

ARTICLE XV

TRANSFER OF INTEREST

15.1 GENERAL. Subject to the terms of any appurtenant leases or
subleases, a Participant shall have the right to Transfer to any third party
all or any part of its interest in or to this Agreement, its Participating
Interest in an Exploration or Production Area or the Assets solely as
provided in this Article XV.

15.2 LIMITATIONS ON FREE TRANSFERABILITY. The Transfer right of a
Participant in Section 15.1 shall be subject to the following terms and
conditions:

(a) No transferee of all or any part of the interest of a
Participant in this Agreement, any Participating Interest in an Exploration
or Production Area or the Assets shall have the rights of a Participant
unless and until the transferring Participant has provided to the other
Participant notice of the Transfer, and except as provided in Sections
15.2(g) and 15.2(h), the transferee, as of the effective date of the
Transfer, has committed in writing to be bound by this Agreement to the same
extent as the transferring Participant;

(b) No Transfer permitted by this Article XV shall relieve the
transferring Participant of its share of any liability, whether accruing
before or after such Transfer, which arises out of Operations conducted prior
to such Transfer;

-47-

(d) In the event of a Transfer of less than all of a Participating
Interest in an Area, the transferring Participant and its transferee shall
act and be treated as one Participant with respect to such Area;

(e) No Participant shall Transfer any interest in this Agreement
or the Assets except by Transfer of part or all of its Participating Interest
in the Exploration or a Production Area, or both;

(f) If the Transfer is the grant of a security interest by
mortgage, deed of trust, pledge, lien or other encumbrance of any interest in
this Agreement, any Participating Interest in an Area or the Assets to secure
a loan or other indebtedness of a Participant in a bona fide transaction,
such security interest shall be subordinate to the terms of this Agreement
and the rights and interests of the other Participant hereunder. Upon any
foreclosure or other enforcement of rights in the security interest the
acquiring third party shall be deemed to have assumed the position of the
encumbering Participant with respect to this Agreement and the other
Participant, and it shall comply with and be bound by the terms and
conditions of this Agreement;

(g) If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by a Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest in
Products or proceeds therefrom prior to such distribution, such sales,
commitment or disposition shall be subject to the terms and conditions of
this Agreement;

(h) Only United States currency shall be used for Transfers for
consideration; and

-48-

(i) Regardless of the number of Transfers, the total Net Smelter
Returns interest available to be divided among all non-Participants pursuant
to Section 6.4(b)(ii) or 6.5 hereof shall not exceed the Net Smelter Returns
interest percentage determined under Section 6.4(b)(ii) or 6.5 at the time of
its creation.

15.3 PREEMPTIVE RIGHT. Except as otherwise provided in Section 15.4, if
a Participant desires to Transfer all or any part of its interest in this
Agreement, any Participating Interest in an Area or Areas, the other
Participant shall have a preemptive right to acquire such interests as
provided in this Section 15.3.

(a) A Participant desiring to Transfer all or any part of its
interest in this Agreement or its Participating Interest in an Area or Areas
or the Assets shall first offer such interest to the other Participant. The
offer shall state the price and all other pertinent terms and conditions of
the desired Transfer. The other Participant shall have 60 days from the date
such offer is delivered to notify the transferring Participant whether it
elects to acquire the offered interest at the price and on the terms and
conditions set forth in the offer. If it does so elect, the Transfer shall
be consummated promptly after notice of such election is delivered to the
transferring Participant.

(b) If the other Participant fails to so elect within the period
provided for in Section 15.3(a), the transferring Participant shall have 120
days following the expiration of such period to market and ultimately
consummate a Transfer at a price and on terms no less favorable than those
offered by the transferring Participant to the other Participant in the
notice required in Section 15.3(a).

(c) If the transferring Participant fails to consummate a Transfer
within the period set forth in Section 15.3(b), the preemptive right of the
other Participant in such offered

-49-

interest shall be deemed to be revived. Any subsequent efforts to Transfer
such interest shall be conducted in accordance with all of the procedures set
forth in this Section 15.3.

15.4 EXCEPTIONS TO PREEMPTIVE RIGHT. Section 15.3 shall not apply to
the following:

(a) Transfer by a Participant of all or any part of its
Participating Interest to an Affiliate of Hecla or Santa Fe, provided that if
the transferee ceases to be an Affiliate of Hecla or Santa Fe, it shall be
required to offer to sell such Participating Interest to the other
Participant in accordance with Section 15.3 at a price equal to the fair
market value of such Participating Interest as determined by an independent
appraiser agreed to by the Participants;

(b) Incorporation of a Participant, or corporate merger,
consolidation, amalgamation or reorganization of a Participant by which the
surviving entity shall possess substantially all of the stock, or all of the
property rights and interests, and be subject to substantially all of the
liabilities and obligations of that Participant;

(c) The grant by a Participant of a security interest in any
interest in this Agreement, any Participating Interest, or the Assets by
mortgage, deed of trust, pledge, lien or other encumbrance;

(d) A sale or other commitment or disposition of Products or
proceeds from sale of Products by a Participant upon distribution to it
pursuant to Article XI; or

(e) Transfer of all or any portion of the capital stock of a
Participant, provided that the Participating Interest or Interests of such
Participant do not constitute more than 80% of the total assets owned by such
Participant.

ARTICLE XVI

CONFIDENTIALITY

-50-

16.1 GENERAL. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section
16.2, shall not be disclosed to any third party or the public without the
prior written consent of the other Participant, which consent shall not be
unreasonably withheld.

16.2 EXCEPTIONS. The consent required by Section 16.1 shall not apply
to a disclosure:

(a) To an Affiliate, consultant, contractor or subcontractor that
has a bona fide need to be informed;

(b) To any third party to whom the disclosing Participant
contemplates a Transfer of all or any part of its interest in or to this
Agreement, its Participating Interest, or the Assets; or

(c) To a governmental agency or to the public which the disclosing
Participant believes in good faith is required by pertinent law or regulation
or the rules of any stock exchange.

In any case to which this Section 16.2 is applicable, the disclosing
Participant shall give notice to the other Participant concurrently with the
making of such disclosure. As to any disclosure pursuant to Section 16.2(a)
or (b), only such confidential information as such third party shall have a
legitimate business need to know shall be disclosed and such third party
shall first agree in writing to protect the confidential information from
further disclosure to the same extent as the Participants are obligated under
this Article XVI.

16.3 PRESS RELEASES. Santa Fe and Hecla shall consult with each other
before issuing any press release or public statement on the results of
exploration activities on the Mining Properties. Neither Hecla or Santa Fe
or Affiliates shall issue any press release or public

-51-

statement mentioning the Properties without the other Participant's prior
written approval and consent (which approval and consent shall not be
unreasonably withheld) except as required on advice of counsel, by any law or
by the rules of any exchange on which the securities of such party are
listed.

16.4 DURATION OF CONFIDENTIALITY. The provisions of this Article XVI
shall apply during the term of this Agreement and for two years following
termination of this Agreement pursuant to Section 12.1, and shall continue to
apply to any Participant who withdraws, who is deemed to have withdrawn, or
who Transfers its Participating Interest, for two years following the date of
such occurrence.

ARTICLE XVII

GENERAL PROVISIONS

17.1 NOTICES. All notices, waivers, payments and other required
communications ("Notices") to the Participants shall be in writing, and shall
be addressed respectively as follows:

To: Santa Fe Santa Fe Pacific Gold Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇, ▇▇▇. ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Land Department

and

Santa Fe Pacific Gold Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇, ▇▇▇. ▇▇▇
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Engineering and Development

To: Hecla Hecla Mining Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel

-52-

All Notices shall be given (i) by personal delivery to the Participant if
delivered during normal business hours, or (ii) by electronic communication,
with a confirmation sent by registered or certified mail return receipt
requested, or (iii) by registered or certified mail return receipt requested.
All Notices shall be effective and shall be deemed delivered (i) if by
personal delivery on the date of delivery if delivered during normal business
hours, and, if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication on the
next business day following receipt of the electronic communication, and
(iii) if solely by mail on the next business day after actual receipt. A
Participant may change its address by Notice to the other Participant.

17.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right,
power or remedy upon a breach hereof shall not constitute a waiver of any
provision of this Agreement or limit the Participant's right thereafter to
enforce any provision or exercise any right.

17.3 MODIFICATION. No modification of this Agreement shall be valid
unless made in writing and duly executed by the Participants.

17.4 FORCE MAJEURE. Except for any obligation to make payments when due
hereunder, the obligations of a Participant shall be suspended to the extent
and for the period that performance is prevented by any cause beyond its
reasonable control, including, without limitation, labor disputes (however
arising and whether or not employee demands are reasonable or within the
power of the party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other
authorization, including access and occupancy rights from surface owners,
curtailment

-53-

or suspension of activities to remedy or avoid an actual or alleged, present
or prospective violation of federal, state or local environmental standards;
acts of war or conditions arising out of or attributable to war, whether
declared or undeclared; riot, civil strife, insurrection or rebellion; fire,
explosion, earthquake, storm, flood, sink holes, drought or other adverse
weather conditions; delay or failure by suppliers or transporters of
materials, parts, supplies, services or equipment or by contractors' or
subcontractors' shortage of, or inability to obtain, labor, transportation,
materials, machinery, equipment, supplies, utilities or services; accidents;
breakdown of equipment, machinery or facilities; or any other cause whether
similar or dissimilar to the foregoing. The affected Participant shall
promptly give notice to the other Participant of the suspension of
performance, stating therein the nature of the suspension, the reasons
therefor, and the expected duration thereof. The affected Participant shall
resume performance as soon as reasonably possible.

Commercial frustration, commercial impracticability or the occurrence of
unforeseen events rendering performance hereunder uneconomical shall not
constitute an excuse of performance of any obligation imposed hereunder.

17.5 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Washington, except for its rules
pertaining to conflicts of laws.

17.6 RULE AGAINST PERPETUITIES. Any right or option to acquire any
interest in real or personal property under this Agreement must be exercised,
if at all, so as to vest such interest in the acquirer within 21 years after
the effective date of this Agreement.

-54-

17.7 FURTHER ASSURANCES. Each of the Participants agrees to take from
time to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.

17.8 SURVIVAL OF TERMS AND CONDITIONS. All provisions of this Agreement
shall survive the termination of this Agreement to the full extent necessary
for their enforcement and the protection of the Participant in whose favor
they run.

17.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. Except as otherwise
provided in the Earn-in Agreement, this Agreement contains the entire
understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter
hereof. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Participants. In the
event of any conflict between this Agreement and any Exhibit attached hereto,
the terms of this Agreement shall be controlling.

17.10 MEMORANDUM. At the request of either Participant, a
Memorandum or short form of this Agreement, as appropriate, which shall not
disclose financial information contained herein, shall be prepared and
recorded by Manager. This Agreement shall not be recorded.

17.11 SEVERABILITY. In the event that a court of competent
jurisdiction determines that any term, part or provision of this Agreement is
unenforceable, illegal, or in conflict with any federal, state, or local
laws, the Participants intend that the court reform that term, part or
provision within the limits permissible under law in a way as to approximate
most closely the intent of the Participants to this Agreement; provided that,
if the court cannot make a reformation, then that term, part or provision
shall be considered severed from this Agreement.

-55-

The remaining portions of this Agreement shall not be affected and it shall
be construed and enforced as if it did not contain that term, part or
provision.

17.12 PARAGRAPH HEADINGS. The paragraph and other headings of this
Agreement are inserted only for convenience and in no way define, limit or
describe the scope or intent of this Agreement or effect its terms and
provisions.

17.13 MONETARY AMOUNTS. All references to monetary amounts in this
Agreement refer to United States dollars.

17.14 ATTORNEYS' FEES. The prevailing party in any dispute arising
under this Agreement shall be entitled to an aware of its reasonable
attorneys' fees and costs.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: SANTA FE PACIFIC GOLD CORPORATION

/s/ B. E. ▇▇▇▇▇▇ By /s/ ▇. ▇. ▇▇▇▇▇
--------------------------- ----------------------------------
Secretary Vice President

HECLA MINING COMPANY
ATTEST:

/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------- ----------------------------------
Secretary Title Chairman
----------------------------------

-▇▇-

▇▇

▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ )
---------------------
) ss.
COUNTY OF Bernalillo )
---------------------

The foregoing instrument was acknowledged before me this ___ day of
September, 1996 by ▇. ▇. ▇▇▇▇▇ the Vice President of Santa Fe Pacific Gold
Corporation, a Delaware corporation, on behalf of said corporation.

/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Notary Public
My commission expires:

September 28, 2000
-----------------------------

STATE OF IDAHO )
) ss.
COUNTY OF Kootenai )

The foregoing instrument was acknowledged before me this 6th day of
September, 1996, by ▇▇▇▇▇▇ ▇▇▇▇▇ the Chairman of Hecla Mining Company, a
Delaware corporation, on behalf of said corporation.

/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Notary Public
My commission expires:

8-5-2000
-----------------------------

-57-

Exhibit 10.11(b) GOLDEN EAGLE OPERATING AGREEMENT

Document Metadata

Document Metadata

Table of Contents