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<br /> <br />A. thirty-five cents ($ .35 )per ton of 2,000N, or fifty-five cents ($ .55 )per <br />cubic yazd. <br />B. N/A percent (_) of the Net Returns at the first point of non-captive <br />market sale of the product(s) as determined by the Colorado State Boazd of Land <br />Commissioners on an individual case basis. . <br />Royalty shall be due and payable on or before the last day of each calendar month during the <br />term of this lease for ores, minerals and other materials mined and removed for sale by Lessee during <br />the preceding calendaz month. <br />Reporting of production royairy that is credited against advanced minimum royalty is also due <br />on or before the last day of each calendaz month for mining during the preceding calendar month. <br />Within sixty days prior to the termination of each and every five-yeaz period for so long as this <br />lease remains in effect, Lessor may reappraise the property herein leased and fix and determine the rate <br />of production royalty to be paid during each yeaz of the succeeding five-yeaz period: Failure to comply <br />with any new royalty rate set by Lessor may subject this lease to cancellation by thirty-day written <br />notice by Lessor. <br />All accounting shall be validated and verified. <br />Lessor reserves the right to reasonably adjust the production royalty rate at the end of each <br />five-yeaz period of the lease if the leased premises aze not held by production. <br />4. EXTENSION- This pazagraph deleted. <br />5. EXTENSION BY PRODUCTION -This paragraph deleted. <br />6. REPORTS - Afrer operations begin, it is agreed that on or before the last day of each month during <br />the term of this lease Lessee shall submit a sworn report to Lessor, in which report shall be entered and <br />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 month, which report shall show the amount of work performed <br />during the preceding month; Lessee shall also, annually during the term of this lease, submit a sworn <br />statement to Lessor disclosing the number of tons and the assay thereof of all ores, minerals and other <br />materials mined from the premises during the preceding yeaz. Such annual statements may coincide <br />with Lessee's fiscal yeazs or with official calendaz yeazs. Further, Lessee shall furnish a map annually <br />showing all workings, depth, thicknesses and shape of any ore body with location of same tied to a <br />corner established by United States survey, certified by a licensed surveyor. Maps furnished to the <br />Colorado Division of Mines or to the Division of Mined Land Reclamation may satisfy this <br />requirement. <br />Lessee shall provide to Lessor, upon request, a complete report on prospecting and exploration <br />operations, including geologic interpretations and recoverable reserve calculations, and maps and cross <br />sections showing location of any mineral-bearing outcrops, drill holes, trenches, ore bodies and other <br />prospecting and exploration activities, along with assays showing the amount of mineral contained in <br />the ore. The records required to be maintained by Lessee and provided to Lessor upon request include <br />logs of all strata penetrated and all geologic and hydrologic conditions encountered, and copies of <br />Page 3 of 9 <br />