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• <br />• <br />3.3 Cure by Lessee. If the Lessee elects to cure defects not corrected by the <br />Lessor, it may recover its curative costs from fifty percent (50 %) of the <br />value of any royalty payments thereafter accruing, to a maximum of $1,000. <br />Curative costs to the Lessee in excess of $1,000 shall be its sole <br />responsibility. <br />3.4 Title Failure After Examination Period. In the event of a title failure at <br />any time after the examination period and during the term hereof, the Lessor <br />shall not be liable therefore in damages or otherwise, and such title failure <br />shall not operate to reduce any payment due to the Lessor pursuant to this <br />Mining Lease, except to the extent such title failure is a result of <br />encumbrances or other defects in title created by, through or under the <br />Lessor and except that royalties on production payable to the Lessor shall be <br />paid only in proportion which the Lessor's interest in the part of the Mining <br />Properties from which the royalties on production occur bears to the entire <br />mineral interest therein. <br />4.1 Performance of Work. The parties have agreed that no minimum amount <br />of work will be required during the first five years of the lease term. <br />Thereafter, the Lessee agrees to expend not less than the amounts set forth <br />during each lease year on the following schedule: <br />The second year of the Mining Lease <br />The third year of the Mining. Lease <br />and each lease year thereafter <br />IV. Minimun Expenditure <br />$ 15,000 <br />$ 20,000 <br />$ 30,000; <br />Such expenditures are to be for exploration, development, mining or related <br />operations in or for the benefit of the Mining Properties. Amounts expended <br />shall include, but not by way of limitation, expenditures for test and <br />development drilling and excavations, both surface and underground; rental <br />of equipment used in operations in the leased premises or if equipment used <br />in the operations is owned by Lessee, equivalent rental computed at the <br />current rental schedule of the Associated Equipment Distributors for <br />equipment used in Colorado; expenditures for servicing and maintaining the <br />rented or owned equipment; expenditures for geological mapping, <br />surveying, sampling and assaying and metallurgical test work, engineering <br />4 <br />