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A An advance minimum royalty,the amount to be negotiated before expiration of the lease.will be due and <br /> payable annually commencing 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 he adjusted by Lessor at the <br /> end of each five-year period of the renewed or new lease. <br /> B. Lessee shall furnish to Lessor satisfactory evidence of plans for ruining during the term of the renewed <br /> lease 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 new <br /> lease is in fact an integral part of and contains reserves in a logical mining unit Whether the acreage is <br /> or is not a part of a logical mining unit will be determined by Lessor. <br /> D. An extension of this Lease as determined by Lessor would he in the best interest of Lessor <br /> 4 EXTENSION BY PRODUCTION --This lease may not be held in perpetuity;however,the lease will continue in <br /> effect for so long as minerals are produced in paying quantities. Cessation of production for a period in excess of <br /> 180 consecutive days will automatically remove lease from producing status unless otherwise agreed to in writing <br /> by Lessor. Lessee shall notify Lessor of each cessation of production,the reasons therefor,and the time period <br /> during which production will or did cease. <br /> Pay ing_quantities means production sufficient to return royalties to Lessor equal to Six Thousand Dollars <br /> $( I.(X>n)per year. <br /> 5. ANCILLARY USE -- Lessee may remove approved minerals,and place on the Leased Premises stock piles of <br /> material mined from this lease and such equipment as is approved by Lessor for this removal. All other ancillary <br /> uses such as concrete plants,asphalt plants,accessory equipment,offsite aggregate materials and any other uses <br /> not specifically mentioned herein w ill he subject to the approval of Lessor and require a yearly rental payment of <br /> no less than $200.00 per acre Haul roads and/or access roads which do not directly benefit the Leased <br /> Premises will be subject to a separate permit and approval of Lessor. <br /> 6. REPORTS AND RECORDS -- 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 <br /> he entered and set down the exact amount in weight of all products and the assay thereof mined and removed from <br /> said leased premises during the preceding calendar month, Lessee agrees to keep and to have in possession <br /> complete and accurate books and records showing the production and disposition of any and all substances <br /> produced on the leased land and to permit Lessor at all reasonable hours,to examine the same or to furnish copies <br /> of same to lessor within 60 days following written request along with purchaser's support documentation.All <br /> said books and records shall be retained by Lessee and made available in Colorado to Lessor for a period of not <br /> less than 10 years.if any such examination shall reveal,or if either party shall discover any error or inaccuracy in <br /> its own or the other party's statement, payment, calculation, or determination, then proper adjustment or <br /> correction thereof shall be made as promptly as practicable thereafter,except that no adjustment or correction <br /> shall he made if more than 10 years have elapsed between the time the error or inaccuracy occurred and the <br /> discovery by either party of said error or inaccuracy. <br /> Further, Lessee shall furnish annually a complete operations report to Lessor disclosing the number of <br /> tons and the assay thereof of all ores,minerals and other materials mined from the premises during the preceding <br /> year. Lessee shall also furnish in said report geologic interpretations and recoverable reserve calculations,and <br /> maps and cross sections showing location of any mineral-bearing outcrops,drill holes, trenches,ore bodies and <br /> other prospecting and exploration activities,along with assays showing the amount of mineral contained in the <br /> ore. The records required to be maintained by Lessee and provided to Lessor upon request include logs of all <br /> strata penetrated and all geologic and hydrologic conditions encountered, and copies of in-hole surveys--this <br /> information to be collected and prepared under the supervision of a qualified geologist,geological engineer or <br /> mining engineer. Other qualified persons may collect and prepare this data. if agreed to in writing between <br /> Lessee and Lessor. Any request to keep certain information confidential should be in writing to Lessor at the tune <br /> such information is submitted to Lessor, and such data may be kept confidential as consistent with State law. <br /> Lessee shall submit, if requested by Lessor, such additional reports, records or documents regarding Lessee's <br /> operation on the Leased Premises as necessary for the compliance with lease provisions. <br /> 7. OVERRIDING ROYALTY LihtiTATIONS -- 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(2%) of the gross <br /> value of the minerals or ore at the first point of sale, Lessor must he notified of all overriding royalties accruing <br /> to this lease. <br /> 8. DEVELOPMENT -- Lessee will diligently explore and develop the Leased Premises by utilizing methods of <br /> exploration cortunonly used in the industry, such as mapping, sampling, drilling, trenching, geophysical <br /> exploration,and laboratory analysis and will expend as a minimum amorally the amounts set forth below under the <br /> heading Minimum Expenditure(Min Expend): <br /> Page 3 of 8 <br />