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RECEPTION#: 214968, 10/01/2015 at 03:55:11 PM, 5 OF 6 PAGES, MICHELLE NAUER,
<br />CLERK & RECORDER, OURAY COUNTY, CO.
<br />provisional settlement, but shall be adjusted in subsequent statements to account for the
<br />amount of refined metal established by final settlement by such refinery.
<br />(e) Royalty Owner acknowledges that Producer shall have the right to market and sell or
<br />refrain from selling refined gold, silver, other metals, minerals or mineral products
<br />produced from the Property in any manner it may elect, and that Producer shall have the
<br />right to engage in forward sales, futures trading or commodity options trading, and other
<br />price hedging, price protection, and speculative arrangements ("Trading Activities")
<br />which may involve the possible delivery of gold, silver or other metals produced from the
<br />Property. Royalty Owner specifically acknowledges and agrees that Royalty Owner shall
<br />not be entitled to participate in the proceeds or be obligated to share in any losses
<br />generated by Producer's Trading Activities.
<br />(f)
<br />(g)
<br />Producer may, but is not obligated to, beneficiate, mill, sort, concentrate, refine, smelt, or
<br />otherwise process and upgrade the ores, concentrates, and other mineral products
<br />produced from ores mined from the Property prior to sale, transfer, or conveyance to a
<br />purchaser, user, or consumer other than Producer. Producer shall not be liable for mineral
<br />values lost in such processing under sound practices. Producer agrees to use
<br />commercially reasonable efforts to notify Royalty Owner of any shipments of any ores,
<br />concentrates, and other mineral products produced from ores mined from the Property
<br />prior to shipment with reasonable detail including, at a minimum, tonnage, expected
<br />return, and location where shipped.
<br />Producer shall be permitted to sell minerals from the Property in the form of raw ore,
<br />dore, or concentrates to an affiliated party, provided that such sales shall be considered,
<br />solely for the purpose of computing Net Value, to have been sold at prices and on terms
<br />no less favorable than those which would be extended to an unaffiliated third party under
<br />similar circumstances.
<br />(h) All minerals for which a Net Smelter Royalty is payable shall be weighed or measured,
<br />sampled and analyzed in accordance with sound mining and metallurgical practices. After
<br />such measurement, Producer may mix or commingle such ores, materials or products
<br />with ores, materials or products from other property.
<br />Royalties shall become due and payable quarterly on the last day of each month
<br />following the last day of the calendar quarter in which the same accrued. Net Smelter
<br />Royalty payments shall be accompanied by a statement showing in reasonable detail the
<br />quantities and grades of the refined metals, dore, concentrates, or other mineral products
<br />produced and sold by Producer in the preceding calendar quarter; the proceeds of sale for
<br />all metals and other mineral products on which Net Smelter Royalty is due; costs, and
<br />other deductions; and other pertinent information in sufficient detail to explain the
<br />calculation of the Net Smelter Royalty payment. Such quarterly statement shall also list
<br />the quantity and quality of any gold or silver dore which has been retained as inventory
<br />for more than sixty (60) days. Royalty Owner shall have fifteen (15) days after receipt of
<br />the statement to either (1) request that the dore be promptly sold, or (2) elect to wait until
<br />the time that refined gold or silver from such dore is actually outturned to Producer or
<br />(i)
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