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references to a "Lease Year," which is hereby defined to be a calendar year of 365 days <br /> (366 days in leap years). The first Lease period shall commence on the date first written <br /> above and shall end on December 31, 2004. The first full Lease Year shall begin on <br /> January 1, 2005 and shall end on December 31, 2005. The dates of beginning and ending <br /> of each subsequent Lease Year shall be reckoned in the same manner. <br /> 4. Permit Contingency. This Lease and the continuing obligations of the parties are <br /> expressly contingent upon Lessee obtaining the required permits from the State of <br /> Colorado, El Paso County and United States Corps of Engineers, if necessary, to conduct <br /> mining operations on the Property. If other required permits referenced herein are not <br /> obtained with two (2) years of execution of this Lease, this Lease shall be terminated and <br /> of no further effect and the parties shall be released from all further obligations <br /> hereunder. Lessee shall provide to Lessor a copy of all Permit Applications submitted to <br /> the State of Colorado, El Paso County, the United States Corps of Engineers, or other <br /> entities simultaneously with the filing thereof. <br /> 5. Representations. Lessee makes the following representations to Lessor, throughout the <br /> term of this Lease. <br /> (a) Lessee is a corporation duly formed, validly existing and in good standing under <br /> the laws of the State of Colorado. <br /> (b) Lessee has the requisite power and authority to enter into and perform its <br /> obligations under this Lease (to be confirmed by corporate resolution upon Lease <br /> execution). <br /> (c) The person or persons executing this Lease on behalf of Lessee are duly <br /> authorized by Lessee to do so. <br /> (d) Lessee is not in violation of any law, regulation, license, permit, or order, which <br /> violation would prevent, hinder or delay the transfer to Lessee of any licenses or <br /> permits necessary to the performance of Lessee's obligations under the Lease, <br /> and that Lessee is not in violation of anything that would hinder or delay the <br /> granting or transfer of any such licenses or permits. <br /> (e) Lessee's consolidated net worth is $20 million or more. <br /> 6. Mining. The mining of the Property, approximately 60 acres, shall begin as soon as an <br /> amendment to the DMG permit and SUP can be obtained by Lessee and integrated into <br /> Lessee's operational mining plan, and shall diligently proceed thereafter with <br /> commercially feasible mining operations so as to complete extraction of the minable <br /> Minerals on the Property within the term of this Lease. Lessee has estimated that there <br /> are approximately 4,115,000 tons of Minerals that can be extracted from the Property and <br /> sold from mining operations. <br /> 3 <br />