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<br />D. The right at all times during the life of this lease to go upon said
<br />premises and every part thereof for the purpose of inspecting said
<br />premises, and the books of accounts and records of mineral workings
<br />therein, and of ascertaining whether or not said Lessee and those
<br />holding thereunder by and from it, are carrying out the terms,
<br />covenants and agreements in this lease contained,
<br />E. The right at .any time to grant a right-of-way upon, over or across
<br />all or any part of said premises for any ditch, reservoir, railroad,
<br />communication system, electric powerline, pipeline, schoolhouse or
<br />other lawful purpose; but that such grants shall be subject to the
<br />rights of Lessee.
<br />TO HAVE AND TO MOLD The above-described premises unto Lessee, its heirs,
<br />successors, assigns, or legal representatives for the term of ten (10) years,
<br />and until Twelve O'clork noon on the 26th day of March, 2000, and, except as
<br />hereinafter stated, :is long thereafter as minerals are being produced in
<br />paying quantities from said premises, and the royalties and rentals provided
<br />for herein are beinE; paid, or by any extension hereof, subject to the
<br />following terms, conditions and agreements, to-wit:
<br />1. ADVANCE MINIMUM F:OYALTY -- As minimum and advance royalty, without
<br />relation to the amount of minerals mined from the leased premises, Lessee
<br />shall pay annuall}~ in advance to Lessor the following amounts:
<br />LEASE YEAR ADVANC E MINIMUM ROYALTY
<br />1st S10G. 00
<br />2nd sloa .00
<br />3rd S10Q. 00
<br />4th S100. 00
<br />5th 5100. 00
<br />LEASE YEAR ADVANCE MINIMUM ROYALTY
<br />6th S250.00
<br />7th S250.00
<br />8th S250.00
<br />9th S250.00
<br />10th 5250.00
<br />Royalty due for minerals produced from said premises shall be
<br />credited against such advance minimum royalty until the total sum is
<br />equal to the advance minimum royalty previously paid to the State, at
<br />which time a regular monthly royalty will be due and payable as herein
<br />provided.
<br />In the event Lessee does not extract minerals from the leased
<br />premises during the primary term or any additional term so agreed to by
<br />Lessor, the minimum amounts above paid to the State will be forfeited.
<br />Acreage changes resulting from surrender or partial assignment may
<br />reduce the advance minimum royalty proportionately. Further, at the end
<br />of each five-year period, commencing from the original lease date, Lessor
<br />may reasonably change the rate or amount of advance minimum royalty to be
<br />paid by Leases,
<br />In case of as:>ignment of this lease, all advance minimum royalty paid
<br />to the State shall be carried forward and credited to the new assignee.
<br />2. PRODUCTION ROYALTY -- The royalty for any products whatever which are
<br />mined, saved, sol<1 and/or removed from the leased premises shall be based
<br />on one of the following, whichever is greater: '
<br />A. thirty cents ( 30C ) per ton of 2,000#, or
<br />forty and one Y:alf cents ( 40.SC ) per cubic yard.
<br />B. ten percent ( 1.~0 ) of the Net Returns
<br />at the first point of non-captive market sale of the product(s) as
<br />determined by t:he Colorado State Board of Land Commissioners on an
<br />individual case basis.
<br />C, five percent ( ,5~ ) of the Gross Market
<br />Value at the first point of sale.
<br />All accounting shall be validated and verified.
<br />Net Returns and Gross Market Value are defined as follows:
<br />Net Returns means the net amount received by Lessee from the sales of the
<br />products after processing, where processing is necessary for commercial
<br />use, less the actual cost of transportation from the mine to the closest
<br />feasible point of sale, less costs of processing including smelting
<br />charges and deductions and other treatment costs.
<br />Cross Market Va u,a means the value of the ore or products after
<br />extraction and at the mine, (See 39-6-106)(E)(h)-CRS),
<br />
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