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the average Producer's Price Index for Construction Sand, Gravel and Crushed Stone for <br /> the previous 5-year period, as published by the U.S. Department of Labor, Bureau of <br /> Labor Statistics. Failure to comply with any new royalty rate set by Lessor may subject <br /> this Lease to cancellation by thirty-day written notice by Lessor. , <br /> Reporting of production royalty that is credited against advanced minimum royalty is <br /> also due on or before the last day of each calendar month for mining during the � <br /> preceding calendar month. E <br /> 3. ROYALTY FOR PREVIOUS,PRODUCTION -- Lessee shall make a payment of $64,727 in <br /> production royalty. Such payment shall be considered full payment of all production <br /> royalties for Lessee's removal of 161,818 tons of sand E gravel from the Leased Premises <br /> prior to execution of this Lease. Such payment shall be due at the time the Lease is <br /> executed. With acceptance of this payment the Lessor considers all past royalty <br /> payments settled and hereby releases Routt County from any further claims for such past <br /> production. <br /> 4. EXTENSION -- Lessee may have a preferential right to renew the Lease or to receive a <br /> new lease, whichever may be determined by Lessor to be in the best interest of the <br /> Lessor, under the following conditions precedent: <br /> A. An advance minimum royalty, the amount to be negotiated before expiration of j <br /> the Lease, will be due and payable annually commencing on the date this Lease E <br /> is renewed or a new lease is executed and shall continue until the expiration of <br /> the new or renewed lease. This amount may be adjusted by Lessor at the end of <br /> each five-year period of the effective date of the renewed or new lease. <br /> B. Lessee shall furnish to Lessor satisfactory evidence of plans for mining during the <br /> term of the renewed Lease or during the term of a new lease. <br /> C. Lessee shall furnish adequate geological evidence to Lessor that the acreage <br /> subject to the renewed or new lease is in fact an integral part of and contains <br /> reserves in, a logical mining unit. Whether the acreage is or is not a part of a <br /> logical mining unit will be determined by Lessor. <br /> D. An extension of this Lease as determined by Lessor would be in the best interest <br /> of.Lessor. <br /> 5. EXTENSION BY PRODUCTION - The Lease may continue in effect for a Secondary Term of I <br /> 10 years to the 8th day of January, 2035 as long as sand and gravel are being produced <br /> in paying quantities from the Leased Premises. Paying quantities is defined as production <br /> and removal from the ,Leased Premises of a quantity sufficient to return to Lessor <br /> production royalty payments of a minimum of$1,000.00 per year of the Lease. <br /> 6. REPORTS AND RECORDS -- After operations begin, it is agreed that on or before the last <br /> day of each month during the term of this Lease Lessee shall submit a sworn, verified, <br /> written report to Lesser, in which report shall be entered and set down the exact <br /> amount in weight or vt.Aume of all products and any assay information the County has <br /> obtained thereof mine.- and removed from said Leased Premises during the preceding <br /> calendar month. Lessee agrees to keep and to have in possession complete and accurate <br /> books and records showing the production and disposition of any and all substances <br /> Page 3 of 13 <br />