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• <br />• <br />• <br />(b) Lessee shall pay all ad valorem and personal property taxes <br />beginning for the year 2006, which year shall be prorated, and <br />continuing each year thereafter. <br />(c) When the Mining Properties are classified under Colorado law as a <br />producing mine, Lessor and Lessee shall each be responsible for its <br />allocable share of taxes which are computed on the basis of the amount <br />of proceeds from production as assessed under the Colorado method of <br />mining taxation as, for example, severance taxes. <br />(d) Excise and taxes levied on the privilege of mining shall be paid by <br />Lessee. <br />(e) The Lessee shall create a Tax Reserve Fund to assure the payment of <br />such taxes. There shall be deducted from net smelter returns on all <br />materials produced and sold from the Mining Properties, before any <br />royalties are computed 1.5% of the value there of, for the purpose of a <br />tax reserve fund for paying such taxes. Said 1.5 % deduction shall be <br />paid to the Lessor by the smelter or other ore producing agency, and the <br />same shall be held by the Lessor as a trust fund in its hand for the <br />payment, when due, of such taxes. Any surplus remaining in said tax <br />fund accumulated in the year, for which the taxes were levied after the <br />payment of taxes, shall be equitably and ratably apportioned and paid to <br />the respective parties on the basis of the applicable royalty rate paid <br />during such year. At any time after the mining properties are placed in <br />production, it is determined that said 1.5% deduction is insufficient to <br />pay such taxes, then said 1.5 % deduction may be reduced or increased <br />in such amount as may reasonably be expected to pay the taxes which <br />are to be paid there from. Depletion allowance, as defined by the United <br />States Tax code shall be apportioned between the parties as the interest <br />of the parties shall be in the ore, minerals or metals generating the <br />depletion allowance. <br />(f) The Lessee shall pay before delinquency all ad valorem taxes and <br />other governmental charges, which if failed to be paid when due could <br />result in a lien on the Mining Properties, but may in good faith contest <br />the validity or amount of any such tax. <br />9.2 Force Majeure. If Lessee should be prevented or delayed from <br />performing any of the obligations of this Lease by reason of or act of nature, <br />12 <br />