Exhibit 10.24


 


(rev.
10/16)


 


	Director’s
    Actions Date (office use only): 5/14/2018	MINERAL
    LEASE NO. 53806


 


GRANT:
SCH


 


UTAH
STATE MINERAL LEASE FOR

BITUMINOUS – ASPHALTIC SANDS


 


This
Mining Lease and Agreement (the “Lease”) is entered into effective the 1st day of June, 2018, (the “Effective
Date”), by and between the State of Utah, acting by and through the School and Institutional Trust Lands Administration,
675 East 500 South, Suite 500, Salt Lake City, Utah 84102, (hereinafter “Lessor”), and


 


Petroteq
Oil Recovery, LLC


4370 Tujunga Ave, Ste #320


Studio City, CA 91640


 


having
a business address as shown above (hereinafter “Lessee”, whether one or more).


 


WITNESSETH:


 


That
the State of Utah, as Lessor, in consideration of the rentals, royalties, and other financial consideration paid or required to
be paid by Lessee, and the covenants of Lessee set forth below, does hereby GRANT AND LEASE to Lessee the exclusive right and
privilege to explore for, drill for, mine, remove, transport, convey, cross-haul, commingle, and sell the leased substances (defined
below) covered by this lease and located within the boundaries of the following-described tract of land (the “Leased Premises”)
located in UINTAH County, State of Utah:


 


T5S,
R21E, SLB&M 





	 	SEC. 23:	Lots 1(9.63), 2(38.14), 3(38.37), 6(40.00), 7(11.69), 8(13.27), 9(40.00), 10(40.00), 
	 	 	11(14.87), SW1/4NE1/4, W1/2SE1/4 [Lots aka E1/2E1/2, NW1/4NE1/4]
	 	SEC. 24:	W1/2NW1/4, SE1/4NW1/4, SW1/4, W1/2SE1/4, SE1/4SE1/4
	 	SEC. 25:	Lots 1(14.47), 7(16.67), 8(17.53), 11(18.39)




 


containing
833.03 acres, more or less.


 


Together
with the right and privilege to make use of the surface and subsurface of the Leased Premises for uses reasonably incident to
the mining of leased substances by Lessee on the Leased Premises or on other lands under the control of Lessee or mined in connection
with operations on the Leased Premises, including, but not limited to, conveying, storing, loading, hauling and otherwise transporting
leased substances; excavating; removing, stockpiling, depositing and redepositing of surface materials; developing and utilizing
mine portals and adjacent areas for access, staging and other purposes incident to mining; and the subsidence, mitigation, restoration
and reclamation of the surface.


 




     


     


    

 


ML 53806


Page No. 2



 


This Lease is subject to, and Lessee hereby agrees to
and accepts, the following covenants, terms, and conditions:


 


		1.	LEASED
                                         SUBSTANCES.



 


		1.1	Leased
                                         Substances. This Lease grants the right to extract the following substances (“leased
                                         substances”): “Bituminous Sands - Asphaltic Sands ” as classified
                                         and defined in Utah Administrative Code R850-22-200, means rock or sand impregnated with
                                         asphalt or heavy oil and is synonymous with the term “tar sands.” This lease
                                         does not cover any substances, either combustible or non-combustible, which are produced
                                         in a gaseous or rarefied state at ordinary temperature and pressure conditions other
                                         than gas which results from artificial introduction of heat. Nor does this lease embrace
                                         any right to recover any liquid hydrocarbon substance which occurs naturally in a liquid
                                         form in the earth regardless of depth, including drip gasoline or other natural condensate
                                         recovered from gas, nor does this lease authorize recovery of any gilsonite, oil shale,
                                         elaterite, ozocerite, or any other hydrocarbons, or bituminous compounds excepting rock
                                         or sand impregnated with asphalt or heavy oil which dries to a viscous or solid bitumen
                                         near the surface of the earth.



 


This
lease includes as part of the leased substances any deposits of nahcolite (sodium bicarbonate), dawsonite (di-hydroxy sodium aluminum
carbonate) or other sodium minerals found in association with the tar sands deposits. Should the Lessee plan to develop any deposit
of said nahcolite, dawsonite or other sodium minerals prior to the commencement of said operations Lessor will require a showing
of facts relative to the extent of any deposit which a Lessee proposes to mine to demonstrate to Lessor that the operations by
the Lessee will not damage or prevent future mining of other minerals from the State lands.. Any deposit of nahcolite or dawsonite
found in association with tar sands deposits on the leased lands will be mined or removed contemporaneously with the tar sands
or subsequent to the mining or removal of the tar sands.


 


In
the event that minerals or materials other than the leased substances are discovered during lease operations, Lessee shall promptly
notify the Lessor and shall not further disturb or remove the other minerals or materials without Lessor’s written permission.
Upon notifying Lessor of such discovery the Lessee shall have preference in making application to the Lessor for a lease or permit
covering the unleased minerals or materials that are discovered.


 


		1.2	No
                                         Warranty of Title. Lessor claims title to the mineral estate covered by this Lease.
                                         Lessor does not warrant title nor represent that no one will dispute the title asserted
                                         by Lessor. It is expressly agreed that Lessor shall not be liable to Lessee for any alleged
                                         deficiency in title to the mineral estate, nor shall Lessee become entitled to any refund
                                         for any rentals, bonuses, or royalties paid under this Lease in the event of title failure.



 


		2.	RESERVATIONS
                                         TO LESSOR. Subject to the exclusive rights and privileges granted to Lessee under
                                         this Lease, and further provided that Lessor shall refrain from taking actions with respect
                                         to the Leased Premises that may unreasonably interfere with Lessee’s operations,
                                         Lessor hereby excepts and reserves from the operation of this Lease the following rights
                                         and privileges (to the extent that Lessor has the right to grant such rights and privileges):



 


		2.1	Rights-of-Way
                                         and Easements. Lessor reserves the right, following consultation with the Lessee,
                                         to establish rights-of-way and easements upon, through or over the Leased Premises, under
                                         terms and conditions that will not unreasonably interfere with operations under this
                                         Lease, for roads, pipelines, electric transmission lines, transportation and utility
                                         corridors, mineral access, and any other purpose deemed reasonably necessary by Lessor.



 




     


     


    

 


ML 53806


Page No. 3



 


		2.2	Other Mineral
                                         Leases. Lessor reserves the right to enter into mineral leases and agreements with
                                         third parties covering minerals other than the leased substances, under terms and conditions
                                         that will not unreasonably interfere with operations under this Lease in accordance with
                                         Lessor’s regulations, if any, governing multiple mineral development.



 


		2.3	Use
                                         and Disposal of Surface. To the extent that Lessor owns the surface estate of the
                                         Leased Premises and subject to the rights granted to the Lessee pursuant to this Lease,
                                         Lessor reserves the right to use, lease, sell, or otherwise dispose of the surface estate
                                         or any part thereof, provided that any such actions will not unreasonably interfere
                                         with operations under this Lease. Lessor shall notify Lessee of any such sale, lease,
                                         or other disposition of the surface estate.



 


		2.4	Rights
                                         Not Expressly Granted. Lessor further reserves all rights and privileges of every
                                         kind and nature, except as specifically granted in this Lease, provided that any actions
                                         under such reservations will not unreasonably interfere with operations under this Lease.



 


		3.	TERM
                                         OF LEASE; MINIMUM ROYALTIES; READJUSTMENT.



 


		3.1	Primary
                                         Term. This Lease is granted for a “primary term” of ten (10) years from
                                         the Effective Date.



 


		3.2	Extension
                                         beyond Primary Term by Production. Subject to Lessee’s compliance with the
                                         other provisions of this Lease, this Lease shall remain in effect beyond the primary
                                         term so long as leased substances are being produced in paying quantities, as delivered
                                         herein, from the Leased Premises, or from lands constituting a mining unit approved by
                                         Lessor in its reasonable discretion. For purposes of this lease, production of leased
                                         substances in paying quantities shall mean mining and sale of the leased substances during
                                         the lease-year in an amount sufficient to cover all operating expenses accruing to the
                                         lessee pursuant to the leasehold for that lease year, including the payment of all taxes
                                         and the payment of rentals and royalties accruing to the Lessor.



 


		3.3	Extension
                                         beyond Primary Term by Diligent Development, Financial Investment and Minimum Royalty.
                                         In the absence of actual production in paying quantities as set forth in paragraph 3.2,
                                         Extension Beyond Primary Term, this Lease shall remain in effect beyond the primary term
                                         only if the Lessee is engaged in diligent operations, exploration or development activity
                                         which in Lessor’s sole discretion is calculated to advance development or production
                                         of leased substances from the Leased Premises or lands constituting an approved mining
                                         unit which includes the Leased Premises, has made a substantial financial investment
                                         for the direct purpose of advancing development or production of leased substances from
                                         the Leased Premises or lands constituting an approved mining unit which includes the
                                         Leased Premises, and Lessee pays the annual minimum royalty set forth in Paragraph 3.4,
                                         Minimum Royalty, in advance before the anniversary date of the date first written hereinabove.



 


		3.4	Minimum
                                         Royalty. Commencing with the with the effective date of the lease to and including
                                         the tenth (10th) year of this lease the Lessee shall pay Lessor, before the Effective
                                         Date and each anniversary thereof, an advanced annual minimum royalty in the amount of
                                         Ten Dollars ($10.00) per acre and for any fractional part of an acre. Beginning with
                                         the eleventh (11th) year of this lease, if the lease remains in effect, minimum royalties
                                         shall be set by Lessor pursuant to the readjustment provisions contained in paragraph
                                         3.6 Lessee may credit each lease-year’s minimum royalty payment against actual
                                         production royalties accruing during that lease year, but such credit shall not carry
                                         over beyond the lease year in which the advance royalty was paid. Minimum royalties may
                                         not be credited against the annual rentals or bonus bids.



 




     


     


    

 


ML 53806


Page No. 4



 


		3.5	Expiration;
                                                                                                                                                                  Cessation of Production. This Lease may not be extended pursuant to paragraph 3.3,
                                                                                                                                                                  Diligent Operations, beyond the end of the twentieth year after the Effective Date except by the actual production of leased
                                                                                                                                                                  substances in commercial quantities from the Leased Premises or from                                          lands
                                                                                                                                                                  constituting an approved mining unit which includes the Leased Premises, or
                                                                                                                                                                  except by suspension of the Lease pursuant to Article 17.3, unless otherwise specifically
                                                                                                                                                                  approved in writing by the Director of the Trust Lands Administration in the interest
                                                                                                                                                                  of the trust beneficiaries. After expiration of the primary term, this Lease will expire
                                                                                                                                                                  of its own terms, without the necessity of any notice or action by Lessor, if: (a) Lessee
                                                                                                                                                                  fails to produce leased substances in accordance with Article 3.2; (b) Lessee ceases
                                                                                                                                                                  to engage in exploration, development, or operations or fails to pay annual advance minimum
                                                                                                                                                                  royalties in accordance with Article 3.4; or, (c) the Director fails to make a written
                                                                                                                                                                  determination that it is in the interest of the trust beneficiaries to extend this lease.



 






		3.6	Readjustment.
                                         At the end of the primary term and at the end of each period of five (5) years thereafter
                                         (“Readjustment Period”), Lessor may exercise its option to readjust the terms
                                         and conditions of this Lease (including without limitation rental rates, minimum royalties,
                                         royalty rates and valuation methods, and provisions concerning reclamation). Notice of
                                         intent to exercise the right to readjust is timely given by Lessor if mailed prior to
                                         the end of the Readjustment Period to the last address set forth for Lessee in Lessor’s
                                         files. Lessor shall have up to one year after exercising its option to readjust to review
                                         and communicate in writing the final readjusted terms of the lease. If within thirty
                                         (30) days after submission of the readjusted lease terms to the Lessee, the Lessee determines
                                         that any or all of the proposed readjusted terms and conditions are unreasonable, then
                                         Lessee shall so notify Lessor in writing and the parties, acting reasonably, shall
                                         attempt to resolve the objectionable term or condition. If the parties are unable,
                                         acting reasonably, to resolve the matter and agree upon the readjusted terms and
                                         conditions as submitted by Lessor at the end of the Readjustment Period, Lessee shall
                                         forfeit any right to the continued extension of this lease, and the lease shall automatically
                                         terminate, provided that nothing herein shall be deemed to preclude Lessee from appealing
                                         any readjustment by Lessor pursuant to applicable law.



 


		4.	BONUS
                                         BID. Lessee agrees to pay Lessor an initial bonus bid in the sum of $12,510.00 dollars
                                         as partial consideration for Lessor’s issuance of this Lease, payable in cash prior
                                         to execution of this lease. The initial bonus bid may not be credited against annual
                                         rentals, annual minimum royalties or production royalties accruing pursuant to this lease.



 


		5.	RENTALS/MINIMUM
                                         RENTALS. Lessee agrees to pay Lessor an annual rental equal to the greater of: (a)
                                         $1.00 for each acre and fractional part thereof within the Leased Premises; or
                                         (b) $500.00, irrespective of acreage. Lessee shall promptly pay annual rentals each year
                                         in advance before the anniversary date of the Effective Date. The rental payment for
                                         a mineral lease year may be credited against production royalties only as they accrue
                                         for that lease year. The Lessee may not credit rentals paid for one lease year against
                                         production royalties accruing to another lease year. Rental payments may not be credited
                                         against minimum royalties or bonus bids accruing to any lease year.



 








		6.	ROYALTIES.



 


		6.1	Production
                                                                                                                                                                  Royalties. Lessee shall pay lessor a production royalty on the basis of 8% of the
                                                                                                                                                                  market price, including all bonuses and allowances received by Lessee, at the point of
                                                                                                                                                                  shipment from the leased premises of the first marketable product or products produced
                                                                                                                                                                  from the leased substances and sold under a bonafide arms length contract of sale, whether
                                                                                                                                                                  or not such product or products are produced through chemical or mechanical treating
                                                                                                                                                                  or processing of the leased substances raw material. The Lessee may deduct the reasonable
                                                                                                                                                                  actual cost of transportation to the first point of sale. In no event shall the production
                                                                                                                                                                  royalty be less than three dollars ($3.00) per barrel of produced substance. The royalty
                                                                                                                                                                  may, at the discretion of Lessor, be increased after the first ten (10) years of production
                                                                                                                                                                  at a rate of not in excess of one percent (1%) per annum until a maximum of twelve and
                                                                                                                                                                  one-half percent (121/2%) royalty is reached; provided, that notwithstanding
                                                                                                                                                                  the foregoing provision, the royalty which Lessee shall pay at any time under this lease,  after notice and hearing,
                                                                                                                                                                  may be fixed by Lessor up to the highest royalty                                          rate then being paid by any tar
                                                                                                                                                                  sands Lessee under any Federal or State tar sands or                                          combined hydrocarbon lease
                                                                                                                                                                  within the State of Utah, but not in excess of a royalty rate                                          of twelve and one-half
                                                                                                                                                                  percent (121/2%) during the primary term.



 






     


     


    

 


ML 53806


Page No. 5



 


		6.2	Non-Arm’s
                                         Length Transactions. In the event that Lessee uses, sells or otherwise disposes of
                                         leased substances without a non-arm’s length contract or bill of sale, Lessee shall
                                         promptly notify Lessor of such use, sale or disposal. The Director may then determine
                                         and assign the Gross Value to the leased substances for royalty purposes after taking
                                         into account spot market prices, the value of similar or like leased substances reported
                                         by other trust lands lessees, the value of like mineral commodities as reported by the
                                         United States Geological Survey, and other pertinent economic data regarding the fair
                                         market value of the leased substances, f.o.b. the mine.



 


		6.3	No
                                         Deductions. It is expressly understood and agreed that none of Lessee’s mining
                                         costs, including but not limited to costs for materials, labor, overhead, distribution,
                                         loading, crushing, or general and administrative activities, may be deducted in computing
                                         Lessor’s royalty. All such costs shall be entirely borne by Lessee and are anticipated
                                         by the rate of royalty set forth in this Lease.



 


		6.4	Royalty
                                         Payment. For all leased substances that are sold or transported from the leased lands
                                         during a particular month, Lessee shall pay royalties to Lessor before the end of the
                                         next succeeding month. Royalty payments shall be accompanied by a verified statement,
                                         in a form approved by Lessor, stating the amount of leased substances sold or transported,
                                         the gross proceeds accruing to Lessee, and any other information reasonably required
                                         by Lessor to verify production and disposition of the leased substances or leased substances
                                         products. Delinquent royalties may be subject to late fees and penalties in accordance
                                         with Lessor’s Rules.



 


		6.5	Suspension,
                                         Waiver or Reduction of Rents or Royalties. Lessor, to the extent not prohibited by
                                         applicable law, is authorized to waive, suspend, or reduce the rental or minimum royalty,
                                         or reduce the royalty applicable with respect to the entire Lease, whenever in Lessor’s
                                         sole judgment it is necessary to do so in order to promote development, or whenever in
                                         the Lessor’s sole judgment the Lease cannot be successfully operated under the
                                         terms provided herein and continued operations are in the trust land beneficiaries best
                                         interest.



 


		7.	RECORDKEEPING;
                                         INSPECTION; AUDITS.



 


		7.1	Registered
                                         Agent; Records. Lessee shall maintain a registered agent within the State of Utah
                                         to whom any and all notices may be sent by Lessor and upon whom process may be served.
                                         Lessee shall also maintain an office within the State of Utah containing originals or
                                         copies of all maps, engineering data, permitting materials, books, records or contracts
                                         (whether such documents are in paper or electronic form) generated by Lessee that pertain
                                         in any way to leased substances production, output and valuation; mine operations; assays;
                                         processing returns; leased substances sales and dispositions; and calculation of royalties
                                         from the Leased Premises. Lessee shall maintain such documents for at least seven years
                                         after the date of the leased substances production to which the documents pertain.



 


		7.2	Inspection.
                                         Lessor’s employees and authorized agents at Lessor’s sole risk and expense
                                         shall have the right to enter the Leased Premises to check scales as to their accuracy,
                                         and to go on any part of the Leased Premises to examine, inspect, survey and take measurements
                                         for the purposes of verifying production amounts and proper lease operations. Upon reasonable
                                         notice to Lessee, Lessor’s employees and authorized agents shall further have the
                                         right to audit, examine and copy (at Lessor’s expense) all documents described
                                         in paragraph 7.1, Registered Agent; Records, whether such documents are located at the
                                         mine site or elsewhere. Lessee shall furnish all conveniences necessary for said inspection,
                                         survey, or examination; provided, however, that such inspections shall be conducted in
                                         a manner that is in conformance with all applicable mine safety regulations and does
                                         not unreasonably interfere with Lessee’s operations.



 






     


     


    

 


ML 53806


Page No. 6



 


		7.3	Geologic
                                         Information. In the event Lessee conducts core-drilling operations or other geologic
                                         evaluation of the Leased Premises, Lessor may inspect core samples, evaluations thereof,
                                         and proprietary geologic information concerning the Leased Premises. Upon request by
                                         Lessor, Lessee shall timely provide Lessor with a true and correct copy of all such evaluations,
                                         geological reports, drilling logs, assays and interpretive maps of the leased substances
                                         within the leased lands.



 


		7.4	Confidentiality.
                                         Any and all documents and geologic data obtained by Lessor through the exercise of its
                                         rights as set forth in paragraphs 7.2, Inspection., and 7.3, Geologic Information., may
                                         be declared confidential information by Lessee, in which event Lessor and its authorized
                                         agents shall maintain such documents and geologic data as protected records under the
                                         Utah Governmental Records Access Management Act or other applicable privacy statute,
                                         and shall not disclose the same to any third party without the written consent of Lessee,
                                         or as required under the order of a court of competent jurisdiction requiring such disclosure,
                                         provided that Lessor’s obligations of confidentiality to Lessee shall cease upon
                                         termination of this Lease.



 


		8.	USE
                                         OF SURFACE ESTATE.



 


		8.1	Lessor-Owned
                                         Surface. If Lessor owns the surface estate of all or some portion of the Leased Premises,
                                         at the time of the execution of this Lease, Lessee may use such lands to the extent
                                         reasonably necessary and expedient for the economic operation of the leasehold, subject
                                         to paragraph 13.2, PLAN OF OPERATIONS. Lessee may not use the surface estate of the Leased
                                         Premises prior to complying with the requirements of paragraph 13.2. Lessee’s right
                                         to surface use of Lessor-owned surface estate shall include the right to subside the
                                         surface. Such surface uses shall be exercised subject to the rights reserved to Lessor
                                         as provided in paragraph 2, RESERVATIONS TO LESSOR, and without unreasonable interference
                                         with the rights of any prior or subsequent lessee of Lessor.



 


		8.2	Split-Estate
                                         Lands. If Lessor does not own the surface estate of any portion of the Leased Premises,
                                         Lessee’s access to and use of the surface of such lands shall be determined by
                                         applicable law governing mineral development on split-estate lands, including without
                                         limitation applicable statutes governing access by mineral owners to split estate lands,
                                         and reclamation and bonding requirements. Lessee shall indemnify, defend and hold Lessor
                                         harmless for all claims, causes of action, damages, costs and expenses (including attorney’s
                                         fees and costs) arising out of or related to damage caused by Lessee’s operations
                                         to surface lands or improvements owned by third parties.



 


		9.	APPLICABLE
LAWS AND REGULATIONS; HAZARDOUS SUBSTANCES



 


		9.1	Trust
                                         Lands Statute and Regulations. This Lease is issued pursuant to, and is subject to,
                                         the provisions of Title 53C, Utah Code Annotated, 1953, as amended. Further, Lessee and
                                         this lease are subject to and shall comply with all current and future rules and regulations
                                         adopted by the School and Institutional Trust Lands Administration and its successor
                                         agencies.



 


		9.2	Other
                                         Applicable Laws and Regulations. Lessee shall comply with all applicable federal,
                                         state and local statutes, regulations, and ordinances, including without limitation the
                                         Utah Mined Land Reclamation Act, applicable statutes and regulations relating to mine
                                         safety and health, and applicable statutes, regulations and ordinances relating to public
                                         health, pollution control, management of hazardous substances, cultural resources, and
                                         environmental protection.



 




     


     


    

 


ML 53806


Page No. 7



 


		9.3	Hazardous
                                         Substances. Lessee [or other occupant pursuant to any agreement authorizing mining]
                                         shall not keep on or about the premises any hazardous substances, as defined under 42
                                         U.S.C. § 9601(14) or any other Federal environmental law, any regulated substance
                                         contained in or released from any underground storage tank, as defined by the Resource
                                         Conservation and Recovery Act, 42 U.S.C. § 6991, et seq, or any substances
                                         defined and regulated as “hazardous” by applicable State law, (hereinafter,
                                         for the purposes of this Lease, collectively referred to as “Hazardous Substances”)
                                         unless such substances are reasonably necessary in Lessee’s mining operations,
                                         and the use of such substances or tanks is noted and approved in the Lessee’s mining
                                         plan, and unless Lessee fully complies with all Federal, State and local laws, regulations,
                                         statutes, and ordinances, now in existence or as subsequently enacted or amended, governing
                                         Hazardous Substances. Lessee shall immediately notify Lessor, the surface management
                                         agency, and any other Federal, State and local agency with jurisdiction over the Leased
                                         Premises, of contamination thereon, of (i) all reportable spills or releases of any Hazardous
                                         Substance affecting the Leased Premises, (ii) all failures to comply with any applicable
                                         Federal, state or local law, regulation or ordinance governing Hazardous Substances,
                                         as now enacted or as subsequently enacted or amended, (iii) all inspections of the Leased
                                         Premises by, or any correspondence, order, citations, or notifications from any regulatory
                                         entity concerning Hazardous Substances affecting the Leased Premises, (iv) all regulatory
                                         orders or fines or all response or interim cleanup actions taken by or proposed to be
                                         taken by any government entity or private Party concerning the Leased Premises.



 


		9.4	Hazardous
                                         Substances Indemnity. Lessee [or other occupant pursuant to any agreement authorizing
                                         mining] shall indemnify, defend, and hold harmless Lessor, employees, officers, and agents
                                         with respect to any and all damages, costs, liabilities, fees (including reasonable attorneys’
                                         fees and costs), penalties (civil and criminal), and cleanup costs arising out of or
                                         in any way related to Lessee’s use, disposal, transportation, generation, sale
                                         or location upon or affecting the Leased Premises of Hazardous Substances, as defined
                                         in paragraph 9.3 of this Lease. This indemnity shall extend to the actions of Lessee’s
                                         employees, agents assigns, sublessees, contractors, subcontractors, licensees and invitees.
                                         Lessee shall further indemnify, defend and hold harmless Lessor from any and all damages,
                                         costs, liabilities, fees (including reasonable attorneys’ fees and costs), penalties
                                         (civil and criminal), and cleanup costs arising out of or in any way related to any breach
                                         of the provisions of this Lease concerning Hazardous Substances. This indemnity is in
                                         addition to, and in no way limits, the general indemnity contained in paragraph 17.1
                                         of this Lease.



 


		9.5	Waste
                                         Certification. The Lessee shall provide upon abandonment, transfer of operation,
                                         assignment of rights, sealing-off of a mined area, and prior to lease relinquishment,
                                         certification to the Lessor that, based upon a complete search of all the operator’s
                                         records for the Lease, and upon its knowledge of past operations, there have been no
                                         reportable quantities of hazardous substances as defined in 40 Code of Federal Regulations
                                         §302.4, or used oil as defined in Utah Administrative Code R315-15, discharged (as
                                         defined at 33 U.S.C. §1321(a)(2)), deposited or released within the Leased Premises,
                                         either on the surface or underground, and that all remedial actions necessary have been
                                         taken to protect human health and the environment with respect to such substances. Lessee
                                         shall additionally provide to Lessor a complete list of all hazardous substances, hazardous
                                         materials, and their respective Chemical Abstracts Service Registry Numbers, used or
                                         stored on, or delivered to, the Leased Premises. Such disclosure will be in addition
                                         to any other disclosure required by law or agreement.



 






     


     


    

 


ML 53806


Page No. 8


 



		10.	BONDING.



 


		10.1	Lease
                                         Bond May Be Required. At the time this Lease is executed, Lessor may require Lessee
                                         to execute and file with the Lessor a good and sufficient bond or other financial guarantee
                                         acceptable to Lessor in order to: (a) guarantee Lessee’s performance of all covenants
                                         and obligations under this Lease, including Lessee’s obligation to pay royalties;
                                         and (b) ensure compensation for damage, if any, to the surface estate and any surface
                                         improvements.



 


		10.2	Reclamation
                                         Bonding. The bond required by and filed with the Utah Division of Oil, Gas and Mining
                                         (“UDOGM”) in connection with the issuance of a mine permit which includes
                                         the Leased Premises shall be deemed to satisfy Lessor’s bonding requirements with
                                         respect to Lessee’s reclamation obligations under this Lease; provided, however,
                                         upon notice to Lessee and a public hearing with respect to the basis for its decision,
                                         the Lessor may, in its reasonable discretion, determine that the bond filed with UDOGM
                                         is insufficient to protect Lessor’s interests. In such an event the Lessor shall
                                         enter written findings as to the basis for its calculation of the perceived insufficiency
                                         and enter an order establishing the amount of additional bonding required. Lessee shall
                                         file any required additional bond with Lessor within thirty (30) days after demand by
                                         Lessor. Lessor may increase or decrease the amount of any additional bond from time to
                                         time in accordance with the same procedure.



 


		10.3	Release
                                         of Additional Bond. Any additional bond required by Lessor pursuant to 10.2, Reclamation
                                         Bonding, may be released by Lessor at any time and shall be released no later than the
                                         time of final bond release by UDOGM with respect to the Leased Premises.



 


		5.	WATER
                                         RIGHTS.



 


		11.1	Water
                                         Rights in Name of Lessor. If Lessee files to appropriate water for use in association
                                         with this lease or operations upon the Leased Premises, the filing for such water right
                                         shall be made by Lessee in the name of Lessor at no cost to Lessor, and such water right
                                         shall become an appurtenance to the Leased Premises, subject to Lessee’s right
                                         to use such water right at no cost during the term of this Lease.



 


		11.2	Option
                                         to Purchase. If Lessee purchases or acquires an existing water right for use in association
                                         with this lease or operations upon the Leased Premises, Lessor shall have the option
                                         to acquire that portion of such water right as was used on the Leased Premises upon expiration
                                         or termination of this Lease. The option price for such water right shall be the fair
                                         market value of the water right as of the date of expiration or termination of this Lease.
                                         Upon expiration or termination of this Lease, Lessee shall notify Lessor in writing of
                                         all water rights purchased or acquired by Lessee for leased substances mining operations
                                         on the Leased Premises and its estimate of the fair market value of such water right.
                                         Lessor shall then have forty-five (45) days to exercise its option to acquire the water
                                         by payment to Lessee of the estimated fair market value. If Lessor disagrees with Lessee’s
                                         estimate of fair market value, Lessor shall notify Lessee of its disagreement within
                                         the 45 day option exercise period. The fair market value of the water right shall then
                                         be appraised by a single appraiser mutually acceptable to both parties, which appraisal
                                         shall be final and not subject to review or appeal. If the parties cannot agree upon
                                         the choice of an appraiser, the fair market value of the water right shall be determined
                                         by a court of competent jurisdiction. Conveyance of any water right pursuant to this
                                         paragraph shall be by quit claim deed.



 






     


     


    

 


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		12.	ASSIGNMENT
                                         OR SUBLEASE; OVERRIDING ROYALTIES.



 


		12.1	Consent
                                         Required. Lessee shall not assign or sublease this Lease in whole or in part, or
                                         otherwise assign or convey any rights or privileges granted by this Lease, including,
                                         without limitation, creation of overriding royalties or production payments, without
                                         the prior written consent of Lessor, which shall not be unreasonably withheld. Lessee
                                         agrees that Lessor, in determining whether to consent to any proposed assignment, may
                                         reasonably consider the proposed assignee’s financial capacity, ability to market
                                         and process leased substances, and may refuse to consent to such assignment if, in the
                                         Lessor’s reasonable opinion, the proposed assignee lacks the necessary financial
                                         or technical capacity to mine, market and/or process leased substances in a manner comparable
                                         to Lessee. Any assignment, sublease or other conveyance made without prior written consent
                                         of Lessor shall have no legal effect unless and until approved in writing by Lessor.
                                         Exercise of any right with respect to the Leased Premises in violation of this provision
                                         shall constitute a default under this Lease.



 


		12.2	Binding
                                         Effect. All of the terms and provisions of this Lease shall be binding upon and shall
                                         inure to the in accordance with standard industry operating practices, and shall avoid
                                         waste of economically recoverable benefit of their respective successors, assigns, and
                                         sublessees.



 


		12.3	Limitation
                                         on Overriding Royalties. No overriding royalty, production payment or other similar
                                         interest may be granted without the express written consent of Lessor, which may be granted
                                         or withheld in Lessor’s sole discretion.



 


		13.	OPERATIONS.



 


		13.1	Permitting.
                                         Before Lessee commences exploration, drilling, or mining operations on the Leased Premises,
                                         it shall have obtained such permits and posted such bonds as may be required under applicable
                                         provisions of the Utah Mined Land Reclamation Act and associated regulations. Lessee
                                         shall maintain any required permits in place for the duration of mining operations and
                                         reclamation. Upon request, Lessee shall provide Lessor with a copy of all regulatory
                                         filings relating to permitting matters.



 


		13.2	Plan
                                         of Operations. Lessee does not have the right to conduct surface disturbing operations
                                         or any operations that have the potential to affect historic properties without first
                                         obtaining Lessor’s approval pursuant to Utah Administrative Code R850-24-700.
                                         Prior to the commencement of any such activities on the Leased Premises, Lessee shall
                                         obtain Lessor’s approval of a plan of operations for the Leased Premises. Lessor
                                         may modify the proposed plan of operations as is needed to insure that there is no waste
                                         of economically recoverable mineral reserves contained on the Leased Premises. In this
                                         context “waste” shall mean the inefficient utilization of, or the excessive
                                         or improper loss of an otherwise economically recoverable mineral resource. Lessor shall
                                         notify Lessee in writing of its approval or modifications of the plan of operations.
                                         The plan of operations submitted by Lessee shall be deemed approved by Lessor if Lessor
                                         has not otherwise notified Lessee within sixty (60) days of filing.



 


		13.3	Plan
of Operations - Modification. In the event that material changes are required to the plan of operations during the course
of mining, Lessee shall submit a modification of the plan of operations to the Lessor. Routine adjustments to the plan of operations
based upon geologic circumstances encountered during day-to-day mining operations that do not result in increased surface disturbance
do not require the submission of a modification. If the proposed changes require emergency action by Lessee, then the Lessee shall
so notify the Lessor at the time of submission of the modification and the parties shall use their best efforts to meet the Lessee’s
time schedule regarding implementation of the changes. Non-emergency modifications will be reviewed promptly by Lessor to insure
that there is no waste of economically recoverable mineral reserves pursuant to the plan of operations, as modified, and Lessor
shall notify lessee in writing of its approval or modification of the proposed modification. Modifications shall be deemed approved
by Lessor if Lessor has not otherwise notified Lessee within thirty (30) days of filing.



 


		13.4	Mine
                                         Maps. Lessee shall maintain at the mine office clear, accurate, and detailed maps
                                         of all actual and planned operations. Such maps shall be certified by an engineer or
                                         geologist who is professionally licensed by the State of Utah or by a state having a
                                         reciprocal licensing agreement with the State of Utah. Lessee shall provide copies of
                                         such maps to Lessor upon request.



 


 






     


     


    

 


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		13.5	Good
                                                                                                                                                                   Mining Practices. Lessee shall conduct exploration and mining operations on the Leased
                                                                                                                                                                   Premises in accordance with standard industry operating practices, and shall avoid waste of economically recoverable leased
                                                                                                                                                                   substances. Lessee shall comply with all regulations and directives of                                          the Mine
                                                                                                                                                                   Safety and Health Administration or successor agencies for the health and safety                                          of
                                                                                                                                                                   employees and workers.



  


		13.6	Mining
                                         Units. Lessor may approve the inclusion of the Leased Premises in a mining unit with
                                         federal, private or other non-state lands upon terms and conditions that it deems necessary
                                         to protect the interests of the Lessor, including without limitation segregation of production,
                                         accounting for commingled leased substances production, and minimum production requirements
                                         or minimum royalties for the Leased Premises.



 


		13.7	Cultural
                                         Resources. Prior to commencing any surface disturbing operations or any operations
                                         that have the potential to affect historic properties, Lessee shall complete a cultural
                                         resource inventory prepared in accordance with applicable laws and regulations, or otherwise
                                         provide evidence of compliance with Utah Administrative Code R850-60-800. Lessee
                                         shall provide such cultural resource compliance materials to Lessor prior to the approval
                                         of the mining permit. Lessor will review all cultural resource compliance materials provided
                                         by Lessee, and may approve, condition, or deny its consent to the mining permit based
                                         upon impacts to cultural resources. Lessor may require Lessee to complete appropriate
                                         cultural resources mitigation measures as a condition of permit approval.



 


		14.	EQUIPMENT;
                                         RESTORATION.



 


		14.1	Equipment.
                                         Upon termination of this Lease, Lessee shall remove, and shall have the right to remove,
                                         all improvements, equipment, stockpiles, and dumps from the Leased Premises within six
                                         (6) months; provided, however, that Lessor may, at Lessor’s sole risk and expense,
                                         and subject to Lessee’s compliance with requirements imposed by UDOGM and MSHA,
                                         require Lessee to retain in place underground timbering supports, shaft linings, rails,
                                         and other installations reasonably necessary for future mining of the Leased Premises.
                                         All improvements and equipment remaining on the Leased Premises after six (6) months
                                         may be deemed forfeited to Lessor upon written notice of such forfeiture to Lessee. Lessee
                                         may abandon underground improvements, equipment of any type, stockpiles and dumps in
                                         place if such abandonment is in compliance with applicable law, and further provided
                                         that Lessee provides Lessor with financial or other assurances sufficient in Lessor’s
                                         reasonable discretion to protect Lessor from future environmental liability with respect
                                         to such abandonment or any associated hazardous waste spills or releases. Lessee shall
                                         identify and locate on the mine map the location of all equipment abandoned on the Lease
                                         Premises.



 


		14.2	Restoration
                                         and Reclamation. Upon termination of this Lease, Lessee shall reclaim the Leased
                                         Premises in accordance with the requirements of applicable law, including mine permits
                                         and reclamation plans on file with UDOGM. Lessee shall further abate any hazardous condition
                                         on or associated with the Leased Premises. Lessee and representatives of all governmental
                                         agencies having jurisdiction shall have the right to re-enter the Leased Premises for
                                         reclamation purposes for a reasonable period after termination of the Lease.



 


		15.	MULTIPLE
                                         MINERAL DEVELOPMENT. The Utah School and Institutional Trust Lands Administration
                                         may designate any lands under its authority as a Multiple Mineral Development Area (MMD).
                                         In designated MMDs the Lessor may require in addition to the terms and conditions of
                                         this lease such stipulations or restrictions as may be necessary in the discretion of
                                         the Director to integrate and coordinate the operations of lessees having an interest
                                         in the lands in order to conserve natural resources and optimize revenues to the trust-land
                                         beneficiaries.



 


 




     


     


    

 


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		16.	DEFAULT



 


		16.1	Notice
                                         of Default; Termination. Upon Lessee’s violation of or failure to comply with
                                         any of the terms, conditions or covenants set forth in this Lease, Lessor shall notify
                                         Lessee of such default by registered or certified mail, return receipt requested, at
                                         the last address for Lessee set forth in Lessor’s files. Lessee shall then have
                                         thirty (30) days, or such longer period as may be granted in writing by Lessor, to either
                                         cure the default or request a hearing pursuant to the Lessor’s administrative adjudication
                                         rules. In the event Lessee fails to cure the default or request a hearing within the
                                         specified time period, Lessor may cancel this Lease without further notice to or appeal
                                         by Lessee.



 


		16.2	Effect
                                         of Termination. The termination of this Lease for any reason, whether through expiration,
                                         cancellation or relinquishment, shall not limit the rights of the Lessor to recover any
                                         royalties and/or damages for which Lessee may be liable, to recover on any bond on file,
                                         or to seek injunctive relief to enjoin continuing violations of the Lease terms. No remedy
                                         or election under this Lease shall be deemed exclusive, but shall, wherever possible,
                                         be cumulative with all other remedies available under this Lease, at law, or in equity.
                                         Lessee shall surrender the Leased Premises upon termination; however, the obligations
                                         of Lessee with respect to reclamation, indemnification and other continuing covenants
                                         imposed by this Lease shall survive the termination. All fees, rentals and monies of
                                         any type previously paid by the Lessee to the Lessor are forfeited to the trust.



 


		17.	MISCELLANEOUS
                                         PROVISIONS.



 


		17.1	Indemnity.
                                         Except as limited by paragraph 7.2, Inspection, Lessee shall indemnify and hold Lessor
                                         harmless for, from and against each and every claim, demand, liability, loss, cost, damage
                                         and expense, including, without limitation, attorneys’ fees and court costs, arising
                                         in any way out of Lessee’s occupation and use of the Leased Premises, including
                                         without limitation claims for death, personal injury, property damage, and unpaid wages
                                         and benefits. Lessee further agrees to indemnify and hold Lessor harmless for, from and
                                         against all claims, demands, liabilities, damages and penalties arising out of any failure
                                         of Lessee to comply with any of Lessee’s obligations under this Lease, including
                                         without limitation reasonable attorneys’ fees and court costs. Lessee may be required
                                         to obtain insurance in a type and in an amount acceptable to Lessor, naming the Trust
                                         Lands Administration, its employees, its Board of Trustees and the State of Utah as co-insured
                                         parties under the policy.



 


		17.2	Interest.
                                         Interest shall accrue and be payable on all obligations arising under this Lease at such
                                         rate as may be set from time to time by rule enacted by Lessor. Interest shall accrue
                                         and be payable, without necessity of demand, from the date each such obligation shall
                                         arise.



 








		17.3	Suspension.
                                         In the event that Lessor in its reasonable discretion determines that suspension is necessary
                                         in the interests of conservation of the leased substances; that prevailing market conditions
                                         for the leased substances render continued operation of the subject property uneconomic,
                                         or if Lessee has been prevented from performing any of its obligations or responsibilities
                                         under this Lease or from conducting mining operations by labor strikes, fires, floods,
                                         explosions, riots, acts of terrorism, any unusual mining casualties or conditions,
                                         Acts of God, government restrictions or orders, severe weather conditions, or other extraordinary
                                         events beyond its control, then the time for performance of this Lease by Lessee shall
                                         be suspended during the continuance of such conditions or acts which prevent performance,
                                         excepting any payments due and owing to Lessor.



 






     


     


    

 


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		17.4	Consent
                                         to Suit; Jurisdiction. This Lease shall be governed by the laws of the State of Utah.
                                         Lessor and Lessee agree that all disputes arising out of this Lease shall be litigated
                                         only in the Third Judicial District Court for Salt Lake County, Utah, and Lessee consents
                                         to the jurisdiction of such court. Lessee shall not  bring any action
                                         against Lessor without exhaustion of available administrative remedies and compliance
                                         with applicable requirements of the Utah Governmental Immunity Act.






 


		17.5	No
                                         Waiver. No waiver of the breach of any provision of this Lease shall be construed
                                         as a waiver of any preceding or succeeding breach of the same or any other provision
                                         of this Lease, nor shall the acceptance of rentals or royalties by Lessor during any
                                         period of time in which Lessee is in default be deemed to be a waiver of such default.



 


		17.6	Severability.
                                         The invalidity of any provision of this Lease, as determined by a court of competent
                                         jurisdiction, shall in no way affect the validity of any other provision hereof.



 


		17.7	Entire
                                         Lease. This Lease together with any attached stipulations, sets forth the entire
                                         agreement between Lessor and Lessee with respect to the subject matter of this lease.
                                         No subsequent alteration of amendment to this Lease shall be binding upon Lessor and
                                         Lessee unless in writing and signed by each of them.



  




     


     


    

 


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IN WITNESS WHEREOF, the parties have executed this Lease
as of the Effective Date.


 








	 	 	THE STATE OF UTAH, acting by and through the
	 	 	SCHOOL AND INSTITUTIONAL TRUST LANDS
	 	 	ADMINISTRATION (“LESSOR”)
	APPROVED AS TO FORM	 	 
	 	 	DAVID URE, DIRECTOR
	SEAN D. REYES	 	 
	ATTORNEY GENERAL	 	 
	 	 	 
	By:	 /s/ Sean D. Reyes	 	By:	/s/
    Thomas B. Faddies                        
	 	Special Assistant Attorney General	 	 	THOMAS B. FADDIES
	 	 	 	ASSISTANT DIRECTOR/MINERALS
	 	 	 
	Form Approved: October 21, 2016	 	 
	 	 	 
	 	 	LESSEE: Petroteq Oil Recovery, LLC
	 	 	 
	 	 	By:	/s/ Aleksandr Blyumkin                               
	 	 	 
	 	 	Title:	Manager                    










 






     


     


    

 


ML 53806


Page No. 14


STATE OF UTAH                          )


                                                         :


COUNTY OF SALT LAKE           )


 


The foregoing instrument
was acknowledged before me this _____ day of____________________________ 20____, by Thomas B. Faddies, in his capacity as Assistant
Director/Minerals of the School and Institutional Trust Lands Administration.


 


 


	 	 
	 	Notary Public


 


STATE OF_________________ )


                                                      :


COUNTY OF_______________ )


 


The foregoing instrument
was acknowledged before me this _____ day of____________________________ 20____, by_________________________________ , in his capacity
as____________________________ of

the Lessee.


 


 


	 	 
	 	Notary Public


 


STATE OF_________________ )


                                                       :


COUNTY OF_______________ )


 


The foregoing instrument
was acknowledged before me this _____ day of ____________________________ 20____, by_________________________________ , Lessee.


 


	 	 
	 	Notary Public