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Company determines are economically recoverable and salable from the Property <br />(after processing and allowing for rejection of tailings), based upon calculations in <br />accordance with recognized industry standards and practices. If the base Volume of <br />2,200,000 feed tons changes from the time this lease is executed to the time <br />production of materials begins due to permit restrictions, recalculations, third party <br />interests or similar changes in the existing mine plan, then the maximum cumulative <br />amount of advanced minimum royalty the Company is required to pay during the <br />term of the Lease shall be adjusted using the above formula and new base feed ton <br />volume. <br />The Advance Minimum Royalty payment for a Lease Year shall be due on or" prior to <br />commencement of that Lease Year. Amounts paid as Advance Minimum Royalty shall be credited <br />as an advance payment of and applied to reduce Material tdnnages otherwise subject to the <br />Production Royalty pursuant to Paragraph 3, based upon the tonnage associated with the royalty rate <br />in effect at the time the Advance Minimum Royalty is paid. Sales Royalties paid pursuant to <br />Paragraph 3, after taking into account Advance Minimum Royalties paid pursuant to this Paragraph, <br />shall be applied in succeeding years to reduce amounts subsequently payable as Advance Minimum <br />Royalty. Upon termination of this Lease for any reason, the obligation to make Advance Minimum <br />Royalty payments. shall likewise terminate except as to payments that became due prior to <br />termination. <br />There is no implied covenant or obligation ofthe Company to develop or mine the Property :or to sell <br />Materials. The Company may maintain this Lease in effect for the term of the Lease by making the <br />annual Advance Minimum Royalty payments described in this Paragraph 4. <br />5. Weighing of Materials, Commingling. For purposes of calculation of Production <br />Royalty, quantities. of Materials removed from the Property on which Production Royalty is due will <br />be measured as follows: <br />A. Use of Scales. All Materials shall be weighed on a certified scale upon sale <br />and removal from the Company's Plant site. If Materials on wh}ch Production Royalty is due are <br />mixed with non-excavated materials (for example, in case of mixing sand and gravel with water and <br />Portland cement in the concrete batch Plant), then for the purpose of calculating the Production <br />Royalty, the weight of the Subject Minerals used in the mixture will be determined using the <br />certified scales at the batch Plant that measure the weight of the materials that comprise the mixture <br />and deducting the weight of the added lion-excavated materials, if necessary. <br />B. Scale Adiustments. Accuracy of the scale shall be checked and adjustments <br />made at least as often as required to continue to be certified. Records of the accuracy check and <br />adjustments shall be preserved and made available in the same manner as other records. <br />C. Commingling. The Company may commingle Materials extracted from the <br />Property with Materials extracted and removed from other properties. In order to fairly and properly <br />allocate production between properties from which commingled Materials are extracted, the pit-run <br />-3-