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<br />less than 10 years. If any such examination shall reveal, or if either party shall discover any error or inaccuracy in
<br />its own or the other party's statement, payment, calculation, or determination, then proper adjustment or
<br />correction thereof shall be made as promptly as practicable thereafter, except that no adjustment or correction
<br />shall be made if more than 10 yeazs have elapsed between the time the error or inaccuracy occurred and the
<br />discovery by either party of said error or inaccuracy.
<br />RE~~~~ssee shall furnish annually a complete operations report to Lessor disclosing the number of
<br />tons and e a ~s~}' thereof of all ores, minerals and other materials mined from the premises during the preceding
<br />yea~~e~e~ 9h&I~also furnish in said report geologic interpretations and recoverable reserve calculations, and
<br />••m,,nna''~~s ,,~ cr s c 9~s showing location of any mineral-bearing outcrops, drill holes, trenches, ore bodies and
<br />~1St~SC'r p os~iteQt~ngea~~d'"exploration activities, along with assays showing the amount of mineral contained in the
<br />ore. The records required to be maintained by Lessee and provided to Lessor upon request include logs of all
<br />strata penetrated and all geologic and hydrologic conditions encountered, and copies of in-hole surveys--this
<br />information to be collected and prepared under the supervision of a qualified geologist, geological engineer or
<br />mining engineer. Other qualified persons may collect and prepare this data, if agreed to in writing between
<br />Lessee and Lessor. Any request to keep certain informationconfidential should be jn writing to Lessor at the time
<br />such information is submitted to Lessor, and sitFh data may be kept confidential as consistent with State law.
<br />Lessee shall submit, if requested, by Lessor, such additional reports, records or documents regarding Lessee's
<br />operation on the Leased Premises as necessary for the compliance with lease provisions.
<br />7. OVERRIDING ROYALTY LIMITATIONS - It is agreed that this lease or any subsequent assignment hereof
<br />shall not be burdened with overriding royalties the aggregate of which exceeds two percent (2%) of the gross
<br />value of the minerals or ore at the first point of sale. Lessor must be notified of all overriding royalties accruing -
<br />to this lease.
<br />8. DEVELOPMENT -This paragraph deleted.
<br />9. PENALTIES -- A penalty. shall be imposed for, but not limited to, late payments, improper payments, operational
<br />deficiencies 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 otherwise provided for by law and may be in the form of,
<br />but not limited to, interest, fees, fines, and/or lease cancellation. A penalty schedule shall be prepared by Lessor
<br />and shall become effective immediately after public notice. Said schedule may be changed from time to time after
<br />such notice.
<br />10. ASSIGNMENT -- Lessee, only with written consent of Lessor, may assign this' lease as 'to the leasehold interest
<br />of such Lessee in all or part of the lands covered hereby; not less, however, than tracts of approximately forty
<br />(40) acres or governmental lots correspondingto aquarter-quarter section for any partial assignment.
<br />No assignment of undivided interests or retention or reservation of overriding royalties will be recognized
<br />or approved by Lessor, and the effect, if any, of any such assignments or reservations will be strictly and only as
<br />between the parties thereto and outside the terms of this lease. No dispute between parties to any assignment or
<br />reservation shall operate to relieve Lessee from performance of any terms or conditions hereof or to postpone the
<br />time therefor. Lessor will at all times be entitled to look solely to Lessee or his assignee shown on Lessor's books
<br />as being sole owner hereof, and for the sending of all notices required by this lease, for the performance of all
<br />terms and conditions hereof.
<br />If an assignment of a part of this lease is approved, a new lease designated as an assignment will be issued
<br />to the assignee covering the lands assigned for the balance of the term of the base lease on the mining lease form
<br />in use at the time of assignment and limited as to term as said lease is limited. The assignor will be released and
<br />discharged from all further obligations for such lands assigned, a's 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 ] 0% of
<br />the value of any consideration tendered to Assignor by Assignee for the assignment. Divulgence of the value of
<br />these considerations shall be mandatory, in affidavit form, which form shall be presented to Lessor along with the
<br />other assignment instruments in order to obtain Lessor's approval for the assignment. An assignment does not
<br />constitute a new lease but is a continuation of the base lease. Any attempt to withhold this information shall be
<br />construed as an attempt to defraud the State of Colorado and shall render this lease null, void and nonexistent, and
<br />all moneys paid to Lessor shall be forfeited to Lessor. In addition, the current statutory fees will be paid at the
<br />time the assignment record form is submitted.
<br />12. WEIGHTS - It is agreed that all ores, minerals and other aaterials mined and taken frpm the leased premises
<br />shall be weighed and assayed and the weight and assay thereof shall be entered in due form in weight and assay
<br />records kept for such purposes by Lessee.
<br />Ton means 2000 pounds. Ton shall'be determined by official Colorado State certified scales or other
<br />methods approved by Lessor.
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