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uses such as concrete plants, asphalt plants, accessory equipment, offsite aggregate materials and any other uses
<br />not specifically mentioned herein will be subject to the approval of Lessor and require a yearly rental payment of
<br />no less than 100.00 per acre. Haul roads and/or access roads which do not directly benefit the Leased
<br />Premises will be subject to a separate permit and approval of Lessor.
<br />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 whiClt t'eport shall
<br />be entered and set down the exact amount in weight of all products and the assay thereof mined and removed from
<br />said leased premises during the preceding calendar month. Lessee agrees to keep and to have in possession
<br />complete and accurate books and records showing the production and disposition of any attd all substances
<br />produced on the leased land and to permit Lessor at all reasonable hours, to examine the same or to furnish copies
<br />of same to Lessor within 60 days following written request along with purchaser's support documentation. All
<br />said books and records shall be retained by Lessee and made available in Colorado to Lessor for a period of not
<br />less than 10 years. If any such exatninationsltall 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, accept that no adjustment or correction
<br />shall be made if more [Iran IO years have elapsed between the time the error or inaccuracy occurred and the
<br />discovery by either party of said error or inaccuracy.
<br />Further, Lessee shall furnish annually a complete operations report to Lessor disclosing the number of
<br />tons and the assay thereof of all ores, minerals and other materials mined from the premises during the preceding
<br />year. Lessee shall also furnish itt said report geologic interpretations and recoverable reserve calculations, and
<br />maps and cross sections showing location of any mineral-bearing outcrops, drill holes, trenches, ore bodies and
<br />other prospecting and 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 he 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 information confidential should be in writing to Lessor at the time
<br />such inforntatiott is submitted to Lessor, and such data may be kept confidential as consistent with State law.
<br />Lessee shall subtttit, 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 accming
<br />to this lease.
<br />8. DEVELOPMENT -- Lessee wilt 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
<br />exploration, attd laboratory analysis and will expend 20 000 as a minimum annually. Indirectly related
<br />exploration and development work such as work done on adjacent properties, or design or construction of a mill
<br />will not be considered as diligent development of the lease unless approved by Lessor.
<br />9. PENALTIES -- A penalty shall be itttposed for, but not limited to, late payments, improper payments, operational
<br />deficiencies of any kind whatsoever, violations of any covenants of this (ease, 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 io all or part of the lands covered he{eby; not Tess, however, than tracts of approximately forty
<br />(40) acres or govermnental lots corresponditig to 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 wit' 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 [rte sending of all notices required by this lease, for the performance of all
<br />terms and conditions hereof.
<br />Yage 3 of 7
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