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art Il. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE- Lessee shall pay lessor rental
<br />annually and in advance for each acre or fraction thereof during
<br />the continuance of the lease at the rate of 53.00 for each lease
<br />year.
<br />(b) RENTAL CREDITS -Rental shall not be credited
<br />against either production or advance royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES -The royalty shall
<br />be 8.0 percent of the value of [he coat as set forth in the
<br />regulations. Royalties are due to Lessor the final day of the
<br />month succeeding the calendar month in which the royalty
<br />obligation accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the
<br />Lessee, [he authorized officer may accept, for a total of not more
<br />than 10 years, the payment of advance royalties in lieu of
<br />continued operation, consistent with the regulations. The
<br />advance royalty shall be based on a percent of the value of a
<br />minimum number of tons deterrrtined in the manner established
<br />by the advance royalty regulations in effect at the time the Lessee
<br />requests approval to pay advance royalties in lieu of continued
<br />operation.
<br />ec. 3. BONDS -Lessee shall maintain in [he proper office a
<br />ease bond in the amount of $5,000. The authorized officer may
<br />require an increase in this amount when additional coverage is
<br />determined appropriate.
<br />Sec. 4. DILIGENCE -This lease is subject to the conditions of
<br />diligent development and continued operation, except that these
<br />conditions are excused when operations under the lease are
<br />interrupted by strikes, the elements, or casualties not attributable
<br />to [he Lessee. The lessor, in the public interest, may suspend the
<br />condition of continued operation upon payment of advance
<br />royalties in accordance with the regulations in existence at the
<br />time of the suspension. Lessee shall submit an amended
<br />operation and reclamation plan pursuant to Section 7 of the Act
<br />(30 U.S.C. 207(c) within 3 years of the date of modification or
<br />prior to approval to commence rzrining operations.
<br />Lessor reserves the power to assent to or order [he suspension of
<br />the terms and conditions of this lease in accordance with, inter
<br />alia, Section 39 of the Mineral Leasing .4et, 30 U.S.C. 209.
<br />Sec. 5. LOGICAL MINING UNIT (LMU) -The lands
<br />contained in the original lease are included in Deserado Mine
<br />LMU, serial number COC 57190 effective September 16, 1985.
<br />Within 30 days after the effective date of this lease modification,
<br />lessee shall amend its Deserado Mine LMU to include the 160
<br />~cres added [o coal lease C-8425 by this modification. The
<br />odified land shall be segregated into another Federal coal lease
<br />~~ should the lessee fail to file such amendment.
<br />The stipulations established in an LMU approval in effect at [he
<br />time of LMU approval or modification will supersede the
<br />relevant inconsistent terms of this lease so long as the lease
<br />remains committed to the LMU. If the LMU of which this lease
<br />is a par[ is dissolved, the (ease shall then be subject to the lease
<br />terms which would have been applied if the lease had not been
<br />included in an LMU.
<br />Sec. 6. DOCUMENTS, EVIDENCEAND INSPECTION- At
<br />such times and in such form as Lessor may prescribe, Lessee
<br />shall furnish detailed statements showing the amounts and quality
<br />of all products removed and sold from the tease, the proceeds
<br />therefrom, and the amount used for production purposes or
<br />unavoidably lost.
<br />Lessee shall keep open at all reasonable times for the inspection
<br />of any duly authorized officer of Lessor, the ]eased premises and
<br />all surface and undereround improvements, works, machinery,
<br />ore stockpiles, equipment, and all books, accounts, maps, and
<br />records relative to operations, surveys, or investigations on or
<br />under the leased lands.
<br />Lessee shall allow lessor access to and copying of documents
<br />reasonably necessary to verify Lessee compliance with terms and
<br />conditions of the ]ease.
<br />While this lease remains in effect, information obtained under
<br />this section shall be closed to inspection by the public in
<br />accordance with the Freedom of Information Action (5 U.S.C.
<br />552).
<br />Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF
<br />OPERATIONS -Lessee shall comply at its own expense with
<br />all reasonable orders of the Secretazy, respecting diligent
<br />operations, prevention of waste, and protection of other
<br />resources.
<br />Lessee shall nct conduct exploration operations, other than
<br />casual use, without an approved exploration plan. All
<br />exploration plans prior to the commencement of mining
<br />operations within an approved mining permit area shall be
<br />submitted to the authorized officer.
<br />Lessee shall carry on all operations in accordance with approved
<br />methods and practices as provided in the operating regulations,
<br />having due regard for the prevention of injury to life, health, or
<br />property, and prevention of waste, damage or degradation any
<br />land, air, water, cultural, biological, visual, and other resources,
<br />including mineral deposits and formations of mineral deposits
<br />not leased hereunder, and to other land uses or users. Lessee
<br />shall take measures deemed necessary by lessor to accomplish
<br />the intent of this lease term. Such measures may include, but not
<br />limited to, modifcation to proposed siting or design of facilities,
<br />timing of operations, and specifications of interim and final
<br />reclamation procedures. Lessor reserves to itself the right to
<br />lease, sell, or otherwise dispose of the surface or other mineral
<br />Permit Revision #5 (2/2005)
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