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and geological services,expenditures for transportation and subsistence of <br /> the personnel who perform the described work,expenditures for <br /> maintenance of unpatented mining claims, including fees paid to the Bureau <br /> of Land Management in lieu of assessment work.Any amount expended in <br /> or credited to any-lease year in excess of the amount set forth in the <br /> foregoing schedule shall be canned forward and credited against the work <br /> requirement for the following lease year. A lease year is a period of one(1) <br /> year commencing on the date of this Agreement or any anniversary of this <br /> Agreement. Lessee shall have no obligation,express or implied,to explore, <br /> develop,mine,or perform any work on, or for the benefit of the Mining <br /> Properties except as requited in this Section 4.1.The Lessee may explore, <br /> evaluate,develop,operate and mine the Mining Properties at such time and <br /> by such means and in such mmmer as it,in its sole discretion,deems <br /> appropriate and may build and place thereon such roads and structures as are <br /> necessary for the accomplishment of such activities. <br /> V. Royalties <br /> 5.1 Efflment of Royaalties. The Lessee shall pay the following royalties to <br /> LVssor at such time as net smelter returns are realized from the production of <br /> minerals from the Miming Properties: <br /> Gold Price Rate of Net Smelter Retum Royalty <br /> $600 or less 5.0% <br /> $600-$700 5.5% <br /> $701 -$800 6.0% <br /> $80141000 6.5% <br /> $100141500 8.0% <br /> $1501 or more 9.5%-- <br /> (a)The term. "net smelter returns"means the net amount of money or <br /> other net proceeds received from the sale of ore,concentrates,sponge, <br /> bullion, or any other form in which minerals or materials(metallic or <br /> non-metallic)are produced from the Mining Properties after deduction <br /> of taxes based upon production,all treatment charges,penalties,smelter <br /> charges,transportation costs,other charges made by a purchaser of ore <br /> or concentrate,other umpire charges which the Lessee may be required <br /> to pay and, if any portion of the production is from lands which are part <br /> of the Mining Properties covered by unpatented mining claims or federal <br /> mineral leases,any rentals,royalties or other consideration allocable to <br /> • 5 <br />