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GoodMiller #2 Pit 112c Permit <br />exceed the rate of increase of die average Producer's Price Index for Construction Sand, Gravel and Crushed Stouc <br />for the previous -year period, as published by the U.S. Department of labor, Bureau of Labor Statistics. Failure to <br />comply with any new royalty rate set by Lessor may subject this lease to cancellation by thirty -day written notice by <br />Lessor. <br />Reporting of production royalty that is credited against advanced minimutn royalty is also due on or before the <br />last day of each calendar month for mining during the preceding calendar month. <br />3. EXTENSION — Lessee may have a preferential right to renew the lease or to receive a new lease, whichever may be <br />determined by Lessor to be in the best interest of the State, under the following conditions: <br />A. An advance minin►um royalty, the amount to be negotiated before expiration of the lease, will be due and <br />payable annually conunencing on the date this lease is renewed or a new lease is executed and shall <br />continue until the expiration of the new or renewed lease. This amount may be adjusted by Lessor at the end <br />of each five -year period of the renewed or new lease. <br />B, Lessee shall furnish to Lessor satisfactory evidence of plans for mining during the term of the renewed lease <br />or during; the term of a new lease. <br />C. Lessee shall furnish adequate geological evidence to Lessor that the acreage subject to the renewed or nc%v <br />lease is in fact an integral part of and contains resen es in a logical mining unit. Rltether the acreage is or is <br />not a part of a logical mining unit will be determined by Lessor. <br />D. An extension of this Lc= as determined by Lessor would be in the best interest of Lessor. <br />4. EXTENSION BY Y O )UC TION The Lease may continue in effect for a Secondary Term of ears to (fie 1l ct <br />day of August, 2031 as long as sand and gravel are being produced in paying quantities from the leased Premises. <br />Paying; quantities is defined as roduction and sales of a quantity sufficient to return to Lessor production royalty <br />payments of a mininwm of er year. Cessation of production for a period in excess of 180 days will <br />automatically remove lease from producing status unless otherwise agreed to in writing by Lessor. <br />�. ANCILLARY USE -- Lessee may remove approved minerals, and place on the Leased Premises stock piles of <br />material mined from the Leased Premises and other such equipawin as is approved by Lessor for this removal and <br />processing. All temporary ancillary uses such a; concrete plants, asphalt plants, accessory equipment, otfsite <br />aggregate materials and any other uses not specifically mentioned herein will be subject to the approval of Lessor, <br />which approval may require a yearly rental payment to Lessor of not less than Two thousand and no/100 Dollars <br />($2,000.00) per acre. Haul roads andlor access roads which do not directly benefit the Leased Premises will be <br />subject to a separate permit and approval of Lessor. <br />6. REPOK - FS AND _RF,CORDS — After operations begin, it is agreed that on or before the last day of each month <br />during the term of this lease Lessee shall submit a sworn, verified, written report to Lessor, in which report shall be <br />entered and set down the exact amount in weight of all products and the assay thereof mined and removed from said <br />Leased Premises during the preceding calendar month. Lessee agrees to keep and to have in possession complete <br />and accurate books and records showing the production and disposition of any and all substances produced on the <br />Leased Premises and to permit Lessor at all reasonable hours, to exarnine tic same or to furnish copies of same to <br />Lessor within 60 days following written request along with purchaser's support documentation. All said books and <br />records shall be retained by Lessee; and made available in Colorado to lessor for a period of not less than 10 years. <br />If any such examination shall reveal, or if either party shall discover any error or inaccuracy in its own or the other <br />party's statement, payment, calculation, or determination, then proper adjustment or correction thereof shall be made <br />as promptly as practicable thereafter, except that no adjustment or correction shall be made if more than 10 years <br />have elapsed between the time the error or inaccuracy occurred and the discovery by either party of said error or <br />inaccuracy. <br />Page 3 of 11 <br />GoodMiller #2 Pit Dec 2014 N -4 <br />