Mineral Lease Agreement: Definition & Sample

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What is a Mineral Lease Agreement?

A mineral lease agreement is a legal contract that grants an individual or company the right to extract minerals from a specific location for a set period. The document includes details about what can be extracted, how much can be mined, and other conditions such as government taxes.

Business owners need to know what this type of agreement entails to see if it applies to their business goals. This type of agreement may be between landowners, businesses that will do the extraction, and even businesses with an interest in the transaction. Typically this type of agreement is between a landowner and a fossil fuel company.

Common Sections in Mineral Lease Agreements

Below is a list of common sections included in Mineral Lease Agreements. These sections are linked to the below sample agreement for you to explore.

Mineral Lease Agreement Sample

THIS MINERAL LEASE AGREEMENT ("Agreement") is made effective as of the day of October 24, 2006 ("Effective Date"), between DALTON LIVESTOCK, a Nevada general partnership, and WINCHELL RANCH, a Nevada corporation, Lessors, and NEWGOLD, INC., a Delaware corporation, Lessee.

A. Lessors are owners of the surface and varying interests of the minerals in and to property described in Exhibit "A" attached hereto, which property is located in Elko County, Nevada (the "Premises").

B. Lessee desires to lease the interests of Lessors in the Premises upon the terms and conditions herein set forth.

C. Lessors desire to lease their interests in the Premises to Lessee upon the terms and conditions herein set forth.

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessors and Lessee (the "Parties" and individually a "Party") agree as follows:

A. Grant of Lease . Lessors hereby lease exclusively to Lessee and its successors and assigns all of Lessors' interest in and to all minerals, including barite, (hereafter the "Mineral Substance") except for and excluding all oil, gas, oil shale and other hydrocarbons (liquid or gaseous), coal, uranium and fissionable materials and geothermal resources, of every nature and kind (hereinafter "reserved substances") beneath the surface of, within, or that may be produced from the premises.

i. Mining and Access Rights . Subject only to any limitations imposed by federal, state and local regulations, the free, unrestricted and uninterrupted right of access, ingress and egress to the Premises over existing roads or alternate routes approved by Lessors and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing therefrom all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort, and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulageways, utility lines, reservoirs and water courses, and other improvements as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement subject to subsection F herein. Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and other Mineral Substances extracted or removed from the Premises and may sell or otherwise dispose thereof. In the exercise of such rights, Lessee shall be subject only to compliance with applicable statutes, rules, regulations and the terms of this Agreement. These rights are also granted and may be utilized for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Lessee may have or acquire any right or interest, provided Lessors assent to the same.

ii. Cross Mining . The right, if Lessee so desires, to mine and remove any Mineral Substances existing on, in or under the Premises through or by means of shafts, openings or pits which may be sunk or made upon adjoining and nearby properties, and the right to store any Mineral Substances from the Premises upon any such properties. In addition, Lessee may use the Premises for any shafts, openings, pits and storage areas sunk or made for the mining, removal and/or stockpiling of any Mineral Substances from any adjoining or nearby properties. Mineral Substances taken from the Premises shall at all times be kept entirely separate and distinct from any other ore or concentrated product until the same are measured and sampled so that the rights of Lessors shall be at all times preserved and protected

iii. Commingling . The right to commingle ore removed from the Premises or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Premises or products derived therefrom and the ore or products with which it is commingled are obtained by Lessee. Lessee shall then use that data to determine Lessors' royalty for such in minerals, metals and/or other products extracted from ores or products so mixed. Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices.

iv. Deposit of Waste Materials . The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials, process solutions, and all other materials originating from the Premises or from adjoining or nearby properties, even if the sole use of the Premises may be for the placement of such materials subject to any and all reclamation as required by state and Federal statutes and regulations, including but not limited to providing access for livestock and seeding.

v. Treatment . The right, at Lessee's election and in any manner it deems fit, to beneficiate, concentrate, process, smelt, refine, and otherwise treat on or off the Premises any Mineral Substances taken from the Premises or from adjoining or nearby properties by any physical or chemical method or methods. In exercising this right, Mineral Substances may be removed to a plant or plants existing, established or maintained upon the Premises or elsewhere.

vi. Water Rights . The right to use any of Lessors' water rights on, about, under or appurtenant to the Premises or to which the Premises are riparian to facilitate the exploration, mining and processing rights granted in this Agreement subject to approval of the Lessors which will not unreasonably be withheld if such use does not materially interfere with Lessors' livestock use of the area.

A. Term . The term of this Agreement shall commence as of the Effective Date and shall continue for a period of five years thereafter unless sooner terminated in the manner herein provided. If at the end of said five-year period, being the primary term, Lessee is engaged in Mining Operations (as defined below), the term of this Agreement shall automatically continue for so long thereafter as Lessee continues to be engaged in Mining Operations.

B. Definition of Mining Operations . For purposes of this Agreement "Mining Operations" shall include, but shall not be limited to, development, extraction, processing. leaching or sale of ores, concentrates or derivatives retrieved through leaching of ores, produced from the Premises. Activities off the Premises shall constitute Mining Operations when they are conducted in connection with an integrated mining operation involving the Premises and other properties in which Lessee holds an interest. Development includes activities, including permitting, carried on diligently and in good faith preparatory to commencing or resuming operations at a mine. Lessee shall be deemed to be actively engaged in Mining Operations so long as all such operations, once begun, do not cease for a period of more than 365 consecutive days. In the event Lessee is actively engaged in Mining Operations at the end of the primary term but at any time is unable to obtain a satisfactory market or a satisfactory price for Mineral Substances and as a result suspends mining, processing or marketing operations from time to time, then Mining Operations shall not be deemed to have ceased and this Agreement shall not expire or terminate provided that Lessee notifies Lessors of such loss of market or inability to obtain a satisfactory price and diligently attempts to market Mineral Substances at a satisfactory price and recommence operations. Mining Operations shall not be deemed to have ceased if once begun they are interrupted through Force Majeure in accordance with Section 8. If Mining Operations have not commenced at the end of the primary term because of Force Majeure conditions, the primary term shall be extended until such Force Majeure conditions cease.

C. Continuation of Use . If, at the end of the primary or extended term, Lessee is not conducting or has ceased Mining Operations, but is utilizing the Premises in support of Mining Operations on other lands, then this Agreement shall continue in force as to the lands subject to such uses and such expansions thereof as may reasonably be contemplated, as designated in good faith by Lessee, and the payment provided in Section 3.A shall be rental for such uses.

A. Annual Rental . As initial consideration for the lease rights granted herein, Lessee shall pay to Lessors Twenty Thousand Dollars ($20,000.00). Subject to Lessee's right to terminate this Agreement, Lessee shall pay the following additional amounts to Lessors as rent:

On each five year term the annual rentals shall be subject to adjustment as set forth in subsection E herein.

None of the payments made in accordance with the schedule set forth above shall be deductible as a credit against production royalties payable to Lessors pursuant to Section 3.B until production commences. After production commences no production royalties shall be due Lessors until the royalties exceed the annual $50,000.00 rental after each anniversary of the effective date. Lessee's production royalties shall be deductible as a credit against the annual payment until the royalties exceed $50,000.00 during the lease year and then paid to Lessors.

B. Production Royalty . When Lessee commences production of ores, minerals or materials from the premises, Lessee shall pay to Lessors a production royalty equal to Lessors' percentage in the mineral interest of the parcel from which production occurs as set out in Exhibit "B" of a percentage of the Net Smelter Returns (NSR) received by Lessee from the sale of said ores, minerals or materials, except for barite, from the Premises, should such amount exceed the annual rental payment specified above. The percentage of net smelter returns to which Lessors' percentage payment shall be applied or credited to Lessee's annual rental is as follows:

For all other minerals other than gold, the average fair market value at the time of production, as quoted in Metals Week or a comparable publication.

For barite, the production royalty shall be 5% of the gross revenues derived from the sale of any barite mined upon the premises adjusted to Lessors' percentage in the mineral interest in the parcel from which production occurs.

(1) If Lessee sells refined gold or silver, Lessee will be deemed to have received proceeds from the sale thereof equal to the number of ounces of refined gold or silver outturned to Lessee's account during the calendar quarter multiplied in the case of gold by the average daily London Bullion Brokers P.M. Gold Fixing during such calendar quarter and in the case of silver by the average of the daily Engelhard industrial bullion price for silver during the calendar quarter. The average price for a calendar quarter shall be determined by dividing the sum of all daily prices posted during the calendar quarter by the number of days that prices were posted The posted price shall be obtained from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source. If a posted price referenced above becomes no longer available, Lessee shall, acting reasonably, select an alternative posted price that closely approximates such original posted price. Lessee shall have the right to market and sell to third parties refined gold and silver in any manner it chooses, including the sale of such refined gold and silver on the commodity market. In this regard, Lessors shall have no right to participate in any gains and/or profits or obligation to suffer any losses accruing to Lessee as a result of forward sales, options trading, commodities futures trading or similar transactions.

(a) all costs, charges and expenses paid or incurred by Lessee for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);

(b ) all costs, charges and expenses paid or incurred by Lessee for transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of Mineral Substances from the Premises to the place or places of treatment and thence to the place or places of sale;

(3) Royalties shall accrue quarterly (based on calendar quarters) and shall become due and payable by Lessee prior to the end of the month following the end of each quarter. Royalty payments shall be accompanied by pertinent information in sufficient detail to explain the calculation of the royalty payment.

(4) All statements for royalties rendered to Lessors by Lessee during any quarter shall conclusively be presumed to be true and correct after one year following the end of such quarter unless within said one-year period Lessors takes written exception thereto and makes a claim on Lessee for adjustment. No adjustment favorable to Lessee shall be made unless it is made within the same prescribed period.

(5) Lessors, upon notice in writing to Lessee, and utilizing a designated representative, shall have the right to audit Lessee's accounts and records relating to the payment of the royalty for any calendar quarter within the one-year period following the end of such calendar quarter; provided, however, the making of any audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in the paragraph above. All audits shall be conducted by Lessors, at Lessors' sole expense, at the office of Lessee where the relevant books and records are maintained and such audit shall be conducted during normal business hours.

C. Place and Allocation of Payment . All payments shall be made and allocated in accordance with the provisions of Section 9 below.

D. No Royalty on Test Materials . Lessee shall have the right to mine and market amounts of Mineral Substances reasonably necessary for sampling. assaying. metallurgical testing and evaluation of the mineral potential of the Premises without incurring any obligation to make production royalty payments.

E. The primary term base rental shall be adjusted upward or downward, on each Fifth yearly anniversary of the effective date by an increase or decrease based on the Consumer Price Index (1982-84=100), base beginning with August 2006, published by the Bureau of Labor and Statistics, United States Department of Labor, as follows:

1. A basic index figure for the purpose herein shall be the index figure for the month of August 2006 for "all items" in the Consumer Price Index' All Urban Consumers, which is agreed to be 2039. If the corresponding index figure for the month of August immediately preceding the commencement of each FIVE (5) year term renewal of this Lease, shall vary from the basic index figure for the month of August 2006, then the base rental for the Lease term commencing on the next anniversary of the Effective Date following shall be adjusted upward or downward to an amount arrived at by multiplying the sum of $50,000.00, times the percentage increase or decrease in the basic index figure from August 2006 to the month of August preceding the commencement of said the second five year term. (Example: Based upon an August 2006 Consumer Price Index of 203.9 and an increase to 215.00 for August 2011. 215.0-203.9 = 5.44%. (5.44% X $50,000.00) + 50,000.00 = $52,720.00 rental for the succeeding five year period.

2. The adjustment of the base rental, as provided in paragraph 1 above, shall be determined as soon as the corresponding index figure to the basic index figure is available from the Bureau of Labor Statistics, United States Department of Labor, and the annual rental payment shall be adjusted accordingly. The adjusted rental shall be applicable from the beginning of each five year term, whether or not it has been calculated by said date.

3. The parties understand and agree that the provision for adjustment of base rental herein contained is intended to provide for an increase or decrease, to keep the base rental, commencing with the second five year term of this lease and each five year term thereafter equivalent to the base rental adjusted for the increase or decrease in the Consumer Price Index.

4. In the event that the Bureau of Labor Statistics, United States Department of Labor changes the form or the basis of calculating the Consumer Price Index, the parties agree that the comparable date shall be used to adjust the base rental to an amount equivalent to the purchasing power of such rental as of August, 2006. In the event the Bureau of Labor Statistics shall change the base period (now 1982-84 = 100), the new index number for the month of August, 2006 shall be substituted for the number used in this Lease.

F. Compensation for Surface Disturbance and Use. Lessors shall receive no compensation for surface damage to the Premises for the use of existing roads or alternate routes approved by Lessors.

Lessors shall receive compensation for those rights granted to Lessee set forth in subsection B on any portion of the Premises used by Lessors in excess of a total of 100 acres upon which Lessors do not hold a 100% interest in the mineral estate. Such compensation shall be at the rate of $25.00 per acre per annum which may be prorated as follows:

1. If Lessors have an interest in the mineral rights and that portion is actively being mined, the compensation shall be prorated on the basis of Lessors' interest. Example: Lessors have a 50% interest in the minerals on a parcel being actively mined. Lessors shall be compensated at the rate of $12.50 per acre per annum for any acreage in excess of 100 acres in the entire Leased area.

2. If an area in excess of 100 acres is being disturbed by the uses set forth in subsection B, and Lessors have no mineral interest in the excess acreage, Lessors shall be compensated at the rate of $25.00 per acre per annum.

3. If Lessors have an interest in the mineral estate and that portion of the Premises is not being actively mined but is occupied by the Lessee for other uses incidental to such mining operation, and the total disturbed acreage in the entire leased Premises exceeds 100 acres, Lessors shall be compensated at $25.00 per acre per annum prorated as to their interest, unless they will receive royalties from other portions of the Premises Leased.

There shall be excluded from the 100 acre limit, any portion of the Premises leased upon which Lessors own a 100% interest in the mineral estate and that portion is being actively mined.

A. Representations and Warranties . Lessors covenant and warrant to Lessee, which covenants and warranties shall survive termination of this Agreement, as follows:

(1) Lessors warrant, to the best of their knowledge and belief, there are no claims, actions, suits or proceedings pending or threatened on account of or as a result of ownership of the real property which, if adversely determined, would prevent or hinder the conditions contained in this Agreement.

(2) Lessors warrant, to the best of their knowledge and belief, they have good and merchantable title to the surface of the property, except for reservations and exceptions made by previous owners, including any reservations contained in patents issued by the United States of America or the State of Nevada and that Lessee has not entered into any leases, licenses, easements or other agreements, recorded or unrecorded, granting rights to any parties in any of the premises and no person or other entity has any right to possess in their occupancy of any portion of the premises. Notwithstanding the foregoing, nothing contained in this Agreement shall be construed to create an obligation on the part of the Lessors to take any title clearative action whatsoever, including, but not limited to, corrections to remove reservations, restrictions, restrictive easements, easements or rights-of-way of record as may exist to the date hereof.

(3) Lessors warrant that they have no knowledge of violation of law or ordinance with respect to the use of ownership of the premises.

(4) Lessors are duly organized and in good standing under the laws of the State of Nevada and has full right, power and capacity to enter into this Agreement under the terms set forth herein.

(6) Lessors have no knowledge or information indicating that any reclamation obligations for prior operations on the Premises are unsatisfied.

B. Title Defects, Defense and Protection . Lessee may at any time cause a title search to be made covering all or any part of the Premises. Lessors shall provide Lessee with any abstracts and other evidences of title in Lessors possession or control. If, (1) in the opinion of Lessee, Lessors title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessors title is contested, questioned or limited by any person or entity and Lessors are unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessors' title. In that event, Lessors shall cooperate as reasonably necessary to assist Lessee in its efforts to perfect or defend Lessors title, time being of the essence. Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C. Lesser Interest . If Lessors' mineral ownership interest in any of the Premises from which production is made is less than 100%, then the production royalty payable pursuant to Section 3.B shall be payable only as to the share of production that is attributable to Lessors actual mineral ownership interest in the portion of the Premises from which such production is made. Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent of Lessors' actual mineral interest in the Premises. This lesser interest shall not apply to the payments payable pursuant to Section 3.A.

A. Outstanding Mineral Interests. Lessee has conducted a mineral review of the Premises described in Exhibit "A" and is aware Lessors' mineral interest in the above described lands vary from NONE to 100%. Lessee shall have the obligation, to determine the outstanding mineral ownership on parcels of interest and obtain proper authorization to mine from those third parties.

B. Protection from Liens . Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder. Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee's request. Lessee shall, however, have the right in good faith to contest the validity of any lien, claim or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof. The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

C. Indemnification . Lessee shall protect Lessors against any damages arising out of Lessee's operations on the Premises and shall indemnify Lessors against liability resulting from Lessee's operations on the Premises; provided, however, that any act or omission by Lessors or any agent acting on their behalf, or any breach of warranty by Lessors, shall not have been a contributing cause to the event giving rise to any such damages.

D. Taxes and Assessments . Except as provided below, Lessee shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Premises resulting from Lessee's activities and products derived therefrom. However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessors, the validity or amount of any such taxes or assessments, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments. Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes and assessments. Lessee shall provide Lessors with copies of all receipts evidencing payment of such taxes and assessments. If Lessors should receive tax bills or claims that are the responsibility of Lessee, Lessors shall promptly forward such bills or claims to Lessee for appropriate action. Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination. Nothing in this paragraph shall be construed to obligate Lessee to pay that portion of any tax based upon an assessment of improvements or structures made or placed on the Premises by Lessors. Lessee shall not be liable for any taxes levied on or measured by Lessors' income or based upon payments made to Lessors by Lessee under this Agreement.

E. Compliance with Laws and Regulations . Lessee shall perform all of its operations on the Premises in compliance with all applicable federal, State and local laws and regulations pertaining to environmental protection, reclamation and bonding. Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, the Nevada Department of Environmental Protection, and any other regulatory authority having rightful jurisdiction in the conduct of exploration, development and production operations on the Premises, including without limitation, requirements applicable to the plugging of drill holes and reclaiming, re-contouring and re-seeding of drill pads, trenches, access roads and other disturbances. Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises. The indemnification obligations of Lessee pursuant to Section 5.B shall specifically be applicable to all of Lessee's environmental obligations. The obligations of Lessee under this Section 5.D shall survive termination of this Agreement.

F. Cooperation with Lessors' Ranching Operations. In exercising its rights hereunder, Lessee shall use reasonable efforts to avoid interfering with Lessors' ranching operations on the Premises and immediate vicinity. Such efforts shall include, but not be limited to the following:

(2) Control of dust conditions on the roads which are causing damage to livestock forage whether such roads are on or off the leased lands but within the grazing area of use.

(3) Fencing of areas which create a hazard for livestock use together with the gates and cattle guards as may be requested by Lessors.

(4) Placement of culverts at road crossings and water courses and drainage to insure natural stream flow and drainage.

(5) Reimbursement to Lessors for the full market value for all livestock killed or injured by activities of the Lessee.

(6) Placement of livestock waters comparable to those now used by Ellison in the event existing stockwater sources are damaged or inaccessible to livestock and such use adversely effects the customary grazing of livestock in the area.

G. Lessors' Right to Inspect. During the term of this Agreement Lessee shall allow Lessors and representatives of Lessors, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee's operations, at times which, in Lessee's discretion, do not unreasonably interfere with its operations. Lessors and Lessors' representatives agree to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents and corporate affiliates from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents or corporate affiliates on account of, or arising directly or indirectly from, Lessors rights under this Section 5.G. Lessors acknowledges and agrees that information obtained pursuant to this Section 5.G shall be subject to the confidentiality provisions set forth in Section 10 hereof.

H. Delivery to Data. Upon termination of this Agreement, Lessee shall furnish Lessors within a reasonable time and without warranty or liability one set of copies of all available data generated from work by or for Lessee on the Premises. Such data is to include, but not necessarily be limited to, geochemical and assay data; sample maps; geologic maps, cross sections and reports; geophysical maps, cross sections and reports; and drill logs. Lessee shall authorize and permit Lessors to take possession of any available drill core, drill cuttings, rejects and pulps derived from the Premises whether or not such materials are stored on the Premises. Lessee shall have no liability to Lessors or any third party for lack of availability or poor condition of any such cores or samples or for any deficiencies in the accuracy, reliability or completeness of any information and data furnished to Lessors. Lessors shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessors and shall indemnify and hold harmless Lessee as to any claims made by such third parties.

I. No Obligation to Mine . Nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Lessee to conduct any exploration, development or mining operations upon the Premises, it being the intent of the Parties that Lessee shall have sole discretion to determine the technical and economic feasibility, timing, method, manner and rate of conducting any such operations. Only the express duties and obligations provided under this Agreement shall be binding upon Lessee. The nature, manner and extent of all exploration development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Lessee.

At the request of Lessors, Lessee shall provide to Lessors an accounting of the expenditures made to evidence satisfaction of this obligation.

A. Termination by Lessors. In the event Lessors consider that Lessee has not complied with any obligation hereunder, Lessors shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement. If the alleged breach is not cured within 30 days after written notice is given of default for failure to make a required cash payment or 60 days after written notice is given of any other default or if Lessee has not within that time either commenced to cure the alleged breach (other than a breach for non-payment) and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessors may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessors within such 30-day or 60-day period setting forth such fact. If Lessors give written notice within 15 days of Lessee's notice that Lessors reject Lessee's position then this Agreement shall not be terminable by Lessors until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken following its affirmance by the highest court to which such an appeal is made). Failure of Lessors to give such notice shall constitute agreement by Lessors that Lessee is not in default. Lessors shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessors' damages for such default where damages are an appropriate remedy. Lessors shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessors. Neither the service of any notice nor the performance of any acts by Lessee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement. Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals or entities included within the term "Lessors."

B. Termination by Lessee . Lessee shall have the right in its sole discretion to terminate this Agreement atany time with respect to all or any part of the Premises by giving Lessors written notice of such termination. Partial termination shall not cause a reduction in the payments prescribed in Section3.A. Upon such termination, all right, title and interest of Lessee under this Agreement shall terminate with respect to the Premises affected. Lessee shall be relieved of all further obligations set forth in this Agreement as to the Premises affected except those obligations, if any, which have accrued prior to such termination. Any taxes, assessments and governmental charges for which Lessee was responsible prior to termination shall be prorated as of the termination date.

C. Release . Following termination of this Agreement as to all or a part of the Premises, Lessee shall promptly deliver to Lessors a fully executed release of this Agreement in recordable form, as to those parts of the Premises that are affected.

D. Reclamation: Removal of Property. Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation. Lessee shall within one year after the date of termination remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon except foundations of a permanent nature, supports, track and pipe placed in shafts, drifts or openings in the Premises. Any property of Lessee not removed by the end of this one-year period shall become the property of Lessors; however, Lessee does not warrant the condition or safety of any such property. Lessee shall have the right to keep a watchman on the Premises during this one-year period.

In the event that Lessors fail to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessors, Lessee shall have the right (but shall not be obligated) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessors shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including, without limitation, related attorney fees) within three months after the same are paid or incurred by Lessee. Any payments to Lessors under this Agreement may be credited by reimbursements to Lessee under this Section. The provisions of this Section shall survive termination of this Agreement.

Lessee shall not be liable for failure to perform any of its obligations, other than making payments due under Section 3A, during any period in which performance is prevented, in whole or inpart, by causes herein termed Force Majeure. For purposes of this Agreement, the term "Force Majeure" shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of suppliers or transporters of materials, parts, supplies, services or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; judgments or orders of any court or agency; inability to obtain on reasonably acceptable terms or in reasonably acceptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments. If Lessee desires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure. The time for discharging Lessee's obligations with respect to the prevented performance, or the time within which Lessee must undertake or complete any activity, shall then be extended for the period of Force Majeure.

A. Notices . Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses, or when addressed as follows and deposited, postage prepaid, in the United States mail for certified delivery: