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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 be
<br /> entered and set down the exact amount.in weight of all products and the assay thereof mined and removed from said
<br /> Leased Premises during the preceding calendar month. Lessee agrees to keep and to have in possession complete
<br /> and accurate books and records showing the production and disposition of any and all substances produced on the
<br /> Leased'Premises and to permit Lessor at all reasonable houi.s,-to.examine the same or to furnish copies of same to
<br /> Lessor within 60 days following written'"request`along with p yrchaser's support documentation. All said books and
<br /> records shall be retained by Lessee`arid:iiiade available %ii'Coloiado to Lessor for a period of not less:than 10 years.
<br /> If any,such`examination shalI`reveal, dr if either paY.ty`shali`discoverFaiiy error or inaccuracy in its own or the other
<br /> party s statement,payment,calculation or deteraunatron,`"thegpioper ad_pstment or correction theredf'shalr be made
<br /> as promptly as practicabie'there�after,'except Ehat1n6-a'djustm'enf"or`cocrection 'shall be made if more than 10 years
<br /> have elapsed between the time the error or inaccuracy occurred and the discovery by either party of said error or
<br /> inaccuracy.
<br /> Further, Lessee shall'furnish annually'a cortiplefe`operations report to Lessor disclosing the number of tons
<br /> and the assay thereof'of all ores, minerals arid'btlie-r`ii'dterials riiined-from the preihiises during the-preceding year.
<br /> Lessee shall also furnish in said report geologic interpretations and recoveraSle reserve calculations, and maps and
<br /> cross sections showing location of any mineral--bearing—outcrops, drill 'holes, trendies, 'ore bodies and other
<br /> prospecting and exploration activities, along with assays showing the amount of mineral contained in the ore. The
<br /> records required to be maintained by Lessee and provided to Lessor upon request include logs of all strata_penetrated
<br /> and all geologic and 1`ryy&oIogic conditions`-enc6usAtered, and"copies bf in-Bole surveys; this information to be
<br /> collected and prepared under the su ervision a la- uarPied'�ecdlo is e6lo cal eir -ineer or minin engineer. Other
<br /> P P P q g B ��g gi g g o
<br /> qualified persons may collect and prepare this data, if agreed to in writing between Lessee and Lessor. Any request
<br /> to keep certain information conjfidentisl`sho ild;be'in-.%;Atingto Lessor at the time such information is submitted to
<br /> Lessor, and such data may be kept confidenfal as consiste'nt''with State law. Lessee snail submit,if requested by
<br /> Lessor, such additional reports, records or documents regarding Lessee's operation on the Leased Premises as
<br /> necessary for the compliance with lease pi'dvisions:l'
<br /> 7. OVERRIDING ROYALTY LIMITATIONS—It is agreed that this Lease or any subsequent assigrunent hereof shall
<br /> not be burdened with overriding royalties the aggregate of which exceeds two percent(2%)of the gross value of the
<br /> minerals or ore at the first point of sale. Lessor must be notified of all overriding royalties accruing to this Lease.
<br /> 8. DEVELOPMENT -- Lessee will diligently explore and develop the Leased Premises by utilizing methods of
<br /> exploration commonly used in the industry, such as mapping, sampling, drilling,trenching, geophysical exploration,
<br /> and"laboratory analysis and will expend as a mirlimuin'anrivallythe amounts set forth below:
<br /> LEASE YEAR IViIN 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 design or
<br /> constriction of a mill will not be considered as diligent development of the Leased Premises unless approved by
<br /> Lessor.
<br /> 9. PcNALTIES — A penal-: shall be imposed for, but rot limited to, la`e paymen's, improper payments, operational
<br /> defciencies of any kind whatsoever, violations of any covenants of this Lease, or any false statements made to
<br /> Lessor. Penalties shall be determined by Lessor unless otheh, se provided for by law and may be in tie form of, but
<br /> not limited to, interest, fees, fines, and/or lease cancellation. A penalty schedule shall be prepared by Lessor and
<br /> shall become effective immediately after public notice. Said schedule may be chanjed from time to time after such
<br /> notice.
<br /> I0_ ASSIGNMENT — Lessee, only withh writ--en consent of Lessor, rnay assign this lease as to the leasehold interest of
<br /> such Lessee in all or part of the lands covered hereby; not less, however, than tracts of approximately forty (40)
<br /> acres or governmental lots corresponding to a quarter-quarter section for any partial-assignment.
<br /> No assignment of undivided interests or retention or reservatloii of overriding royalties will-be recognized or
<br /> approved"by Lessor, and the effect, if any, of any "such'assignments or reservations will be strictly`acid only as
<br /> between the parties thereto and outside the'terrns of this lease. No__dispute'between parties to any assignment or
<br /> reservation shall operate to relieve Lessee frnr_n nerfgrmance of any terms or-conditions hereof or to post-Done the
<br /> time therefor. Lessor will at all times be entitled to look solely to Lessee or his assignee shown on Iessor's bcoks as
<br /> being sole owner hereof, and for the sending of all notices required by this Lease,for the performance of all terms
<br /> a.nd'cond'iV6hs hereof.
<br /> If an assignment of a pa--t of this Lease is approved, a new lease designated as an assignment lease will be
<br /> issued to the assignee covering the lands assigned for the balance of the term of the base lease on the mining lease
<br /> form in use at the time of assignment and limited as to term as said lease is limited_ The assignor'will be released
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