Exhibit 10.2
 
The State of Texas
Official Seal of The State of Texas
Austin, Texas

 
MINING LEASE
M-111331

 
WHEREAS, on the 30th day of October , 2007, Silver Standard Corporation was
issued Prospect Permits M-108543, M108545 and,
 
WHEREAS, on the 15th day of July , 2010,  Silver Standard Corporation filed in
the General Land Office its application to lease, in accordance with Chapter 53.
Subchapter B, of the Texas Natural Resources Code, the following tract(s) of
land in the State of Texas;
 
SW/4, S/2 of NW/4, SW/4 of NE/4. W/2 of SE/4, SW/4 of NE/4 of SE/4 and W/2 of
SE/4 of SE/4 of Section 7, Block 71, T-7, T&P Ry. Co.;
NW/4, NW/4 of NE/4. NW/4 of NE/4 of NE/4, N/2 of SW/4 of NE/4, and SW/4 of SW/4
of NE/4 of Section 18, Block 71, T-7, T&P Ry. Co.; and
S/2 of NE/4 of NE/4, E/2 of SW/4 of NE/4, SE/4 of NE/4, W/2 of SE/4; NE/4 of
SE/4 of SE/4, and SE/4 of SE/4 of SE/4 of Section 12, Block 72, T-7, T&P Ry,
Co., containing  860  acres, more or less, in   Hudspeth  County, Texas,
(hereinafter referred to as the "leased premises")
 
NOW, THEREFORE, in accordance with Chapter 53, Subchapter B, of the Texas
Natural Resources Code, this Mining Lease is made and entered into this 17th_day
of August . 2010. hereinafter the "effective Date", between the State of Texas
(hereinafter referred to as "LESSOR", "State of Texas" or "State"), acting by
and through the COMMISSIONER of the General Land Office of the State of Texas,
(hereinafter referred to as "COMMISSIONER") and Silver Standard Corporation of
1408 Roseland Blvd., Tyler, Texas 75701 (hereinafter referred to as "LESSEE").
LESSEE, as used herein, shall also include any successor, assignee, devisee,
legal representative or heir who acquires any right or obligation initially held
by this named LESSEE under this lease.

 
1.           GRANTING CLAUSE: For and in consideration of the amounts stated
below and of the covenants and agreements of this lease hereby agreed to be
paid, kept and performed by LESSEE, the State of Texas hereby grants, leases and
lets unto LESSEE the leased premises, for the sole and only purpose of
prospecting for, exploring for, producing, developing, mining (by drilling,
boring, open pit, underground mining, strip mining, solution mining, or any
other method permitted herein), extracting, milling, removing, and marketing the
following: beryllium, uranium. rare earth elements, all other base and precious
metals, industrial minerals and construction materials of all kinds and all
other minerals excluding oil, gas, coal, lignite, sulphur, salt and potash,
hereinafter referred to as the "named material", and the rocks, minerals and
mineral substances that are contained in or are necessarily and actually
produced in conjunction with or incidental to the named material (the named
material and the other rocks, minerals and mineral substances granted herein are
hereinafter collectively referred to as the "leased minerals"), and no other
material or mineral.
 
Additionally, there is hereby excepted and reserved to LESSOR the full use of
the property covered hereby and all rights with respect to the surface and
subsurface thereof for any and all purposes except those granted and to the
extent herein granted to the LESSEE, together with the rights of ingress and
egress and use of said lands by LESSOR and its mineral lessees, for purposes of
exploring for and producing the minerals which are not covered by the terms of
this lease, but which may be located within the surface boundaries of the leased
area. All of the rights in and to the leased premises retained by LESSOR and all
of the rights in and to the leased premises granted to LESSEE shall be exercised
in such a manner that neither shall unduly interfere with the operations of the
other.
 
The total bonus to be paid to the State of Texas as consideration paid for this
lease is One Hundred Ninety-seven Thousand Eight Hundred and No/100  Dollars
(S197,800.00), which represents a bonus of Two Hundred Thirty and No/100 Dollars
($230.00) per acre, on 860 net acres. The total bonus shall be paid in the
following manner: (a) upon delivery to LESSEE of the lease, LESSEE shall pay the
State Thirty-five Thousand and No/100 Dollars ($35,000.00); (b) upon LESSEE'S
submittal to LESSOR of ail initial plan of Operations to conduct exploration,
LESSEE shall pay the State Sixty-five Thousand and No/100 Dollars ($65,000.00);
and (c) upon LESSEE'S submittal to LESSOR of a Supplemental plan of operations
to conduct mining, LESSEE shall pay the State Ninety-seven Thousand and Eight
Hundred and No/100 Dollars ($97,800.00) LESSEE acknowledges that these bonus
payments are in addition to the Delay Rental payments set out in Section 3 of
this lease.
 
2.           TERM: Subject to the other provisions in this lease, this lease
shall be for a term of twenty (20) years from this date (hereinafter called
"primary term"), and as long thereafter as the named material shall be produced
in paying quantities from the land hereby leased. As used in this lease, fee
term "produced in paying quantities" shall be defined to mean that the receipts
from the sale of the named material and the market value (as defined in this
lease) of any named material used by LESSEE in a manner authorized by the
COMMISSIONER (excluding those amounts allocable to the State's royalties
provided for in this lease and including those amounts attributable to the
working interest as of the date of this lease) exceed Out of pocket operational
expenses for the twelve months past. Out of pocket operational expenses, as used
in this lease, shall be defined as those costs directly associated, with the
current costs of operations. Specifically, this definition shall not include the
costs of capital improvements to leased premises and fixtures affixed thereto,
and it shall not include non-cash items, Such as depreciation expenses and
depletion allowances. If after the expiration of the 20 year term this lease is
not producing in paying quantities as defined above, then a rebuttable
presumption shall arise that this lease has terminated for failure to so
produce.
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 1 OF 11

 
 

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3.           DELAY RENTAL: If production in paying quantities of the named
material has not been obtained on or before one (1) year after the date of this
lease then this lease shall terminate unless LESSEE, on or before that date,
pays in the manner prescribed in Section 27 of this lease the following sum:

 
 

 Per Acre Amount  Total Amount  $50.00     $ 44,718.30

 
In a like manner and upon payment of the amounts set out below on or before the
corresponding anniversary dates of this lease, LESSEE may defer the commencement
of said production for successive periods of one (1) year each during the
primary term hereof:

 

    Per Acre Amount     Total Amount    Anniversary Date 2013 - 2014   $ 50.00  
  $ 44,718.30    Anniversary Date 2015 - 2019   $ 75.00     $ 67.077.45  
 Anniversary Dale 2020 - 2024   $ 150.00     $ 134.154.90    Anniversary Date
2025 - 2029   $ 200.00     $ 178,873.20  

 

 
Payments under this section shall act as a rental and shall cover the privilege
of  deferring commencement of production in paying quantities of the named
material for one (1) year from the corresponding anniversary date.

 
4.           MINIMUM ADVANCE ROYALTY: Immediately upon the sale of the leased
minerals, if such sale occurs on the lease premises, or the removal of the
leased minerals in commercial quantities from the leased premises, LESSEE shall
pay in the same manner prescribed in Section 28 of this lease a Sum of Five
Hundred Thousand and No/100 Dollars ($ 500,000.00) as minimum advance royalty.
This Section 4 shall not apply to the production of waste materials as defined
in Section !4(g). The payment of the initial minimum advance royalty shall be
considered timely if it is received by the COMMISSIONER, at Austin, on or before
seven (7) days after the date of the initial commencement of production.
Thereafter, this royalty is to be so paid and received on or before the
anniversary date of this lease, in advance, for each lease year (as determined
by the anniversary dale of this lease) in which the leased minerals are produced
from the leased premises. It is understood and agreed that this minimum advance
royalty is due and payable for every year that the leased minerals are produced
from the leased premises, regardless of the amount of actual production.

Should LESSEE cease production and later re-commence production, then payment of
a minimum advance royalty shall be due and payable immediately upon
re-commencement of production in the same manner as if LESSEE were initially
commencing production. However, should LESSEE so re-commence production within
the same lease year for which a minimum advance royalty has already been
properly paid to the COMMISSIONER, then a payment shall not be due upon the
re-commencement but shall be due and payable thereafter by LESSEE in the manner
described above on or before the anniversary date of this lease, in advance2 for
each lease year in which the leased minerals are produced from the leased
premises.
 
If applicable, a minimum advance royalty paid will be credited against the first
royalty due as hereinafter provided for the leased minerals actually produced
from the leased premises during die least year for which such minimum advance
royalty was paid.

 
5.           PLAN OF OPERATIONS: Before LESSEE commences any activities
associated with mineral exploration or development that require substantially
disturbing or destroying the surface or subsurface of the leased premises,
LESSEE agrees to submit to and obtain approval from the COMMISSIONER and upon
request, submit to any surface lessee of the leased premises, for said lessee's
information, a plan of operations in compliance with all current and future
General Land Office administrative rules relating to the procedure for filing,
obtaining approval and complying with of any such plan of operations. LESSEE
also agrees to so submit amended and supplemental plans of operations as
required by said rules. The General Land Office reserves the right to require
LESSEE to furnish a bond as a condition to approval of a plan of operations. The
current and future General Land Office administrative rules relating to plans of
operations and conduct of exploration and mining operations shall determine when
and how LESSEE may commence and conduct any activities on, in, or under the
leased premises.

LESSEE is expressly placed on notice of the National Historical Preservation Act
of 1966, (PB-89-66, 80 Statute 915: 16 U.S.C.A. §470} and the Antiquities Code
of Texas, Chapter 191, Tex. Nat. Res. Code Ann, (Vernon 1996 Supp.). Before
breaking ground at a project location, lessee shall notify the Texas Historical
Commission., P.O. Box 12276, Austin, Texas 78711. An archaeological survey might
be required by the commission before construction of the project can commence.

OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 2 OF 11
 
 

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Further, in the event that any site, object, location, artifact or other feature
of archaeological, scientific, educational, cultural or historic interest is
encountered during the activities authorized by this lease, lessee will
immediately notify LESSOR and the Texas Historical Commission so that adequate
measures may be undertaken to protect or recover such discoveries or findings,
as appropriate.

6.           EXPLORATION:  It is understood and agreed that LESSEE owes LESSOR a
duty to take all steps a reasonably prudent operator would take to explore the
leased premises for the named material and to delineate the reserves thereof.
 
7.           DUTY TO MAKE MARKETABLE, PROCESS. ETC.;   (a) If the leased
minerals are capable of being economically produced by the LESSEE in commercial
quantities, it is understood and agreed that LESSEE owes LESSOR, a duty to take
all steps necessary to put the leased minerals into a marketable condition. This
may include crushing, separating, concentrating, processing or other forms of
preparing the leased minerals for sale. It is understood and agreed that LESSEE
has the duty to undertake and/or arrange to have undertaken all operations a
reasonably prudent operator would undertake in order to produce, process, and
make marketable the most valuable component or components of the leased
minerals. No cost incurred in meeting these duties is deductible in the
computation of the royalty due under this lease except where expressly allowed
in this lease. Should LESSEE not put the leased minerals into a marketable
condition as required herein, royalty due under this lease will nevertheless be
calculated upon the market value, as defined herein, of the leased minerals in a
marketable condition. Should LESSEE not put the leased minerals into their most
valuable component or components as required herein, royalty due under this
lease will nevertheless be calculated upon the market value, as defined herein2
of this most valuable component or components in a marketable condition. Neither
the bonus, rentals, nor royalties paid or to be paid hereunder shall relieve
LESSEE from any of the obligations herein expressed. The point at which these
said duties have or could have been complied with shall define "the mine" as
that phrase is used in this lease for the purposes of royalty calculation.
 
(b) Should LESSEE, in performance of those duties required in Section 7(a) of
this lease, transport the leased minerals to a location away from the leased
premises. LESSEE may deduct, for the purposes of royalty calculation, the
transportation cost, as defined by Generally Accepted Accounting Principles,
incurred in and directly allocable to that transportation of the leased minerals
from the leased premises, and no other costs, as follows:

If LESSEE actually incurs this transportation cost pursuant to a bona fide
transaction entered into at arm's length with a non-affiliated party (as defined
in Section 8(a) of this lease) of adverse economic interests, then this
transportation cost, if reasonable, may be deducted for the purposes of royalty
calculation. If this transportation cost is incurred pursuant to other than the
above-described transaction, including by means of LESSEE-owned facilities, then
this deduction shall be determined by the reasonable costs that (1) are actually
incurred by the party or parties (whether that party is LESSEE and/or some other
party) that actually performs the transportation service (hereinafter referred
to in this subsection (b) as the "transporter") and (2) are directly allocable
to this transportation of the leased minerals. Therefore, the deduction allowed
in this second type of transaction (i.e. non arm's length, etc.) shall not
include any profit margin, commission or any other similar charge that is
charged by any transporter for the performance of this transportation service.
In no event shall any transportation deduction discussed in this subsection (b)
include any transportation cost incurred for transportation within the leased
premises. In no event shall any deduction discussed in this subsection (b) be
greater than the State or Federal tariff, whichever was legally applicable, that
was in effect at the time the leased minerals were transported and that was for
comparable movement of minerals. The daduotion discussed in this subsection (b)
is subject at any time to the COMMISSIONERS review and audit. LESSEE must be
able to document these deductions to the COMMISSIONER'S satisfaction, should the
COMMISSIONER at any time request such verification, in order to properly deduct
these costs.
 
(c) LESSEE shall also have the duty to diligently market the leased minerals
that are produced, processed and made marketable as required above. (See Section
8(a) for an explanation of the allowed deductions for the costs incurred in
meeting this duty for royalty calculation purposes.)
 
8.           PRODUCTION ROYALTY: As a production royalty LESSEE agrees to pay in
the manner prescribed in Section 27 of this lease a sum equal to Eight percent
(8%) of the Market Value (as defined below) of all other leased minerals at "the
mine" (as defined in Section 7(a)) produced from the leased premises. (For the
treatment of waste material, see Section 13.)  Notwithstanding anything
contained herein, it is expressly provided in accordance with Texas Natural
Resources Code, §53.018 that if production is Obtained, the state shall receive
not less than one-sixteenth (6.25%) of the value of the leased minerals produced
from the leased premises.
 
(a) Market Value Definition and Procedure. Market value, as that phrase is used
in this lease, shall be defined to mean the higher of, at the option of the
COMMISSIONER: (1) gross proceeds received by LESSEE (e.g., the gross price paid
or offered LESSEE) from the sale of the leased minerals and including any
reimbursements for severance taxes and production related costs, or (2) highest
price for materials or minerals (a) produced from the leased premises or from
other mines and (b) that are comparable in quality to the produced leased
minerals. Price shall be determined by any generally accepted method of pricing
chosen by the COMMISSIONER, including, but not limited to, comparable sales
(e.g. prices paid or offered), published prices plus premium, and values/costs
reported to a regulatory agency. Provided, however, that in no event shall the
royalty due the State be less than the minimum royalty amounts set out in this
lease.
 
For purposes of computing and paying royalties under this lease, the market
value shall be presumed to be the gross proceeds received by LESSEE pursuant to
a bona fide transaction entered into at arms length with a non-affiliated party,
as defined hereafter, of adverse economic interests. An affiliated party is
defined for the purposes of this lease as a subsidiary, or parent of LESSEE Or
other entity in which LESSEE Of an owner of LESSEE has a financial interest by
stock ownership or otherwise of ten percent or more or one related to LESSEE or
an owner of LESSEE by blood, marriage or common business enterprise. A
non-affiliated party is defined, for the purposes of this lease, as one without
any of the above described characteristics of an affiliated party. This
presumption may be overcome and additional royalties may be assessed under
Section 8(a)(2) of this lease when a different price is established by any  of
the methods set out in that section.
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 3 OF 11
 
 
 

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Should LESSEE incur post-"mine" costs, i.e. costs other than those incurred as a
result of the LESSEE'S performance of those duties required in Section 7{a) of
this lease, then, at the option of the COMMISSIONER, the market value of the
leased minerals at "the mine" Shall be determined by the market value Of the
leased minerals, as defined above, after some or all of these post-"mine" costs
have been incurred, less these post-"mine" costs, as defined by this lease and
Generally Accepted Accounting Principles, actually incurred in and directly
allocate to out of pocket costs, charges and expenses incurred by LESSOR in: (1)
transporting run of the mine ore from the portal, pit opening or shaft collar to
the mill or other place where beneficiation, concentration or refining takes
place; (2) concentrating including the cost of milling, floatation, thickening,
regrinding, and filtering; (3) roasting (45 loading and Shipping; and (5)
handling tailings and mine waste, (such activities are hereinafter referred to
in this paragraph as "marketing"), and no other costs, as follows: If these
marketing costs are actually incurred by LESSEE pursuant to a bona fide
transaction entered into at arms length with a non-affiliated party (as defined
in Section 8(a) of this lease) of adverse economic interests, then these actual
marketing costs, if reasonable, may be deducted for the purposes of royalty
calculation. If these marketing costs are incurred pursuant to other than the
above described transaction, including by means of LESSEE-owned facilities, then
this marketing deduction shall be determined by the reasonable costs that (1)
are actually incurred by the party or parties (whether that party is LESSEE
and/or some other party) that actually perform the post-"mine" marketing
services (hereinafter referred to in this paragraph as the "marketer") and (2)
are directly allocable to this marketing of the leased minerals, Therefore, the
deduction allowed in this second type of transaction (i.e. non arm's length,
etc.) shall not include any profit margin, commission Or any Other similar
charge that is charged by any marketer for the performance of these marketing
services. In no event shall any deduction discussed in this paragraph be greater
than the lowest charge available for comparable services or products from an
unaffiliated party (defined in Section 8(a) of this lease) with economic
interests adverse to those of LESSEE. In no event shall any transportation
deduction discussed in this paragraph include any transportation cost incurred
for transportation within the "die mine". A deduction for the costs of
post-"mine" transportation shall not exceed the State or Federal tariff,
whichever was legally applicable, that was in effect at the time the leased
minerals were transported and that was for comparable movement of minerals. All
deductions discussed in this paragraph are subject at any time to the
COMMISSIONER'S review and audit LESSEE must be able to document these deductions
to the COMMISSIONER'S satisfaction, should the COMMISSIONER at any time request
such verification, in order to properly deduct these costs.
 
(b)            Gross Proceeds Definition and Procedure. For the purpose of
determining gross proceeds, the following will apply: When a LESSEE sells or
otherwise transfers the leased minerals to a purchaser or transferee by other
than a bona fide transaction entered into at arm's length with a non-affiliated
party of adverse economic interests, the COMMISSIONER, at his option, may choose
to use (1) such purchaser's or transferee's gross proceeds received from its
sale of the leased minerals or (2) the total financial benefit accruing to the
LESSEE and the purchaser or transferee for the purposes of royalty calculation
instead of the LESSEE'S gross proceeds received from the sale or transfer to
said purchaser or transferee.  LESSEE agrees to obtain and provide the
COMMISSIONER all information requested by the COMMISSIONER for the purposes of
determining the affiliation or relationship of LESSEE and a purchaser or
transferee of the leased minerals. As in the case of royalty calculation based
on the LESSEE'S gross proceeds, no costs incurred as required under this lease
are deductible for the purposes of calculating the royalty due under this lease
except where expressly allowed in this lease. Upon satisfactory evidence
provided to the COMMISSIONER and subject to the COMMISSIONER'S discretion, the
purchaser's or transferee's gross proceeds or the total of the financial benefit
accruing to LESSEE and the purchaser or transferee will not be used for royalty
calculation purposes if LESSEE demonstrates that during the relevant time period
either: (1) the purchaser or transferee was legitimately in the business of
purchasing and processing or marketing the leased minerals at issue from parties
Other than those with which it is affiliated, as defined above, and that its
transaction with the LESSEE was an arms length transaction or (2) the
transaction at issue contained terms equivalent to those of comparable
transactions between non-affiliated parties. In the event LESSEE sells or
transfers title to a material and/or mineral covered by this lease and retains a
financial interest or benefit to be returned at some later date, the
Commissioner may elect to calculate royalty due upon the total value eventually
returned to LESSEE.
 
(c)            Minimum Royalty.   Provided, however, in no event shall the
royally due under this lease be less than One Dollar ($1.00) per   pound   of
the U3O8 (yellow cake) and Forty Cents ($.40) per pound of the BeO (beryllium
oxide), contained in the ore produced from leased premises.
 
(d)            In Kind Royalty. Notwithstanding anything contained herein to the
contrary, COMMISSIONER may at the COMMISSIONER'S Option, upon not less than 60
days notice to LESSEE, require at any time or from time to time that payment of
all or any portion of the royalties accruing to the State under this lease be
made in kind (i.e. Six and 25/100 percent (6.25%)) of the gross production of
the leased minerals) at "the mine" without any deduction (including, but not
limited to, deduction far the cost of producing, separating, treating,
concentrating, processing, or storing said leased minerals or otherwise meeting
the duties set out in Section 7 of this lease).   Any leased minerals taken in
kind shall be loaded at LESSEE's expense upon the transportation provided by
LESSOR at "the mine".   The COMMISSIONER may, at the COMMISSIONER'S option, so
require such in kind payment to be so made at a point prior to "the mine". In
kind payments of the leased minerals made ready for in kind delivery during a
given calendar month shall be made on or before, at the COMMISSIONER'S
discretion, the last day of the following calendar month.
 
(e)            Payments and Reports. Unless the COMMISSIONER elects to take the
royalties stipulated in this lease in kind, all royalties not taken in kind are
to be received by the COMMISSIONER, at Austin, on or before the last day of each
calendar month for the leased minerals produced during the preceding calendar
month. For die purposes of the prior sentence only, "produced" shall be defined
in the applicable administrative rule effective when the leased minerals on
which royalty is owed were physically extracted from the leased premises. The
royalty payment shall be accompanied by an affidavit of the LESSEE or his
authorized representative completed in the following form and manner: The report
shall be based on LESSEE'S samples, assays, analyses, measurements and records
and shall set forth, using the appropriate measurements, the type and exact
amount of all materials and/or minerals produced from the leased premises during
the preceding calendar month and the amount of royalty being submitted. If any
materials and/or minerals produced from the leased premises have been sold
during the preceding calendar month, then the report shall also set out the type
and exact amount of each material and/or mineral sold during the preceding
calendar month, the gross amount received for and die market value of the same
(including the method and figures used to calculate this value as shown by any
relevant documents, records, reports or schedules), and to whom sales were made.
If these sales were made to an affiliated or related party, the report shall set
out the details of such affiliation or relationship. In addition, the report
shall be accompanied by production records, ore records, sales receipts,
invoices, weight receipts, records of mill, mint, refinery or smelter
settlements, and other pertinent returns 6r documents which shall substantiate
the selling price of the materials and/or minerals and the compliance of LESSEE
with the royalty or other provisions of this lease and any other report, record,
or document the COMMISSIONER may require to verify such compliance. If any
materials and/or minerals produced from the leased premises have been used by
LESSEE during the preceding calendar month, then the report must also indicate
the type and exact amount of each material and/or mineral so used and the method
and figures used by LESSEE to calculate the value of each material and/or
mineral so used as shown by any relevant documents, records, reports or
schedules. Each royally payment shall be accompanied by a check stub, schedule,
summary or other remittance advice showing, by the assigned General Land Office
lease number, the amount Of royalty being paid on each lease, Even if royalty
payments are not due or are taken in kind, an affidavit of the LESSEE or his
authorized representative, completed in the same form and manner as described in
this paragraph, shall be filed with the General Land Office on or before the
last day of each calendar month.
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 4 OF 11

 
 

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(f) Penalty and Interest. Delinquent royalty payments and reports shall accrue
penalty and/or interest as determined by Texas Natural Resources Code §53.024 or
its successor and any applicable administrative rule in effect at the time the
royalty payments or reports were due. As of the date of this lease, the
following are the current key penalty and interest provisions under which this
lease shall operate: If LESSEE pays royalty on or before thirty (30) days after
the royalty payment was due, then LESSEE owes a penalty of 5% on the royalty due
or $25.00, whichever is greater. A royalty payment which is over thirty (30)
days delinquent shall accrue a penalty of 10% of the royalty due or $25.00
whichever is greater. In addition to a penalty, royalties shall accrue interest
at a rate of 12% per year; such interest will begin to accrue 60 days after the
due date. Documents which are required under this lease or by law and not filed
when due shall incur a penalty in an amount set by the General Land Office
administrative rules. The LESSEE shall bear all responsibility for paying
royalties or causing such royalties to be paid in the manner prescribed in this
lease. Payment of the delinquency penalty shall in no way operate to prohibit
the State's right of forfeiture as provided by law and by this lease nor act to
postpone the date on which royalties were originally due. The above penalty
provisions shall not apply in cases of title dispute as to the State's portion
of the royalty or to that portion of the royalty in dispute as to fair market
value.

 
9.          SHUT-IN ROYALTY: If at the expiration of the primary term or at any
time thereafter: (1) the leased premises is capable of producing the named
minerals in paying quantities, and (2) this lease is not otherwise being
maintained in force and effect, then LESSEE may, at LESSEES option, pay as a
shut-in royalty, in the same manner prescribed in Section 28 of this lease, an
amount equal to Five Hundred Thousand and No/100 Dollars ($500,000.00). To be
effective, any shut-in royalty must be received by LESSOR on or before: (1) the
expiration of the primary term, or (2) not more than sixty days after LESSEE
ceases to produce the named minerals in paying quantities from the leased
premises, or (3) not more than sixty days after LESSEE completes a mining or
rehabilitation operation on the leased premises in accordance with an approved
plan of operations, whichever date is latest and must be in the full amount set
out above and this lease must have theretofore been maintained in force and
effect. The shut-in royalty payment shall be accompanied by (1) a statement by
LESSEE describing the circumstances requiring the use of this shut-In provision
and (2) an affidavit by LESSE that the mine is shut-in and not producing in
paying quantities.

If the shut-in royalty is properly paid and received, this lease shall be
considered to be a producing lease and the shut-in payment shall hold this lease
in force and effect For a period of one year from the end of the primary term or
from the first day of the month following the month in which production in
paying quantities ceased or in which said mining or rehabilitation operations
were completed, whichever date is later. After that one year period, if the
above listed conditions still exist, LESSEE may, at LESSEE'S option, continue to
hold this lease in force and effect by shut-in royalty payments for additional
and successive periods of one year each if the LESSOR receives the same shut-in
royalty amount set out above each year on or before the expiration of the
previously held one year period. If the due date of a shut-in royalty payment
should fall on a Saturday, Sunday or a legal state or federal holiday, the due
date shall be extended to the next calendar day which is not a Saturday, Sunday,
or such a holiday, it is provided, however, that shut-in royalty cannot serve to
hold this lease in force and effect for more than five years from the date this
lease is initially shut-in (i.e. from the first date of the first shut-in period
of this lease). LESSEE may proportionately reduce any shut-in payment that if
made will hold this lease in effect for less than a full year because of this
five (5) year maximum.

None of these provisions shall relieve LESSEE of the obligation of reasonable
development. Neither receipt nor retention by the LESSOR of an improperly paid
shut-in payment shall operate as ratification or a re-grant of the interest
covered by this lease if this lease terminated because of improper payment, nor
shall such receipt or retention stop LESSOR from asserting the termination of
this lease. Minimum advance royalty that has been paid shall not be credited
against a shut-in payment Lessee chooses to make. Shut-in royalty payment shall
not be credited against any production royalty due as provided in this lease for
the leased minerals actually produced during any shut-in period or thereafter.

10.           MEASURING, ASSAYING AND ANALYZING: LESSEE shall install and use
scales, meters, or any other measuring device reasonably necessary to accurately
measure the produced leased minerals, prior to said leased minerals being moved
from the leased premises.    It is understood and agreed that the COMMISSIONER
may, with reasonable notice, require the LESSEE, at any time and at the LESSEE'S
expense, to assay and/or analyze the produced leased minerals in a manner
consistent with standard techniques of the industry to determine its material or
mineral content and/or its quality.

11.           INSPECTIONS:   The books, accounts, weights, wage contracts and
records, correspondence, records, contracts and other documents relating to the
production, transportation, assaying, analyzing, processing, recovery, use,
sale, and marketing of the leased minerals shall at all times be subject to
inspection and examination by the COMMISSIONER, or the COMMISSIONER'S authorized
representative, and copies of such records shall be forwarded to the
COMMISSIONER at Austin, Texas upon request.

OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 5 OF 11
 
 

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LESSEE'S mining, milling, and processing operations shall be subject at any time
to inspection by the COMMISSIONER or the COMMISSIONER'S authorized
representative. This inspection right shall include, but shall not be limited
to, the following: the COMMISSIONER or the COMMISSIONER'S authorized
representative is authorized (1) to check scales, sampling and assaying
procedures as to their accuracy, (2) to have full access to any of the entries,
shafts, pits. slopes or workings on the leased premises and to any of LESSEE'S
other mining, milling and processing operations, and (3) to examine, inspect,
survey and take measurements Of same and to examine all books and weight sheets,
records and any Other documents that relate to these operations or that may show
in any way the material or mineral output of the leased premises or any Other
aspect of compliance with the covenants or conditions of this lease, whether
express or implied. Copies of any records or other documents pertaining to these
operations shall be furnished to the COMMISSIONER upon written request. LESSEE
shall cooperate in such manner as shall be reasonably necessary for said
inspection, survey, or examination. All inspections, examinations, and the like
provided for herein may be performed at any lime and without any requirement of
prior notice.

 
12.          LIEN:  By acceptance of this lease, LESSEE pants the State, in
addition to any applicable statutory lien, an express contractual Hen on and
security interest in all leased minerals in and extracted from the leased
premises, all proceeds which may accrue to LESSEE from the sale of such leased
minerals, whether such proceeds are held by LESSEE or by a third party, and all
fixtures on and improvements to the leased premises used in connection with the
production or processing of such leased minerals in order to secure the payment
of all royalties or other amounts due or to become due under this lease and to
secure payment of any damages or loss that LESSOR may Suffer by reason of
LESSEE'S breach of any covenant or condition of this lease, whether express or
implied. This lien and security interest may be foreclosed with or without court
proceedings in the manner provided in Title 1. Chapter 9 of the Texas Business
and Commerce Code.

 
LESSEE agrees that the COMMISSIONER may require LESSEE to execute and record
such instruments as may be reasonably necessary to acknowledge, attach or
perfect this lien. LESSEE hereby represents that there are no prior or superior
liens arising from and relating to LESSEE'S activities upon the above-described
property or from LESSEE'S acquisition of this lease. Should the COMMISSIONER at
any time determine that this representation is not true, then the COMMISSIONER
may declare this lease forfeited as provided in Section 18 of this lease.
 
13.          REQUIRED FILINGS: A log, sample analysis, or other information
obtained from each test drilled or area sampled on the area covered by this
lease shall be filed with the General Land Office upon request.   Within ninety
(90) days after any sampling, drilling, mining Of Other evaluation program shall
have been completed or abandoned, LESSEE shall file in the General Land Office
an evaluation map or plat showing all geological formations penetrated, the
depth, thickness, grade, and mineral character of all ore bodies, the water
bearing strata, the elevation and location of all test holes, and other
pertinent information, The correctness of such map or plat shall be sworn to by
LESSEE or his representative.  Further, LESSEE must furnish annually on the
anniversary date of this lease a map or plat showing all activities and workings
conducted on or in association with this lease. The filings discussed in this
section shall be required notwithstanding the fact that this lease may have
subsequently terminated, been forfeited or been released.
 
14.          DEVELOPMENT:   If the leased minerals are capable of being
economically produced by the LESSEE in commercial quantities, LESSEE agrees to
diligently develop the leased premises into a viable mine and to mine the leased
minerals in such a manner as is consistent with good mining practice including,
but not limited to, in a manner consistent with General Land Office and Railroad
Commission rules and regulations. Neither bonus, rentals nor royalties paid or
to be paid hereunder shall relieve the LESSEE from any of the obligations herein
expressed. Such methods of mining must be used as will insure the extraction of
the greatest ossible amounts of the leased minerals consistent with prevailing
good mining practice. Specific examples of compliance with the above include,
but are not limited to:

 
(a)
LESSEE agrees to slope the sides of all surface pits, excavations and subsidence
areas in a manner consistent with good mining practices. Such sloping is to
become a normal part of the operation:

 

(b)
Whenever practicable, all surface pits, excavations and subsidence areas shall
not be allowed to become a hazard to persons, wildlife or livestock.

 
(c) 
LESSEE agrees to mine the leased minerals in such a manner as to leave as much
level surface as is reasonable and consistent with prevailing good mining
practices; All development shall be done in such a manner as to prevent the
pollution of water.

 
(d)
In underground workings, all shafts, inclines, and drifts must be adequately
supported and all parts of workings, where minerals commercially minable are not
exhausted, shall be kept free from water and waste materials to the extent
reasonably possible;
 

(e)
Underground workings art to be protected against fire, floods, creeps and
squeezes. If such events do occur, they shall be checked by LESSEE  to the
extent and in a manner which is in keeping with good methods of mining;
 

(f)
If relevant, LESSEE shall take all steps a reasonably prudent operator would
take to adequately protect the leased minerals from drainage by operations on
other lands or this lease shall be subject to forfeiture by the COMMISSIONER;
and

 
 

(g)
As governed by the duties and standards set out in Section 7 of this lease, all
leased minerals produced by LESSEE from the leased premises that cannot be so
marketed (herein called "waste materials') will be used to fill) the pits,
shafts and excavations On the leased premises and no royalty shall be due
thereon at that time.   No other use of these waste materials or any leased
mineral is allowed unless the LESSEE obtains the COMMISSIONER'S prior written
consent to such other use. However, should another use of the leased minerals be
permitted, royalty shall be due for these used leased minerals in accordance
with Sections 7 and 8 of this lease and, should another use of the waste
materials be permitted, the waste material royalty exception of this subsection
shall not apply and royalty shall be due for these used waste materials in
accordance with sections 7 and 8 of this lease, The LESSEE'S duty regarding the
leased minerals as set out in Section 7 of this lease is a continuing duty.
Should changing technology or market conditions render any component of former
waste materials marketable, then LESSEE shall (1) process, make marketable and
market those former waste materials as set out in Section 7 of this lease and
(2) pay royalty thereon in accordance with Sections 7 and 8 of this lease. The
state reserves the title to all minerals contained in these waste materials both
during the term of this lease, subject to LESSEE'S duty set out above, and upon
the expiration, surrender, or termination of this lease.

 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
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Nothing in this section shall be construed to give LESSEE the right to sell or
otherwise dispose of minerals or substances other than those covered hereby.
 
In the event LESSEE, in the interest of economy or efficiency of mining
operations or for other valid reasons, intends to conduct mining operations on
or within the leased premises in conjunction with mining operations on or within
any other land (whether state or privately owned), for example by commingling
production, then prior thereto LESSEE must obtain the COMMISSIONER'S approval of
such plan of operations, which shall not unreasonably be withheld.
 
15.          RECLAMATION:   By the end of the term of this lease, LESSEE shall
grade the leased premises so that the grade of the leased premises shall
approximate the grade of the surrounding topography. Upon completion of the
required grading, the surface shall be reseeded with a seed mixture approved by
the COMMISSIONER. Should this obligation not be met by the end of the term of
this lease, it shall nevertheless survive and continue beyond the term of this
lease and shall be an obligation owed to the state. This obligation is owed by
LESSEE in addition to any other obligation imposed upon LESSEE by this lease,
including, but not limited to, the requirements of Section 6 hereof and LESSEE'S
plan of operations.

16.          TRANSFERS (E.G. ASSIGNMENTS): After obtaining written approval by
the COMMISSIONER, which shall not unreasonably be withheld, this lease may be
transferred at any time. All transfers must reference the lease by the file
number and must be recorded in any county in which any portion of the leased
premises is located, and each Such recorded transfer or a certified copy of each
such recorded transfer stall be filed in the General Land Office within ninety
(90) days after the execution of the transfer, as provided by Texas Natural
Resources Code §52.026, accompanied by the appropriate filing fee. A transfer is
not effective until these required documents are properly filed in the General
Land Office. Failure to properly file these required documents in the General
Land Office shall subject this lease to forfeiture. The filing fee due under
this section shall be determined by the applicable statute and/or administrative
rule in effect at the time the transfer is filed in the General Land Office.
 
Upon any assignment of  this lease, in whole or in part, the assignee will
succeed to all rights and be subject to all liabilities, claims, obligations,
penalties, and the like, theretofore incurred by the assignor, including any
liabilities to the State for unpaid royalties. However, such assignment will not
have the effect of releasing the assignor from any liability, claim, obligation,
penalty, or the like, theretofore accrued in favor of the State, in addition,
upon any assignment of this lease, the assignee assumes, for the benefit of the
State, the obligation to fulfill all provisions and covenants of this lease,
both expressed and implied. Assignee, as used in this section, shall also
include any successor, devisee, legal representative or heir of an assignee who
acquires any right or obligation initially held by that assignee under this
lease.
 
Upon assignment of any divided part of this lease, whether divided by acreage,
zone, horizon, vein, mineral or Other similar method, said assigned interest
shall become segregated from the remaining portion of this lease SO that from
the dale of such assignment or assignments, the provisions hereof shall extend
and be applicable severally and separately to each segregated portion of the
land covered hereby and so assigned, so that performance or lack of performance
of the provisions hereof as to any segregated portion of this lease shall not
benefit or prejudice any other segregated portion, to the same extent as if each
segregated portion of the lands covered hereby are under separate leases. It is
understood and agreed that the effect of such an assignment is to create two
separate leases, both of which must comply with (heir lease terms in order to
keep their leases in force.
 
In the case of Ownership or assignment of any undivided interest in this lease,
no covenant or condition thereof, implied or expressed, is divisible. Anything
less than complete compliance with said covenants or conditions shall render
this lease Subject to forfeiture and/or termination as provided by the tease's
provisions.
 
17.          RELEASES: The LESSEE may release all or any portion of this lease
to the State at any time, to release this lease, LESSEE must record the relevant
instrument or instruments evidencing such release in each county where the
leased premises are located and mail a certified copy of each such recorded
release to the General Land Office, accompanied by the appropriate filing fee.
Any release will not have the effect of releasing LESSEE from any liability,
claim, obligation, penalty, or the like, theretofore accrued in favor of the
State nor will it have the effect of reducing any amount due under this lease. A
release is not effective until the required certified copies of that release are
filed in the General Land Office, Failure to file the required certified copies
of a release in the General Land Office shall subject this lease to forfeiture.
The filing fee due under this section shall be determined by the applicable
statute and/or administrative rule in effect at the time the release is filed
with the General Land Office.
 
18.          AUTHORITY OF MANAGER OR AGENT: When required by the COMMISSIONER,
the authority of a manager or agent to act for LESSEE must be filed in the
General Land Office.

19.          FORFEITURE: If LESSEE shall fail or refuse to make payment of any
sum due, or if LESSEE or LESSEE'S agent should refuse the COMMISSIONER or his
authorized representative access to the records or other data pertaining to the
operations under this lease, or if LESSEE or LESSEE'S agent should knowingly
make any false return or false report concerning this lease, or if any of the
material terms of this lease should be violated, then this lease and all rights
hereunder shall be subject to forfeiture by the COMMISSIONER, and the
COMMISSIONER may declare this forfeiture when sufficiently informed of the facts
which authorize a forfeiture, and, in such event, the COMMISSIONER shall write
on the wrapper containing file papers relating to this lease words declaring the
forfeiture and sign it officially; and this lease, and all rights under this
lease, together with all payments made under it, shall thereupon be forfeited.
Notice of the forfeiture shall be mailed forthwith to the person or persons
shown by the records of the General Land Office to be the owner of the forfeited
lease at their last known addresses as shown by said records. However, nothing
herein shall be construed as waiving the automatic termination of this lease by
operation of law or by reason of any term or condition arising hereunder.
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
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20.           REINSTATEMENT: A forfeiture may be set aside and all rights under
this lease may be reinstated before the rights of another party intervene, upon
satisfactory evidence to the COMMISSIONER of future compliance with the
provisions of the law, this lease, and any rules adopted applicable to this
lease and with any conditions placed upon the reinstatement, LESSEE shall offer
the evidence required for reinstatement within 30 days after the date the notice
of forfeiture was mailed and after such 30 days, LESSEE shall have no future
opportunity for reinstatement

21.           FORCE MAJEURE: When, after effort is made in good faith, LESSEE is
prevented from complying with any express or implied covenant of this lease or
from producing and mining the named material from the leased premises by reason
of storm, flood, or other acts of God, fire, war, rebellion, insurrection, riot,
strikes, or as result of any valid order, rule or regulation of any court or
governmental authority having jurisdiction, or litigation required to gain
access to the lands described in this lease under the power of eminent domain as
provided in §11.079, Texas Natural Resources Code, effective September 1, 1987
(for the period beginning with the filing of the action in a court of competent
jurisdiction until a. final non-appealable order is entered in such action but
not including periods of pre-filing discussions or negotiations), then upon
written application by LESSEE and upon written approval thereof by the
COMMISSIONER, LESSEE'S obligation to comply with such covenant shall be
suspended while LESSEE is so prevented; and LESSEE shall not be liable for
damages for failure to comply with such covenant while LESSEE is so prevented;
and this lease shall be extended while and so long as LESSEE is so prevented
from producing and mining the named material from the leased premises, provided,
however, that nothing in this section shall be construed to suspend the
condition of paying delay rentals as set out in Section 3 hereof. As dictated by
31 Texas Administrative Code §10.3(d) (1),  the term of this lease may not be
extended by this Section to exceed twenty (20) years.

22.           USE OF WATER: LESSEE shall have the right to use water produced
during operations under this lease as is reasonably necessary for operations
under this lease except water from wells or tanks of the surface owner or any
surface lessee; provided, however, LESSEE shall not use potable water Of water
suitable for livestock or irrigation purposes for operations without the prior
written consent of the COMMISSIONER.

23.          DAMAGE PAYMENTS FOR PERSONAL PROPERTY, IMPROVEMENTS, LIVESTOCK AND
CROPS: LESSEE shall pay damages caused by its operations to all personal
property, improvements, livestock and crops on said land to the owner of said
items.

24.           SURFACE USE:  Subject to the obligation to pay surface damages as
set out in Section 33 of this lease, and to any reservation in favor of LESSOR,
LESSEE shall have the right to occupy within the limits of this lease so much of
the surface as may be reasonably necessary for the development of leased
minerals; and shall have the right of ingress and egress over and across the
area embraced herein,

25.           SURFACE USE LIMITATIONS:  LESSEE shall not drill or mine, erect
buildings or conduct any mining operations within three hundred (300) feet of
improvements without reasonably compensating the owner of said improvements.

26.           REMOVAL OF EQUIPMENT AND FIXTURES: LESSEE shall not be permitted
to remove any casing or wellhead from any well or bore hole during the life of
this lease or after the termination, expiration, or forfeiture of this lease
without the written consent of the COMMISSIONER or his authorized
representative, LESSEE shall have the right to remove all equipment, machinery,
tools, supplies, and installations, excluding the casing and wellhead, placed by
LESSEE on the leased premises during the life of this lease and for a period of
three hundred sixty-five (355) days after the termination, expiration or
forfeiture of this lease, unless an extension in writing of such three hundred
sixty-five (365) day period has been obtained from the COMMISSIONER or some
other written agreement is reached between all parties to this lease.

27.           FILING REQUIREMENTS: LESSEE shall record this executed lease in
each county in which the lease premises is located. After such retardation,
LESSEE shall obtain a certified copy of the recorded lease from the county
clerk. LESSEE shall send such certified copies to the General Land Office within
ninety days of the date of recordation.

28.           PAYMENTS, NOTICES AND OTHER REQUIRED DOCUMENTS: Unless otherwise
expressly provided for herein, all payments provided for in this lease shall be
payable to the COMMISSIONER of the General Land Office at Austin, Texas, for the
use and benefit of the State of Texas.
 
All notices, payments and other documents required or due hereunder shall be
given to the parties at their respective addresses as follows and shall be
deemed received only upon actual receipt, unless "receipt" is otherwise defined
by an applicable Texas Statute or Administrative Rule:
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
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(a)  If to LESSOR, COMMISSIONER, General Land Office, State or State of Texas:

General Land Office
1700 North Congress
Austin, Texas 78701
Ann: Minerals Leasing Division

 
(b)  If to LESSEE:          Silver Standard
Corporation                                                                                                       
Tax Payer ID #32-042484231
1408 Roseland Blvd.
Tyler, Texas 75701

 
or addressed to any of the above parties at such other addresses as such party
shall hereafter furnish to the other parties in writing. Any notice of change of
address shall not be binding on a party until the expiration of 30 days after
the receipt of such notification by that party. Such notification must be in
writing, delivered or mailed by registered or certified mail.
 
29.          APPLICABLE LAW: The law of the United States and the State of Texas
shall apply to and govern this lease in any and all matters whatsoever. For the
purposes of this lease, such law shall include, but shall not be limited to,
Texas Water Code §61.117 and all current and future General Land Office and/or
School Land Board administrative rules governing State minerals other than oil
and gas that are not in direct conflict with the provisions contained in this
lease. In addition, mining operations in submerged areas are further subject to
the applicable laws of the United States regarding mining in such submerged
areas.

30.           BINDING EFFECT: This lease and the provisions hereof shall be
binding upon and inure to the benefit of State and LESSEE and their respective
heirs, devisees, legal representatives, successors and assigns.

31.           IMPLIED COVENANTS: Neither payment of bonus, rental, royalties nor
compliance with any other covenant or condition of this lease shall relieve the
LESSEE from any obligation expressed in this lease or implied by law unless this
lease expressly so relieves the LESSEE.
 
32.           REMEDIES: The remedies provided for in this lease are not
exclusive and in no way shall limit any other lawful claim or remedy available
to the State under law.

33.           PAYMENT OF DAMAGES FOR USE OF SURFACE: Upon the issuance of this
lease, LESSEE shall pay, in the manner prescribed in Section 27 of this lease,
surface damages to the LESSOR in the amount of Two Thousand Two Hundred and
No/100  Dollars ($2,200.00) for the use of the surface of the leased premises in
prospecting for, exploring, developing, or producing the leased minerals during
the first year of this lease. On or before one (i) year after the date of this
lease, if this lease is still held in effect on that anniversary date, LESSEE
shall pay, in a like manner, surface damages to LESSOR in a like amount for like
use of the surface of the leased premises during the second year of this lease.
On or before two (2) years after the date of this lease (i.e. on the
2012 anniversary date), if this lease is still held in effect on that
anniversary date, LESSEE shall pay, in a like manner, surface damages to LESSOR
if) a like amount for like use of the surface of the leased premises during the
third year of this lease. In no event shall any payments for damages for use of
the surface be paid to any party other than LESSOR, nor production royalty or
any other benefit reserved to LESSOR in this lease.

34.           SEVERABILITY:   If any section of this lease or its application to
any person or circumstance shall be held to be invalid by a court of competent
jurisdiction, such invalidity shall not affect any other section of this lease,
or any application thereof, that can be given effect without the invalid section
or application.  To this end, the sections of this lease, or any portion
thereof, are declared 10 be severable.
 
35.           LEASE SECURITY; LESSEE shall take the degree of care and all
proper safeguards a reasonably prudent operator would take to protect the leased
premises and to prevent theft of all materials and/or minerals produced from the
leased premises. This includes, but is not limited to, the installation of all
necessary equipment, seals, locks, or other appropriate protective devices on or
at all access points at the lease's production, gathering and storage systems
whore theft of said materials and/or minerals can occur. LESSEE shall be liable
for the loss of any of said materials and/or minerals resulting from theft and
shall pay the State royalties thereon as provided in this lease on all leased
minerals lost by reason of theft.
 
36.           ANTIQUITIES COPE: In the event that any foundation, site, item, or
the feature of archaeological, scientific, or historic interest is encountered
during the activities authorized by this lease, LESSEE will immediately cease
such activities and will immediately notify the LESSOR and the Texas Antiquities
Committee so that adequate measures may be undertaken to protect or recover such
discoveries or findings, as appropriate. In this regard, LESSEE is expressly
placed on notice of the National Historical Preservation Act of 1966, (PB-89-66,
80 Statute 915; IS U.S.C.A. 470) and the Antiquities Code of Texas, Chapter 191,
Natural Resources Code.
 
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COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
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37.           INDEMNIFICATION: Lessee hereby releases and discharges the State
of Texas, its officers,  employees, partners, agents, contractors,
subcontractors, guests, invitees, and their respective successors and assigns,
of and from all and any actions and causes of action of every nature, or after
harm, including environmental harm, for which recovery of damages is sought,
including, but not limited to, all losses and expenses which are caused by the
activities of Lessee, its officers, employees, and agents arising out of,
incidental to, or resulting from, the operations of or for Lessee on the leased
premises hereunder, or that may arise out of or be occasioned by Lessee's breach
of any of the terms or provisions of this Agreement, or by any other negligent
or strictly liable act or omission of Lessee. Further, Lessee hereby agrees to
be liable For, exonerate, indemnify, defend and hold harmless the State of
Texas, its officers, employees and agents, their successors or assigns, against
any and all claims, liabilities, losses, damages, actions, personal injury
(including death), costs and expenses, or other harm for which recovery of
damages is sought, under any theory including tort, contract, or strict
liability, including attorneys' fees and other legal expenses, including those
related to environmental hazards, on the leased premises or in any way related
to Lessee's failure to comply with any and all environmental laws; those arising
from or in any way related to Lessee's operations or any other of Lessee's
activities on the leased premises; those arising from Lessee's use of the
surface of the leased premises; and those that may arise out of or be occasioned
by Lessee's breach of any of the terms or provisions of this Agreement or any
other act or omission of Lessee, its directors, officers, employees, partners,
agents, contractors, subcontractors, guests, invitees, and their respective
successors and assigns.  Each assignee of this Agreement, or an interest
therein, agrees to be liable for, exonerate, indemnify, defend and hold harmless
the State of Texas and its officers, employees, and agents in the same manner
provided above in connection with the activities of Lessee, its officers,
employees, and agents as described above. EXCEPT AS OTHERWISE EXPRESSLY LIMITED
HEREIN, ALL OF THE INDEMNITY OBLIGATIONS AND\OR LIABILITIES ASSUMED UNDER THE
TERMS OF THIS AGREEMENT SHALL BE WITHOUT LIMITS AND WITHOUT REGARD TO THE CAUSE
OR CAUSES THEREOF (EXCLUDING PRE-EXISTING CONDITIONS), STRICT LIABILITY, OR THE
NEGLIGENCE OF ANY PARTY OR PARTIES (INCLUDING THE NEGLIGENCE OF THE INDEMNIFIED
PARTY). WHETHER SUCH NEGLIGENCE BE SOLE, JOINT, CONCURRENT, ACTIVE, OR PASSIVE.
NOTWITHSTANDING THE FOREGOING, THE LESSEE SHALL NOT BE LIABLE TO INDEMNIFY WITH
REGARD TO ANY CLAIM OR MATTER ARISING THROUGH THE GROSS NEGLIGENCE OF THE LESSOR
OR ANY AGENT, REPRESENTATIVE OR SERVANT OF THE LESSOR.

38.           EXECUTION: This hard mineral lease must be signed and acknowledged
by the LESSEE before it is filed of record, in the county records and in the
General Land Office of the State of Texas.

 
Standard Silver
Corporation                                                         
LESSEE
 
BY: /s/  G. W. McDonald                               
 
TITLE: Chairman of the Board of Directors
 
DATE: August 23,  2010                                
 
IN TESTIMONY WHEREOF, witness the signature of the Commissioner of the General
Land Office, under the seal of the General Land Office.

 
/s/ Jerry E. Patterson
COMMISSIONER OF THE GENERAL LAND OFFICE OF THE STATE OF TEXAS
 
Minerals /s/
Legal /s/
Dep. Com. /s/
Chief Clerk/s/
 
 

 
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COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
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STATE OF  Texas   (CORPORATION ACKNOWLEDGEMENT)
 
COUNTY OF   Smith

 
BEFORE ME, the undersigned authority, on this day personally appeared G. W.
McDonald known to me to be the person whose name is subscribed to the foregoing
instrument, as Chairman of the Board  and acknowledged to me that the executed
the same for the purposes and consideration therein expressed, in the capacity
stated, and as the act and deed of said corporation.
 
Given under my hand and seal of office this the     23    day of August,  20 10.
 
/s/ Denise Lewis

Notary Public in and for _____________________
________________________________________
 
NOTARY PUBLIC SEAL
STATE OF TEXAS
DENISE LEWIS
Notary Public, State of Texas
My Commissioin Expires
April 15, 2014
 
 
COUNTY OF HUDSPETH     )     LEASE
 
STATE OF TEXAS        ) ss         PAGES: 11

I Hereby Certify  That  This  Instrument Was  Filed  for Record On  The  1ST Day
Of  September,   2010  at  03:11:05 PM And Was Duly Recorded
as  Instrument  # 132766 Of The Records Of Hudspeth
 
Witness My Hand And Seal  Of  Office
Abigail  Ortega
Deputy/County Clerk,  Hudspeth,   TX
/s/ BrendaR
 
 
 
OFFICIAL SEAL
COUNTY COURT
HUDSPETH COUNTY, TEXAS
A CERTIFIED COPY
ABIGAIL ORTEGA, COUNTY CLERK
HUDSPETH COUNTY, TEXAS
PAGE 11 OF 11

 
 
 

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TEXAS  GENERAL  LAND  OFFICE
jerry patterson, commissioner
 
OFFICIAL SEAL
GENERAL LAND OFFICE
STATE OF TEXAS

 
 
January 12, 2011

 
MR DAN GORSKI
STANDARD SILVER CORPORATION
7 COPANO POINT
ROCK PORT TX 78382

 
Re: Mining Lease M-111331 & Certain Prospect Permits in Hudspeth County
 
Dear Mr. Gorski:
 
The Lease Correction to the captioned mining lease has been signed by the
Commissioner of the General Land Office is enclosed herewith.

The original executed Lease Correction document must be signed and acknowledged
by you and filed in the records of Hudspeth County, and a certified copy of the
filed document sent to the General Land Office for filing.

I have also enclosed photocopies of fee seven prospect permits (M-108541 thru
M-108547) issued as renewals on October 30, 2010, per your request.

If you have any questions or if we can be of service, please contact me at the
number listed below.

 
Sincerely,
 
/S/ Bill Farr

Bill Farr, Geologist Minerals Leasing
(512) 475-1502

 
BF/bf

 
 
Stephen F. Austin Building * 1700 North Congress Avenue * Austin, Texas
78701-1495
Post Office Box 12873 * Austin, Texas 787l1-2873
512-463-5001* 800-998-4GLO
www.glo.state.tx.us
 
 
 

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Lease Correction

 
Whereas Standard Silver Corporation and the Texas General Land Office entered
into Mining Lease M-111331 dated August 17, 2010, and recorded as Instrument #
132766 of the Records of Hudspeth County on September 1, 2010;
 
Whereas through an error or mistake Standard Silver Corporation was incorrectly
referred to in the above referenced lease as Silver Standard Corporation; and

Whereas Standard Silver Corporation and the Texas General Land Office desire to
correct the above referenced lease to correctly identify the parties thereto;

Now therefore, Standard Silver Corporation and the Texas General Land Office do
hereby correct said lease dated August 17, 2010, to provide that the parties
thereto are Standard Silver Corporation and the Texas General Land Office, All
other terms and conditions of said lease remain in full force and effect.

 
IN TESTIMONY WHEREOF, witness the signature of the Commissioner of the General
Office, under the seal of the General Land Office.
 
 
/s/ Jerry E. Patterson
COMMISSIONER OF THE GENERAL
LAND OFFICE OF THE STAE OF TEXAS

 
APPROVES
Minerals /s/
Legal /s/
Dep. Com. /s/
Chief Clerk /s/

 
Standard Silver Corporation
 
LESEE
BY: /s/                                                         
TITLE: CEO                                               
DATE: 22 24 Jan 2011                              

 
 
 

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STATE OF Texas (CORPORATION ACKNOWLEDGEMENT)
COUNTY OF Aransas

 
BEFORE ME, the undersigned authority, oh this day personally appeared Daniel E.
Gorski known to me to be the person whose name is subscribed to the foregoing
instrument, as                               and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, in the
capacity stated, and as the act and deed of said corporation.

 
Given under my hand and seal of office this the 24th day of January, 2011.

/s/ Marcia Sue Hansen
Notary Public in and for  Aransas County

NOTARY PUBLIC SEAL STATE OF TEXAS
MARCIA SUE HANSEN
Notary Public, State of Texas
My Commission Expires 08-13-2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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