EXHIBIT 10.8
MINING LEASE
THIS MINING LEASE made and entered into this 15th day of October, 1973, by
and between TINTIC URANIUM COMPANY, a Utah corporation, having its principal
office at 1112 Walker Bank Building, Salt Lake City, Utah (hereinafter
referred to as "Lessor") and CENTENNIAL DEVELOPMENT COMPANY, a Utah
corporation, whose principal office and place of business is located at 34
Century Park-Way, Salt Lake City, Utah (hereinafter referred to as "Lessee"),
W I T N E S S E T H :
1. LEASED PREMISES AND TERM. Lessor, in consideration of the royalties
hereinafter reserved and the performance of the duties and agreements
hereinafter expressed, does hereby lease to Lessee the mineral rights, exclusive
of oil and gas, and such surface rights as Lessor owns, to the following
described lands located in San Juan County, State of Utah, to wit:
Lots One, Two, Three and Four of Section 1, in Township 31 South, of
Range 25 East, of the Salt Lake Meridian.
which mineral rights and such surface rights are hereinafter referred to as the
"Leased Premises". It is the responsibility of the Lessee to obtain from the
surface owners, permission for surface use not clearly granted to Lessor.
Documents establishing Lessor's rights in the Leased Premises are attached
hereto and by reference are made a part hereof, to wit:
1. Conveyance and Agreement dated April 3, 1954, between G. 0.
Patterson and Edna L. Patterson, and T-U Uranium Company.
2. Agreement dated April 3, 1954, between G. 0. Patterson and
Edna L. Patterson and T-U Uranium Company.
3. Conveyance, dated January 10, 1955, by T-U Uranium Company
to Tintic Uranium Company.
4. Letter of opinion, dated October 28, 1959, by Ray, Rawlings,
Jones & Henderson to Tintic Uranium Company.
TO HAVE AND TO HOLD the Leased Premises unto the Lessee for mining
purposes, including prospecting, development, mining, extraction, benefication,
milling, processing, removal and sale of ores, metals and other materials of
commercial value, except oil and gas, and for all uses reasonably incidental
thereto, for a term commencing on the date hereof for a period of ten (10)
years, with the right of renewal for like TERMS THEREAFTER, upon written
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notice to Lessor 90 days before the lease expiration date, as long as minimum
work requirements or better or minimum royalties or better, as specified below
are satisfied.
2. WORK REQUIREMENTS AND MINIMUM ROYALTIES. Lessee shall have two (2)
years from the date hereof to enter upon the Leased Premises to explore, drill,
conduct geological, geophysical and geochemical surveys, and otherwise
investigate the property, with the requirement that at least $12,000.00 be
expended on such work during the two-year period.
Thereafter, Lessee shall continue diligently to explore, develop and mine
the Leased Premises, with an annual minimum expenditure of $3,000.00.
Expenditures to be credited against minimum work requirements shall include all
expenditures made by Lessee in connection with any and all investigations,
exploration, development, mining, extraction, benefication, milling, processing,
removal and sale of ores, metals-minerals and other materials within and from
the Leased Premises, except royalties paid to Lessor, income and franchise
taxes, home office expenses and supervisory salaries not directly related to
operations on the Leased Premises, the acquisition costs of depreciable items
and allowance for depletion.
Beginning with the third year of the lease, Lessee shall pay a minimum
royalty of $250.00 per month. At the option of the Lessee, the minimum royalty
may be paid in an annual sum at the end of said lease year. Minimum royalties
paid shall be applied as a credit against actual royalties becoming due and
payable under this lease.
3. ROYALTIES. Lessor reserves to itself a royalty of six percent (6%) of
net smelter returns for all minerals, exclusive of uranium ores, thorium ores
and other ores containing fissionable materials, in recoverable amounts of 0.01%
or more.
For the purposes of computation of the royalty hereunder, "net smelter
returns" shall mean all sums received by Lessee for ores or other products from
the Leased Premises, less all transportation and treatment charges not deducted
by the purchaser. In the event that the mill or smelter to which such ores or
products are delivered is owned, operated or controlled by Lessee or its
assigns, the charges of such mill or smelter shall not be greater than those of
comparable mills or smelters for milling or smelting similar materials. Haulage
from the mine to the mill site is to be part of the mining cost and not part of
the transportation cost.
The term "net smelter return per ton", as used in this lease, shall mean,
as to any shipment, the net smelter return for that shipment divided by the
number of dry tons of ore in the shipment or the number of tons of ore
yielding the concentrate in that shipment.
On uranium ores, thorium ores, and ores containing fissionable materials,
Lessee shall pay a twenty-five percent (25%) royalty or a twenty-five percent
(25%)
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net profit, as the case may be, from such ores sold or marketed, to the Grantors
or their assigns of the Conveyance and Agreement dated April 3, 1954, and the
Agreement dated April 3, 1954, copies of both of which are attached hereto and
by reference made a part hereof. A six percent (6%) royalty shall be paid to
Lessor on the proceeds from the sale of uranium ore, thorium ore, and ores
containing fissionable materials, containing a recoverable 0.01% or more of U3O8
or other fissionable materials, free of all development, mining and operating
costs.
4. ORES FROM THE LEASED PREMISES. Ores from the Leased Premises shall not
be co-mingled with ores from other operations without permission of Lessor.
Engineering, sampling and assaying procedures used in the determination of
grades and tonnages shall be established by agreement between Lessor and Lessee.
5. PAYMENT OF AND REPORTS RELATING TO ROYALTIES. Before the end of each
month following a month in which any net smelter returns or other proceeds have
been received, or as soon thereafter as possible, Lessee shall pay the royalties
due hereunder and furnish to Lessor a report of the net smelter returns or other
proceeds received, which report shall be accompanied by copies of the mill or
smelter settlement sheets.
6. REPORTS TO LESSOR. Lessee shall furnish to Lessor within thirty (30)
days after the end of each calendar quarter, while this lease is in force:
a. A report describing Lessee's operations or activities on the
Leased Premises for the quarterly period.
b. Copies of the results of geological, geophysical and
geochemical surveys including maps, drill logs, and assays pertaining
thereto.
c. Copies of mine maps showing the current status of mine
workings on the Leased Premises.
d. In all drilling and sampling on the Leased Premises, the
Lessee shall check for the presence and content of uranium, vanadium,
thorium, and other fissionable materials, regardless of whether or not
such material is mined and sold. Assay and sampling data on these
materials shall be included in the quarterly reports.
7. INSPECTION BY LESSOR. Lessee shall permit duly authorized
representatives of Lessor at all reasonable times to enter into the workings in
the Leased Premises for the purpose of examining, inspecting, surveying or
taking such samples as such representatives may desire and for the purpose of
ascertaining whether the terms and conditions of this lease are being performed
by Lessee. Lessee's agent may accompany such representative of Lessor, but such
representative shall enter upon the premises
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at his own risk. Lessor or its representatives authorized in writing, shall at
all reasonable times have access to all records as will show compliance on the
part of Lessee with the provisions of this Lease.
8. LESSEE - INDEPENDENT OPERATOR. The Lessee hereunder is an independent
operator and all partners and employees of the Lessee, whether on a wage or
profit sharing basis, shall be selected, controlled and paid by the Lessee and
Lessee shall, at Lessee's expense, carry workmen's compensation insurance and
occupational disease compensation insurance covering all of Lessee's employees,
and Lessee shall pay any taxes required and/or make any deductions required
under the Federal Social Security Act and/or the Utah Employment Security Act
for which Lessee may become obligated and shall comply with all Utah laws, rules
and regulations or any governmental authority affecting Lessee's operations on
the Leased Premises and shall furnish to Lessor evidence of such compliance.
9. INSURANCE. Lessee will maintain public liability and property damage
insurance, with an endorsement in favor of Lessor, covering the working of the
said premises with limits of not less than $100,000 as to any claim of any one
person, not less than $300,000 for total claims for any one occurrence and not
less than $25,000 for property damage.
10. POSTING ON LEASED PREMISES. The Lessee shall forthwith post and
thereafter keep posted in conspicuous places on the Leased Premises as many
written notices as may be necessary to adequately notify all persons who may
come within or upon the Leased Premises that the same are held by Lessee under
lease from Lessor and that Lessee, and not Lessor, is liable for the payment of
all labor performed and supplies and/or materials furnished to or used by Lessee
in and upon the Leased Premises, and that Lessee, and not Lessor, shall be
responsible for all debts and expenses incurred in mining operations in or upon
the Leased Premises.
11. INDEMNITY. The Lessee shall hold Lessor harmless and fully indemnify
Lessor against all claims and demands of every kind and nature which may be made
upon Lessor or against the above described premises for or on account of any
debts or expenses contracted or incurred by the Lessee, as well as from and
against all acts, transactions or omissions by Lessee, his agents and servants,
including claims, demands, causes of action, costs and expenses arising during
the continuance of the agreement from or on account of injury to any person,
whether occasioned by any unsafe or dangerous condition of any part of the above
described premises or any workings thereon or therein by Lessee, or otherwise,
and to defend Lessor at Lessee's own cost and expense from any such liability or
asserted liability.
12. LEASE NOT TO BE ASSIGNED OR SUBLET. The Lessee shall not assign or
sublet this lease or any interest therein, or the premises affected thereby, or
any portion
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thereof, without the written consent of the Lessor, which consent shall not
unreasonably be withheld, nor allow any person not in privity with the parties
hereto to take or hold said premises, or any part thereof, under any pretense
whatsoever.
13. PROPER OPERATIONS REQUIRED. Lessee shall conduct all operations and
work on the Leased Premises in good miner-like fashion and in such a manner as
to develop the premises for the realization of the maximum economical return
therefrom and shall comply with all of the applicable mining laws and
regulations of federal, state and local authorities.
14. TAX PAYMENTS.
a. Lessor's Taxes. Lessor shall pay all Federal, state and county
taxes of any kind assessed against it on account of the receipt of
royalties paid to it by Lessee hereunder.
b. Personal Property Tax. Lessee shall pay all state and county
taxes assessed to it or to Lessor upon any improvements, machinery,
equipment, tools, supplies and other property placed in or upon the Leased
Premises by Lessee.
c. Property Tax. Lessee shall pay all state and county property tax
assessments upon the Leased Premises, except as provided in Paragraph 13e
hereof.
d. Severence Tax. "Severence" or "Production" taxes, if any, shall
be prorated among and shall be paid by Lessee and Lessor in proportion to
their respective participation in the proceeds thereof. The words
"severence" or "production" taxes, as used herein, shall not be construed
as including the tax referred to in Paragraph 13e or any tax resulting from
a valuation based upon "net annual proceeds", nor the "mining occupation
tax" referred to in Paragraph 13f.
e. Net Proceeds Tax. Taxes resulting from assessed valuation of the
Leased Premises based upon "net annual proceeds", as provided in Section
59-5-57, U.C.A. 1953, as amended, or any valuation method which may be
substituted therefor, shall, except as otherwise provided in this
paragraph, be prorated among and be paid by Lessee and Lessor in proportion
to their respective participation in such "net annual proceeds".
If for any calendar year after the termination of this lease (including
the calendar year during which the lease is terminated) the assessed
valuation of the Leased Premises based upon "net annual proceeds", shall
exceed the assessed valuation which would otherwise have resulted
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but for "net annual proceeds" from Lessee's operations conducted upon this
lease, then notwithstanding the termination of this lease, any additional
taxes which result from such difference (increase) in assessed valuation
shall be prorated among and shall be paid by Lessee and Lessor in
proportion to their respective participation in such "net annual proceeds"
which resulted in such increased valuation.
f. Mining Occupation Tax. Lessee shall be solely responsible for and
agrees to pay any operations conducted under this lease.
15. TERMINATION BY LESSOR FOR CAUSE. If there shall be a violation by
Lessee of any covenant or agreement herein contained, and Lessor shall send
by registered mail to Lessee written notice specifying such violation and
demanding possession of the premises covered by the Lease, and if at the
expiration of 90 days after the date of mailing said notice of demand, the
violation still continues, the term of this lease shall then at the option of
Lessor terminate and expire and the leasehold rights of Lessee in the Leased
Premises shall become forfeited, and this agreement shall be terminated in
its entirety; and without further demand or notice, Lessor, by its agents or
attorneys, may enter upon and into the Leased Premises and dispossess all
persons occupying the same, with or without force, and with or without
process of law, or at Lessor's option, Lessee and all persons found in
occupation of such leased premises may be proceeded against as guilty of
unlawful detainer. Failure of Lessor to exercise for any length of time any
right of forfeiture for such cause shall in no event operate as a waiver of
such right of forfeiture for such cause still continuing, or for any
reoccurrence thereof or for any different cause.
16. SURRENDER OF PREMISES ON TERMINATION. Lessee will deliver to Lessor
the premises leased herein, with the appurtenances and improvements, in good
order and condition, reasonable wear and tear and damage by natural causes and
the mining operations herein authorized except, without demand or further
notice, on the last day of the term hereof, or of any extended term, or at any
time previous upon termination hereof, provided however:
a. BROKEN ORES. That all broken ores on or in the leased premises
not shipped prior to such expiration or earlier termination may be removed
by Lessee within 90 days after termination and accounted for as herein
provided as if shipped and sold prior to termination, but if not so removed
within said 90-day period such ores shall become the property of Lessor.
b. TRACK, PIPE, ETC. All tracks, pipe and ventilating tubing on or
in the leased premises shall remain in place at the termination of the
lease and become the property of Lessor.
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c. REMOVAL OF EQUIPMENT. Upon termination of this lease and
agreement, Lessee shall have the right, within 120 days from the date of
such termination, to remove from the Leased Premises and sell sufficient
fixtures and equipment (other than track, pipe and ventilating tubing)
constructed or installed by it either on the surface or underground and not
necessary for access to shafts, main levels and adits and main haulageways
as will fully reimburse it for any undepreciated portion of the cost of
such fixtures and equipment, provided that Lessor shall have the option to
purchase, at as favorable a price and upon as favorable terms as can be
obtained by Lessee from any other person, by giving Lessee written notice
of its election to purchase such fixtures or equipment within 30 days after
the date of such termination. All such fixtures and equipment not required
to be disposed of to so reimburse Lessee and any such equipment remaining
on the Leased Premises 120 days after the date of termination of the lease
shall become the property of Lessor.
17. DELAY DUE TO CAUSES BEYOND CONTROL OF LESSEE. If Lessee shall be
delayed, or interrupted in, or prevented from, performing its obligations as
herein provided, by acts of God, fires, floods, strikes, insurrection or mob
violence, injunction, regulations or orders or requirements of government,
then and in all such cases Lessee shall for the time being, and without
liability, be excused from performance of its obligations as herein provided,
for the period of such prevention, delay or interruption; and all provisions
of this lease and agreement shall again come into full force and effect
immediately upon the termination of the period of prevention, delay or
disability resulting from any of the causes aforesaid.
18. TERMINATION BY LESSEE. Notwithstanding anything herein to the
contrary, continuance of this lease and agreement shall be optional with Lessee,
and no penalty shall accrue or be asserted against Lessee by reason of
termination by Lessee or for failure thereafter to perform any of the
conditions, terms and agreements hereof; and Lessee may terminate this lease and
agreement at any time upon giving to Lessor 60 days written notice of intention
to terminate. Thereupon any liability of Lessee hereunder shall immediately
cease and terminate, except liability on account of any obligation arising out
of its operations in the Leased Premises incurred and owing at the time of such
termination.
19. MANNER OF GIVING NOTICE. Any written notice or other writing
contemplated herein shall be sufficiently served when the same has been
deposited in the United States Mail, postage prepaid, registered and addressed
as follows:
To Lessor: Tintic Uranium Company
1112 Walker Bank Building
Salt Lake City, Utah 84111
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To Lessee: Centennial Development Company
34 Century Park-Way
Salt Lake City, Utah
or to such other addresses as Lessee and Lessor or either of them may from time
to time designate in writing.
This lease and agreement shall inure to the benefit of and be binding upon
the heirs, executors, administrators, legal representatives, successors and
assigns of the respective parties.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their respective corporate officers thereunto duly authorized and
their corporate seals to be hereunto affixed, duly attested, all as of the
day and year first hereinabove written.
TINTIC URANIUM COMPANY
ATTEST:
[SEAL]
By ILLEGIBLE
ILLEGIBLE --------------------------------
- ------------------------------ Its President
Secretary
LESSOR
CENTENNIAL DEVELOPMENT COMPANY
ATTEST
[SEAL]
By ILLEGIBLE
ILLEGIBLE --------------------------------
- ------------------------------ Its Chairman
Secretary
LESSEE
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STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 15th day of October, 1973, personally appeared before me H. E.
Raddatz who being by me duly sworn did say that he is the president of Tintic
Uranium Company, and that said instrument was signed in behalf of said
corporation by authority of a resolution of its Board of Directors, and said H.
E. Raddatz duly acknowledged to me that said corporation executed the same.
/s/ [ILLEGIBLE]
---------------------------------
NOTARY PUBLIC
Residing at Salt Lake City, Utah
[SEAL]
My Commission Expires:
/s/ [ILLEGIBLE]
- ------------------------------
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 15th day of October, 1973, personally appeared before me J.
C. Bennett who being by me duly sworn did say that he is the Chairman of
Centennial Development Company, and that said instrument was signed in behalf
of said corporation by authority of a resolution of its Board of Directors,
and said J. C. Bennett duly acknowledged to me that said corporation executed
the same.
Portia Williams
---------------------------------
NOTARY PUBLIC
Residing at Salt Lake City, Utah
My Commission Expires:
January 19, 1976
- ------------------------------
RATIFICATION AND AMENDMENT
This Ratification and Amendment is made effective this 5 day of January 1993
by and between Tintic Uranium Company, a Utah corporation (hereinafter
referred to as "Lessor") and MLP Associates, a Colorado limited partnership
(hereinafter referred to as "MLP").
RECITALS
Lessor and Centennial Development Company, a Utah corporation, entered into a
mining lease, (hereafter referred to as "Lease") dated effective the 15th day
of October 1973 covering lands located in Township 31 South, Range 25 East, SLM
and described as Lots 1, 2, 3 and 4 of Section 1 (hereinafter referred to as the
"Premises") which Lease is of record in Book 515, Page 220-228 in the records of
San Juan County, Utah.
The Lease and all rights and privileges thereunder are currently held under an
option agreement between Lisbon Copper Ltd and MLP which agreement is dated
April 20, 1988 and recorded in Book 701, Page 720 in the records of San Juan
County, Utah.
Lessor and MLP desire to adopt, ratify and confirm the Lease and to further
amend the terms as set forth in this Ratification and Amendment.
Lessor hereby ratifies the Lease, any and all amendments, assignments, subleases
or any other transfer of interest of any nature whatsoever occurring between
October 15, 1973 and the date of this agreement (of record or not of record) and
confirms that all requirements of the Lease, including but not limited to,
payments, royalties, work requirements and approvals have been complied with and
satisfied as of the date of this Ratification and Amendment.
In consideration of the payments, obligations and mutual agreements set forth
herein, Lessor and MLP agree as follows:
1. The annual minimum royalty referenced in Section 2, as amended by letter
dated June 10, 1982 shall be increased from $300.00 per year to $1,000.00
per year which payment shall be due on the anniversary of the effective date
of the Lease. MLP further agrees to pay Lessor the royalty increase of
$700.00 retroactive to the October 15, 1992 anniversary date.
2. The annual work requirement of $3,000.00 referenced in Section 2 is hereby
deleted in its entirety.
3. The net smelter return royalty of 6% for all minerals exclusive of
uranium ores, thorium ores and other ores containing fissionable
materials referenced in Section
3 shall be reduced to 3%. The royalty applicable to fissionable ores will
remain unchanged.
Except to the extent specifically amended in this Ratification and Amendment,
the Lease is and shall remain in full force and effect in accordance with its
terms.
LESSOR TINTIC URANIUM CO. MLP
/s/ Thomas A. Henry ILLEGIBLE
- ------------------------------ ------------------------------
BY: Thomas A. Henry, JR. BY:
President
STATE OF CALIFORNIA )
:SS.
County of SAN DIEGO )
On this 7 day of December, 1992, personally appeared before me Thomas
A. Henry JR., signer of the foregoing instrument who acknowledges to me he has
executed same in behalf of the Tintic Uranium Company.
/s/ Alison D. Marquardt
[SEAL] ------------------------------
Notary Public
Residing at San Diego, CA
My Commission Expires: 9/23/94
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STATE OF ARIZONA )
: SS.
County of Maracopa )
On this 5th day of January, 1993 personally appeared before me
Charles E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same on behalf of MLP Associates, A
Colorado Limited Partnership.
/s/ Sara J. Briggs
[SEAL] ------------------------------
Notary Public
Residing at 12221 N. Tatum
Phoenix, AZ 85032
My Commission Expires: Nov. 23, 1994
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