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Further, Lessee shall furnish annually a complete operations report to Lessor disclosing the <br /> number of tons and the assay thereof of all ores, minerals and other materials mined from the premises <br /> during the preceding year. Lessee shall also furnish in said report geologic interpretations and <br /> recoverable reserve calculations, and maps and cross sections showing location of any mineral-bearing <br /> outcrops, drill holes, trenches, ore bodies and other prospecting and exploration activities, along with <br /> assays showing the amount of mineral contained in the ore. The records required to be maintained by <br /> Lessee and provided to Lessor upon request include logs of all strata penetrated and all geologic and <br /> hydrologic conditions encountered, and copies of in-hole surveys; this information to be collected and <br /> prepared under the supervision of a qualified geologist, geological engineer or mining engineer. Other <br /> qualified persons may collect and prepare this data, if agreed to in writing between Lessee and Lessor. <br /> Any request to keep certain information confidential should be in writing to Lessor at the time such <br /> information is submitted to Lessor, and such data may be kept confidential as consistent with State <br /> law. Lessee shall submit, if requested by Lessor, such additional reports, records or documents <br /> regarding Lessee's operation on the Leased Premises as necessary for the compliance with lease <br /> provisions. <br /> 7. OVERRIDING ROYALTY LIMITATIONS -- It is agreed that this Lease or any subsequent assignment hereof <br /> shall not be burdened with overriding royalties the aggregate of which exceeds two percent (Z%) of the <br /> gross value of the minerals or ore at the first point of sale. Lessor must be notified of all overriding <br /> royalties accruing to this Lease. <br /> 8. DEVELOPMENT -- Lessee will diligently explore and develop the Leased Premises by utilizing methods <br /> of exploration commonly used in the industry, such as mapping, sampling, drilling, trenching, <br /> geophysical exploration, and laboratory analysis and wilt expend as a minimum annually the amounts <br /> set forth below: <br /> LEASE YEAR MIN EXPEND LEASE YEAR MIN EXPEND <br /> NA NA NA NA <br /> Indirectly related exploration and development work such as work done on adjacent properties, or <br /> design or construction of a mill will not be considered as diligent development of the Leased Premises <br /> unless approved by Lessor. <br /> 9. PENALTIES -- A penalty shall be imposed for, but not limited to, late payments, improper payments, <br /> operational deficiencies of any kind whatsoever, violations of any covenants of this Lease, or any false <br /> statements made to Lessor. Penalties shall be determined by Lessor unless otherwise provided for by <br /> law and may be in the form of, but not limited to, interest, fees, fines, and/or lease cancellation. Such <br /> penalties shall be taken from the Lessor's published fee schedules, as they may be amended by the <br /> Board from time to time. <br /> 10. ASSIGNMENT -- Lessee, only with written consent of Lessor, may assign this lease as to the leasehold <br /> interest of such Lessee in all or part of the lands covered hereby; not less, however, than tracts of <br /> approximately forty (40) acres or governmental lots corresponding to a quarter-quarter section for any <br /> partial assignment. <br /> No assignment of undivided interests or retention or reservation of overriding royalties will be <br /> recognized or approved by Lessor, and the effect, if any, of any such assignments or reservations will <br /> be strictly and only as between the parties thereto and outside the terms of this lease. No dispute <br /> between parties to any assignment or reservation shall operate to relieve Lessee from performance of <br /> GL 110167 Revised 9/2015 <br /> Page 4 of 13 <br />