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° The royalty rate shall be $1.00 per ton (D000 pounds) of sand Et gravel produced and sold from <br /> the Leased Premises during lease years 1-5. <br /> w The royalty rate shall be $1.25 per ton (2000 pounds ) ofsand Et gravel produced and Sn<d <br /> from the Leased Premises during tease years 6'1O <br /> Reporting 0fproduction royalty that iscredited against advanced nnininnunn royalty is also due onVr <br /> before the last day of each calendar month for mining during the preceding calendar month. <br /> Deductions:No |tis expressly understood and agreed that none of Lessee's exploration, mining, <br /> production or processing costs, including but not limited tO costs for materials, tabor, overhead, <br /> distribution, transportation, loading, crushing' processing, or general and administrative activities, may <br /> be deducted in computing Lessor's royalty. All such costs shalt be entirely borne by Lessee and are <br /> anticipated by the rate uf royalty set forth in this Lease. <br /> Payment: The production royalty shalt be due and payable on or before the last day of each calendar <br /> month during the term of this Lease for ores, minerals and other materials mined and removed for sale <br /> by Lessee during the preceding calendar month. Reporting Uf production royalty that iscredited <br /> against AMR is also due on or before the last day ofeach calendar month following the month of <br /> production. Payment shalt be accompanied by a settlement sheet indicating the calculation of the <br /> production royalty by the Lessee and stating the number of units of product mined and removed, the <br /> Gold Index Price, the royalty rate, and the royalty payment due the Lessor. <br /> Sampling: Royalty shalt be due on any minerals extracted or removed from the property for the <br /> purposes ofsampling, Lesdng, analysis or evaluation in order to determine nninerai values o[ the <br /> property, when such materials of value are sold or used. <br /> Within 6U days prior t0 the termination nf each and every 5-year period for soLong as this Lease <br /> remains in effect, Lessor may reasonably adjust the rate nfproduction royalty t0be paid during each <br /> year ofthe succeeding 5-year period. Failure to comply with any new royalty rate set by Lessor may <br /> subject this Lease to cancellation by3O'd3y written notice byLessor. <br /> 7. There will be no extension to the ten-year term of this Lease. <br /> O. DEVELOPMENT '- LesSeewiii 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. <br /> Exploration Plan: nExpioradonP(andetaiiing the methods tobe used for exploration and the timing <br /> of exploration activities, consistent with the plan outlined in L2s3e2`5 response to Lessor's Solicitation <br /> of Offers, shalt be submitted to Lessor within G months after the Effective Date ofthis Lease. No <br /> surface disturbance shalt occur prior to receipt of written approval of the Exploration Plan from the <br /> Lessor. 4rec\DrnOU0n plan for all areas disturbed during exploration shalt be included in the <br /> Exploration Plan. Lessor shalt notify Lessee within ]O days ifit finds, in its sole discretion, that the <br /> Page 4of18 <br />