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• <br />• <br />• <br />V. AUDIT AND INSPECTION <br />5.1 OWNER or OWNER's agent shall have the right upon twenty (20) days written <br />notice to LESSEE to audit and inspect any records of LESSEE which are necessary to determine <br />royalties due hereunder or to determine if LESSEE is complying with prudent mining practices <br />or required reclamation plans. OWNER or OWNER's agent may copy any such records, at <br />OWNER's expense, but such records shall be kept confidential by OWNER. In addition, any <br />such audit or inspection shall be during LESSEE's normal working hours. <br />5.2 OWNER or OWNER's agent shall have the right to inspect the surface or any <br />underground workings or" any operation of LESSEE on the Leased Premises during LESSEE's <br />normal working hours, except that such inspections shall not unreasonably interfere with any <br />operations of LESSEE. <br />5.3 Any such inspections under 5.1 and 5.2 above shall be at the sole risk of <br />OWNER. <br />VI. NO IMPLIED COVENANT OF DEVELOPMENT <br />6.1 The advance minimum royalty payments to be made hereunder on an annual basis <br />shall be in lieu of and in complete substitution for any implied covenant of development of the <br />Leased Premises, the existence of any such implied covenant being denied and/or waived by <br />OWNER and LESSEE. <br />VII. TAILINGS AND DUMPS <br />7.1 OWNER assumes no environmental or other liability for ore, rocks, dumps or <br />tailings removed or disposed of by LESSEE whether on or off the leased premises. <br />s Aclient\hendrickskalaisgen\smith mining lease.rtf <br />6 < <br />