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• current rental schedule of the Associated Equipment Distributors for equipment used in <br />Colorado; expenditures for servicing and maintaining the rented or owned equipment; <br />expenditures for geological mapping, surveying, sampling and assaying and metallurgical <br />test work, engineering and geological services, expenditures for transportation and <br />subsistence of the personnel who perform the described work; expenditures for <br />maintenance of unpatented mining claims, including fees paid to the Bureau of Land <br />Management in lieu of assessment work. Any amount expended in or credited to any <br />lease year in excess of the amount set forth in the foregoing schedule shall be carried <br />forward and credited against the work requirement for the following lease year. A lease <br />year is a period of one (I) year commencing on the date of this Agreement or any <br />anniversary of this Agreement. Lessee shall have no obligation, express or implied, to <br />explore, develop, mine, or perform any work on, or for the benefit of the Mining <br />Properties except as required in this Section 4.1. The Lessee may explore, evaluate, <br />develop, operate and mine the Mining Properties at such time and by such means and in <br />such manner as it, in its sole discretion, deems appropriate and may build and place <br />thereon such roads and structures as are necessary for the accomplishment of such <br />activities. <br />V. Royalties <br />5.1 Payment of Royalties The Lessee shall pay the following royalties to Lessor at such <br />time as net smelter returns are realized from the production of minerals from the Mining <br />Properties: <br />(a) The term "net smelter returns" means the net amount of money or other net <br />proceeds received from the sale of ore, concentrates, sponge, bullion, or any other <br />form in which minerals or materials (metallic or non - metallic) are produced from the <br />Mining Properties after deduction of taxes based upon production, all treatment <br />charges, penalties, smelter charges, transportation costs, other chargers made by a <br />purchaser of ore or concentrate, other umpire charges which the Lessee may be <br />required to pay and, if any portion of the production is from lands which are part of <br />the Mining Properties covered by unpatented mining claims or federal mineral <br />leases, any rentals, royalties or other consideration allocable to such land payable to <br />the United States pursuant to federal law now existing or hereafter enacted. <br />(b) The gold price for purposes of determining the royalty under this Section 5.1 <br />shall be the London final fix on gold on he London Gold Market for the week in <br />. which Lessee receives net smelter returns. <br />March 12, 2010 Amendment M- 1981 -185 4 <br />