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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 may be imposed for, but not limited to, late payments, improper payments, <br /> errors on production reports, violation of any covenant of this Lease, or false statements made to <br /> Lessor. Penalties, taking into account the nature of the claimed deficiency, shall be determined by <br /> Lessor and may be in the form of, but not limited to, interest, fees, fines, and/or tease cancellation. <br /> Interest shall accrue on any delinquent annual rental, royalty, and other fees due under this Lease <br /> from the date the payment becomes due. Interest shall be calculated at the rate of one and one-half <br /> percent (1.5%) per month, or any fraction thereof, compounded monthly, until full payment is <br /> received by Lessor. In addition, the Lessor may charge penalties as provided in the Lessor's published <br /> fee schedules, as they may be amended 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 /> 40 acres orgovernmental lots corresponding to a quarter-quarter section for any <br /> approximately forty ( ) P <br /> PP Y <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 /> any terms or conditions hereof or to postpone the time therefor. Lessor will at all times be entitled to <br /> look solely to Lessee or his assignee shown on Lessor's books as being sole owner hereof, and for the <br /> sending of all notices required by this Lease, for the performance of all terms and conditions hereof. <br /> If an assignment of a part of this Lease is approved, a new lease designated as an assignment <br /> lease will be issued to the assignee covering the lands assigned for the balance of the term of the base <br /> lease on the mining lease form in use at the time of assignment and limited as to term as said lease is <br /> limited. The assignor will be released and discharged from all further obligations for such lands <br /> assigned, as if the same had never been a part of this Lease. <br /> 11. ASSIGNMENT CONSIDERATION -- The consideration for approval of assignment by Lessor shall be 10% of <br /> the value of any consideration tendered to Assignor by Assignee for the assignment. Divulgence of the <br /> value of these considerations shall be mandatory, in affidavit form, which form shall be presented to <br /> Lessor along with the other assignment instruments in order to obtain Lessor's approval for the <br /> assignment. An assignment does not constitute a new lease but is a continuation of the base lease. <br /> Any attempt to withhold this information shall be construed as an attempt to defraud the State of <br /> Colorado and shall render this lease null, void and nonexistent, and all moneys paid to Lessor shall be <br /> forfeited to Lessor. In addition, the current statutory fees will be paid at the time the assignment <br /> record form is submitted. <br /> 12. WEIGHTS -- It is agreed that all ores, minerals and other materials mined and taken from the Leased <br /> Premises shall be weighed and assayed and the weight and assay thereof shall be entered in due form <br /> in weight and assay records kept for such purposes by Lessee. <br /> Ton means 2000 pounds. Ton shalt be determined by Colorado State certified scales or other <br /> methods approved by Lessor. <br /> SM 102453 <br /> Page 5 of 15 <br />