Document:

Exhibit 10.17

 

	
   

  	
  NEW MEXICO STATE LAND OFFICE

  APPLICATION FOR

  ASSIGNMENT OF A GENERAL MINING

  LEASE

  	
  LAND OFFICE USE ONLY

  FROM: HG-0060

  TO: HG-0060-1

  

 

	
  FOR VALUE RECEIVED,

  	
   

  	
  Great Western Exploration, LLC,

  	
   

  	
  (“Assignor” whether one or more),

  
	
   

  	
   

  	
  Name (include name of spouse, if any, or type of business entity)

  	
   

  	
   

  

 

assigns and conveys to: BE Resources, Inc.
(“Assignee” whether one or more), whose mailing address is 107 Hackney Cr.,
Elephant Butte, NM 87935, the entire interest and title in and to Mineral Lease
No. HG-0060 (“the Lease”) initially made by the New Mexico State Land
Office to: Great Western Exploration, LLC, dated January 3, 2005,
insofar as the Lease covers the following land in Socorro County, New Mexico:

 

	
  Subdivision

  	
   

  	
  Section

  	
   

  	
  Township

  	
   

  	
  Range

  	
   

  	
  Acres

  	
   

  	
  Institution

  	
   

  
	
  ALL

  	
   

  	
  16

  	
   

  	
  9S

  	
   

  	
  8W

  	
   

  	
  640

  	
   

  	
  CS

  	
   

  

 

together with the rights incident thereto,
and improvements thereon, if any.

 

Assignee assumes and agrees
to perform all duties and obligations to the Commissioner of Public Lands
including payment of rentals and royalties, and to do such other acts as are
required by the Lease, to the same extent and in the same manner as if the
provisions of the Lease were fully set out herein.

 

Assignee warrants the
leasehold estate herein assigned, except as to any valid overriding royalty,
production payment, operating agreement or sub-lease, if any, now of legal
record, and covenants to the Assignee and the Commissioner of Public Lands that
the leasehold estate assigned is valid, and that all rentals and royalties due
under the Lease have been paid in full, and that all other Lease obligations
presently due have been fully performed.

 

	
  EXECUTED this 4 day of September, 2007.

  	
  By:

  	
  /s/ DAVID Q. TOGNONI

  
	
   

  	
   

  	
  Assignor

  
	
   

  	
   

  	
   

  
	
   

  	
  General Manager, Great
  Western Exploration, LLC

  
	
   

  	
  Spouse, if any, or title,
  if signing in representative capacity

  

 

ASSIGNEE’S ACCEPTANCE

 

The undersigned Assignee named above hereby
agrees to be bound by all of the terms, covenants, and conditions of the Lease
and this Assignment and shall succeed to the rights and benefits under the
Lease.

 

	
  EXECUTED this 4 day of September, 2007.

  	
  By:

  	
  /s/ DAVID Q. TOGNONI

  
	
   

  	
   

  	
  Assignor

  
	
   

  	
   

  	
   

  
	
   

  	
  President, BE
  Resources Inc.

  
	
   

  	
  Spouse, if any, or title,
  if signing in representative capacity

  

 

APPROVAL OF THE COMMISSIONER

 

Office of the Commissioner
of Public Lands

 

 

Santa Fe, New Mexico

 

I hereby certify that this
Assignment was filed in my office on RECEIVED SEP 06 2007, and was approved by
me and shall be effective as to the State of New Mexico on APPROVED SEP 10
2007.

 

	
   

  	
  /s/ Patrick H. Lyons

  
	
   

  	
  COMMISSIONER OF PUBLIC LANDS

  

 

ACKNOWLEDGMENT IN AN INDIVIDUAL CAPACITY

 

	
  State of 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  County of 

  	
   

  	
   

  

 

	
  This instrument was acknowledged before me on

  	
   

  	
   

  	
  (date) by

  
	
   

  	
   

  
	
   

  	
   

  	
  (name(s) of person(s))

  
					

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature of Notarial Officer

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  (Seal)

  	
   

  
	
   

  	
  My commission expires:

  	
   

  	
   

  
					

 

ACKNOWLEDGMENT IN A REPRESENTATIVE CAPACITY

 

State of NEW MEXICO

 

County of SIERRA

 

This instrument was acknowledged before me on
SEPT. 4, 2007 (date) by

 

David Q. Tognoni (name(s) of person(s))

 

as General Manager, (type of authority,
e.g., officer, trustee, etc.) of

 

Great Western Exploration, LLC (name of
party on behalf of whom instrument was executed.)

 

	
   

  	
  /s/ KANDIE LANFORD

  	
   

  
	
   

  	
  Signature of Notarial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  KANDIE LANFORD

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  NOTARY PUBLIC

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
  My commission expires:

  	
  10-26-08

  	
   

  
					

 

INSTRUCTIONS AND INFORMATION

 

1.             FILING:  All Assignments must be filed in the State
Land Office in triplicate, with original signatures on all three copies, within
one hundred (100) days from the date of signing, and must be accompanied
by the recording fee.

 

 

2.             RECORDING
FEE:  The non-refundable recording
fee for each Assignment is fifty dollars ($50.00).

 

3.             PERSONAL
CHECKS:  When an Assignment is
accompanied by a personal check, the Commissioner of Public Lands reserves the
right to withhold approval of the Assignment until the check is paid.

 

4.             ASSIGNMENT
APPROVAL:  The
Commissioner will approve the assignment of a mineral lease, in whole or in
part, if the Commissioner finds:

 

A.            the Assignment does not
create an undivided interest in the lease or any part thereof;

 

B.            the assigned portion of the
premises is not less than a legal subdivision;

 

C.            the Assignment is executed
on the proper form and by the proper person;

 

D.            the lease is in good standing
as to the assigned portion of the premises;

 

E.             no litigation is pending
that could affect the lease or the interest of any person therein;

 

F.             The Assignee has been
pre-qualified pursuant to 19.2.2.21 NMAC;

 

G.            the Assignment will not
adversely affect the interests of the trust; and

 

H.            the Assignment is to no more
than two persons.

 

5.             COMPLETE
ADDRESS:  An
Assignment must show the complete post office address of the Assignee.

 

6.             ACKNOWLEDGMENT:  An Assignment must be executed before an
officer authorized to take acknowledgments of deeds. Persons executing on
behalf of a corporation or other business entity must indicate title or
authority to execute.

 

7.             MARITAL
STATUS:  An Assignment must show whether
the Assignors are married or single; if married, both husband and wife must
sign the Assignment. The Certificates of Acknowledgment must show the marital
status of the Assignors.

 

8.             COMMUNICATIONS:  All official business, letters and
communications must be addressed directly to the Commissioner of Public Lands,
Oil, Gas, and Minerals Division.

 

9.             PAYMENT:  All payments for annual rental, recording,
and approval of fees are to be made to:

 

COMMISSIONER OF PUBLIC LANDS

P.O. Box 1148

Santa Fe, NM 87504-1148

 

NEW MEXICO STATE LAND OFFICE

DISCLOSURE STATEMENT

19.2.2.19 AND 19.2.2.20 NMAC

 

This disclosure statement
dated this 4 day of September, 2007 is provided by BE Resources Inc.,
hereinafter referred to as “applicant” to the Commissioner of Public Lands in
accordance with 19.2.2.19 and 19.2.2.20 NMAC, as a prerequisite to securing an
assignment of a general mining lease as authorized by New Mexico Statutes
Annotated (NMSA) 1978 paragraph 19-8-14 and subsequent paragraphs. Current
business address and telephone number of applicant: 107 Hackney Circle, Elephant
Butte, New Mexico 87935, Telephone: 505-744-4014.

 

A.            Names and addresses of all
predecessor or parent organizations or affiliates, if any. Please also include,
if the applicant is an entity: (i) the state in which such entity was
formed; (ii) the nature 

 

 

of the legal entity (partnership, LLC,
etc.); (iii) the address of the principal place of business in New Mexico
and/or the registered agent in New Mexico:

 

BE
Resources Inc. is a Colorado company incorporated on August 8, 2007.
BE Resources Inc. has no predecessors or parents. BE Resources Inc.
is acquiring the state mining leases from Great Western Exploration, LLC,
the Colorado limited company which presently owns the leases. The principal
place of business for BE Resources Inc. is 107 Hackney Circle, Elephant
Butte, New Mexico 87935.

 

B.            Previous mining experience,
including a list of mines currently or previously operated. For each mine,
please state type of mine, mineral(s) mined, its location (county and
state or foreign country), and any name by which the mine is or was known.
Include mines operated by any of the organizations you have listed in
Paragraph A above.

 

BE
Resources Inc. has no previous mining operation history. If approved, BE
Resources Inc. will be the assignee of State Land Office Lease
Nos. HG-0059, HG-0060 and HG-0061 which are currently held by Great
Western Resources, LLC, a qualified state mineral lessee and the proposed
assignor of the lease which is the initial purpose of this disclosure
statement.

 

C.            List any and all financial
assurances designed to assure performance of an obligation that you have
forfeited in the past ten years. For each forfeiture, state the date or
approximate date and the reason for the forfeiture, and the address of each
entity to whom the forfeiture was made. (Include all forfeitures by entities
identified in Paragraph A.)

 

None

 

D.            List any and all penalties
and fines in excess of five hundred dollars ($500.00) that you have paid in the
past ten years for violating or allegedly violating any permit or law whose
primary purpose is to protect or assure reclamation of the environment. For
each such penalty or fine, please state its amount, the date or approximate
date it was paid, and describe the violation or alleged violation that resulted
in the penalty or fine. (Include any such penalties paid by any entitles listed
in paragraph A above.)

 

None

 

E.             List all persons by name and
title or position who could exercise management control over how mining
activities would be conducted:

 

David
Tognoni, General Manager of BE Resources Inc.

 

F.             Type of minerals in the
geological area of interest and basis for believing a successful mine can be
established in the geological area of interest:

 

Beryllium
and associated minerals and ores.

 

G.            Proposed methods of exploration
and extraction:

 

Exploration—drilling
permitted by the State of New Mexico. Current permitted program is ongoing.
Extraction—Conventional underground or open-pit as permitted by the State of
New Mexico.

 

H.            Descriptions of any
mitigating circumstances that may help explain negative information (such as
payment of penalties, etc):

 

Not
applicable.

 

I.              Please set forth any
additional information for the Commissioner the applicant believes would help
the Commissioner assess the applicant’s qualifications, environmental and
mining track records, and intentions regarding the area proposed to be covered
by a general mining lease

 

 

Mr. David
Tognoni, President of BE Resources Inc., is a professional engineer who
has 27 years experience in mining and mineral exploration. Mr. Tognoni
is a registered Professional Engineer, State of New Mexico. A description of
his experience is attached hereto.

 

In
addition, Mr. Stewart Jackson has been retained as a mining consultant by
BE Resources Inc. He has 40 years experience in the mining business,
as described in his resume attached hereto.

 

The
Commissioner retains the right to request additional information pertinent to
assessing your qualifications, environmental record, mining record, and
intentions regarding the area to be covered by a proposed lease, which he deems
necessary.

 

I,
David Tognoni, do hereby certify that I have personal knowledge of the
information supplied and, to the best of my knowledge, all the statements made
in this Disclosure Statement are true and complete.

 

	
   

  	
  /s/ David Tognoni

  
	
   

  	
  David Tognoni

  

 

ACKNOWLEDGMENT IN A REPRESENTATIVE CAPACITY

 

	
  State of New Mexico

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  County of SIERRA

  	
  )

  	
   

  

 

This instrument was
acknowledged before me on SEPT. 4, 2007 by David Tognoni as President of BE
Resources Inc.,

 

	
   

  	
  /s/ Kandie Lanford

  
	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Kandie Lanford

  	
   

  
	
  (Seal)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My commission expires:

  	
  10-26-08Exhibit 10.18

 

NEW MEXICO STATE LAND OFFICE

MINING LEASE FOR GENERAL MINING—LEASE NO. HG-0061

 

This Lease is made and entered into between
the COMMISSIONER OF PUBLIC LANDS, (“Commissioner”), as Lessor, and

 

Great
Western Exploration, LLC

2008
Meander Rd., Windsor, CO 80550

 

(“Lessee”), and shall become effective upon
the date executed by the Commissioner.

 

The Lessee has duly filed an application for
a mining lease for the purpose stated in this Lease, covering the lands
described below which are under the jurisdiction of the Commissioner. The
Lessee has tendered a bonus amount of $455
which includes the first year’s annual rental and the further sum of $ 100.00 as application fee, and the
Commissioner has accepted the application as submitted.

 

The parties agree as follows:

 

The Commissioner does grant, demise and lease
to Lessee for the sole and only purpose of exploring for, mining, removing, and
processing of Beryllium as the
principal mineral and minerals associated therewith on and from the following
described lands, (the “Property”), situated in Socorro County, New Mexico:

 

	
  SUBDIVISION

  	
   

  	
  SEC

  	
   

  	
  TWP

  	
   

  	
  RGE

  	
   

  	
  BENEFICIARY

  	
   

  	
  ACRES

  	
   

  
	
  Lots
  7,8,9,

  	
   

  	
  17

  	
   

  	
  9S

  	
   

  	
  8W

  	
   

  	
  CS

  	
   

  	
  127.90

  	
   

  

 

The parties agree as follows:

 

1.             Inspection by Lessee:  Lessee is leasing the Property based on
Lessee’s own inspection of and judgment regarding the Property. Lessee agrees
that the Commissioner is making no representations or warranties with regard to
the Property.

 

2.             Term:

 

A.            Primary Term Of Mineral
Lease:

 

i.              The Lease shall
be for a primary term of three (3) years and so long thereafter as
minerals are produced or mined in paying quantities from the Property.

 

ii.            Annual rent
during the primary term shall be one dollar ($1.00) per acre, which amount
shall be paid in advance each year.

 

B.            Secondary Term Of Mineral
Lease:

 

i.              If minerals are
not produced or mined in paying quantities during the primary term, then the
Lessee may continue the Lease in full force and effect through a secondary
term. The secondary term shall be two (2) years and so long thereafter as
minerals are produced or mined in paying quantities from the Property.

 

ii.            Annual rent
during the secondary term shall be ten dollars ($10.00) per acre, which amount
shall be paid each year in advance.

 

C.            Tertiary Term Of Mineral Lease:

 

i.              If minerals are
not produced or mined in paying quantities during the primary or secondary
term, then the Lease may be continued into the tertiary term. The tertiary term
shall be five (5) years and so long thereafter as minerals are produced or
mined in paying quantities from the Property.

 

1

 

ii.            Annual rent
during the tertiary term shall be three dollars ($3.00) per acre, which amount
shall be paid each year in advance.

 

D.            Quaternary Term Of Mineral
Lease:

 

i.              If minerals are
not produced or mined in paying quantities from the Property during the
primary, secondary or tertiary term, then the Lease may be continued into the
quaternary term. The quaternary term shall be five (5) years and so long
thereafter as minerals are produced or mined in paying quantities from the
Property.

 

ii.            Annual rent
during the quaternary term shall be ten dollars ($10.00) per acre, which amount
shall be paid each year in advance.

 

3.             Amount Of Royalty:  In addition to annual rentals, the Lessee
shall pay royalty on all minerals mined and removed except special minerals.
The royalty shall be no less than two percent (2%) of the gross returns, less
the actual and reasonable transportation and smelting or reduction costs, up to
fifty percent (50%) of the gross returns. Gross returns shall be based on the
arm’s-length sales price of the produced minerals and shall include, if
applicable, all premiums, bonuses and other consideration of any kind received
by the Lessee for the minerals produced from the Property. The Lessee shall
calculate royalty for special minerals in exactly the same manner as for other
minerals, except that the royalty percentage shall be no less than five percent
(5%) of the gross returns. “Special minerals”
means rare earth minerals, precious and semi-precious stones, uranium, thorium
or any other minerals which have been or may hereafter be determined to be
essential to the production of fissionable materials.

 

4.             Advance Royalty During Quaternary Term:  If minerals are not produced or mined in
paying quantities during the primary, secondary or tertiary term, then the
Lease may be continued into the quaternary term by the payment of advance
royalties:

 

A.            In the eleventh
year of the Lease, the Lessee shall pay, in addition to rent, ten dollars ($10)
per acre as an advance royalty.

 

B.            In the twelfth
year of the Lease, the Lessee shall pay, in addition to rent, twenty dollars
($20) per acre as an advance royalty.

 

C.            In the
thirteenth year of the Lease, the Lessee shall pay, in addition to rent, thirty
dollars ($30) per acre as an advance royalty.

 

D.            In the
fourteenth year of the Lease, the Lessee shall pay, in addition to rent, forty
dollars ($40) per acre as an advance royalty.

 

E.             In the
fifteenth year of the Lease, the Lessee shall pay, in addition to rent, fifty
dollars ($50) per acre as an advance royalty.

 

5.             Credit For Advance Royalties:  Upon the commencement of production of
minerals in paying quantities, the principal sum paid as an advance royalty for
the year in which such production commences, and the principal sums so paid for
the two (2) previous years, shall be credited against the royalty
otherwise payable to the Commissioner.

 

6.             Payment Of Royalty And Accounting:  The Lessee shall pay the correct amount of
royalty to the Commissioner on the twentieth (20th) day of the month following the month of use, sale
or other disposal of minerals. On the same day, the Lessee shall submit to the
Commissioner a production and royalty statement, accounting for the production
and royalty for the previous calendar month. Such statements shall be prepared
upon forms prescribed and furnished by the Commissioner and in accordance with
instructions accompanying the forms.

 

2

 

7.             Reclamation Plan Required:  Notwithstanding the issuance of this mineral
Lease, no mining activity shall be conducted on the Property except in
accordance with a written reclamation plan approved by the Commissioner.
Reclamation plans consist of the mining permit or other authorizations issued
by the permitting agency and any supplemental requirements deemed necessary by
the Commissioner to assure adequate protection and reclamation of Property.
Upon approval by the Commissioner, the reclamation plan shall automatically be
incorporated into this mineral Lease without the necessity of further agreement
between the Lessee and the Commissioner. A violation of the reclamation plan
shall constitute a violation of the mineral Lease.

 

8.             Obtaining Permit From The Permitting Agency:

 

A.            The Lessee
shall apply for a permit from the permitting agency in accordance with the New
Mexico Mining Act or other applicable laws, whichever applies. The Lessee shall
submit copies of the permit application and all supporting documents to the
Commissioner at the same time that these materials are submitted to the
permitting agencies. The Lessee shall also promptly submit copies to the
Commissioner of all correspondence, reports and other documents regarding the
Lessee’s permit applications.

 

B.            The Lessee’s
permit applications and supporting documents shall fully disclose the intended
mining activity to the permitting agencies and the Commissioner. The
Commissioner will review the Lessee’s application and supporting documents and
may participate in the permitting process at the discretion of the
Commissioner.

 

C.            If the
permitting agencies require the land management agency or landowner to approve
a proposed permit prior to issuance, the Commissioner may withhold such approval
if the Commissioner determines that a proposed mining activity is not in the
best interest of the trust. At the written request of the Commissioner, the
Lessee shall withdraw any such proposed mining activities from its permit
application.

 

9.             Supplemental Requirements:

 

A.            After the
Lessee obtains the necessary permits or other final authorization from the
permitting agencies in accordance with 19.2.2.25 NMAC, the Lessee shall submit
a complete and accurate copy of the permit or other authorization to the
Commissioner. The Commissioner may review the permit or other authorization to
determine whether to include any supplemental requirements in the reclamation
plan.

 

B.            If the
Commissioner determines that supplemental requirements are needed, the Commissioner
may notify the Lessee of the specific areas of concern, and the Lessee shall
thereafter propose supplemental requirements to address these concerns. The
Commissioner may review the Lessee’s proposal and may notify the Lessee of any
deficiencies, which the Lessee shall address in a subsequent submittal. The
process of submittal and review shall be repeated until the Commissioner
approves the Lessee’s proposed supplemental requirements.

 

10.          Issuance Of Reclamation Plan:  After the permitting agencies issue the
mining permit or other authorizations and the Commissioner reviews the permit
and approves any supplemental requirements, the Commissioner may prepare a
reclamation plan. The reclamation plan may consist of the permits or other
authorization issued by the permitting agencies, incorporated by reference, and
any supplemental requirements imposed by the Commissioner. The Lessee shall
sign and acknowledge the plan, in triplicate, and return all three originals to
the Commissioner. The Commissioner may thereafter approve the reclamation plan
by signing the plan, in triplicate, and returning one fully executed original
to the Lessee.

 

3

 

11.          Strict Compliance With Reclamation Plan:  The Lessee shall conduct mining activity in
strict compliance with an approved reclamation plan. The reclamation plan in
effect at any given time authorizes only such mining activity as is authorized
under the permit or other authorization issued by the permitting agencies and expressly
incorporated by reference into the plan.

 

12.          Additional Reclamation Plans:  The Lessee shall obtain an additional
reclamation plan before conducting any mining activity that is not authorized
under its existing reclamation plan. The Lessee shall obtain the additional
reclamation plan to cover the new mining activity by following the procedure
set out in 19.2.2.25 NMAC through 19.2.2.27 NMAC. The original and all
additional reclamation plans approved by the Commissioner shall remain in full
force and effect unless otherwise provided in the latest plan approved by the
Commissioner. In the event of a direct conflict between the most current
reclamation plan and any earlier plan, the most current plan shall govern.

 

13.          Survival Of Reclamation Plan Requirements:  The Lessee’s obligation to reclaim the
Property in accordance with the reclamation plan in effect at the time the
mineral Lease is suspended, relinquished or otherwise terminated for any reason
shall survive such suspension, relinquishment or termination and continue so
long thereafter as Lessee’s liability under the Mining Act or other applicable
laws continues. In the event of such suspension, relinquishment or termination
of the mineral Lease, the Commissioner may provide the Lessee with written
authorization to enter the Property to carry out the reclamation plan.

 

14.          Mine Development Plan Required:  No minerals shall be produced except in
substantial compliance with a written mine development plan approved by the
Commissioner. The mine development plan shall provide for efficient and orderly
development of mineral reserves and prevention of waste. The mine development
plan shall be consistent with the Lessee’s obligation to reclaim the Property.
The requirements of the mine development plan shall, upon approval by the
Commissioner, be incorporated automatically into the mineral Lease without the
necessity of further agreement between the Lessee and the Commissioner. Failure
to substantially comply with the mine development plan shall constitute a
violation of the mineral Lease.

 

15.          Obtaining A Mine Development Plan:  The Lessee shall submit a proposed mine
development plan to the Commissioner, who shall review the plan and thereafter
notify the Lessee, in writing, of any deficiencies. The Lessee shall then
submit a modified proposal addressing the deficiencies and any other issues
raised by the Commissioner. This process of submittal and review shall be
repeated until the Commissioner and Lessee reach agreement on the plan. Once
agreement is reached, the Lessee shall sign and acknowledge the mine
development plan, in triplicate, and return all originals to the Commissioner.
The Commissioner shall thereafter approve the plan by signing all three
originals and returning one original to the Lessee.

 

16.          Modification Of Mine Development Plan:  If the Lessee determines that it is no longer
feasible or economically prudent to follow the approved mine development plan,
the Lessee shall submit a proposed modification of the plan to the
Commissioner, together with the reasons that modification is required. The
Lessee shall seek the Commissioner’s approval for the modification by following
the procedure set out in 19.2.2.32 NMAC. The Lessee shall continue to comply
with the existing mine development plan until the Commissioner approves the
modification. The Commissioner may refuse to approve any modification that the
Commissioner determines is not in the best interest of the trust.

 

17.          Restriction On Permanent Pits, Piles And Impoundments:  No permanent pit, pile, impoundment or any
other permanent manmade feature or improvement shall be placed on the Property 

 

4

 

unless specifically approved
by the Commissioner. The Commissioner may refuse to approve any such permanent
feature or improvement that would prevent productive post-mining use of the
affected land, as determined by the Commissioner, unless the Lessee fully
compensates the trust for the loss of such land through purchase or other
arrangement approved by the Commissioner.

 

18.          No Processing Or Stockpiling Of Off-Lease Materials:  This Lease grants the Lessee the right to
enter the Property for mining purposes, together with the right to use and
occupy so much of the Property as may be necessary or convenient to carry out
such mining purposes. The Lease does not authorize the Lessee to process or
stockpile minerals, waste rock, ore, overburden or other materials obtained
from off-Lease sources. Therefore, unless authorized under a separate
commercial Lease issued by the Commissioner, no minerals, waste rock, ore,
overburden or other materials obtained from off-Lease sources shall be
processed or stockpiled on the Property.

 

19.          Financial Assurance:

 

A.            Unless waived
by the Commissioner in writing, and before the commencement of mining activity,
the Lessee shall provide financial assurance to guarantee payment of royalties
and to comply with the terms and conditions of this Lease other than
reclamation, which is covered under 19.2.2.39 NMAC. The Commissioner will
determine the amount of financial assurance required.

 

B.            Unless waived
by the Commissioner in writing, and before commencement of any exploration,
drilling, development, processing and/or mining activities on, in and/or under
the Property pursuant to this Lease, the Lessee shall execute and provide
financial assurance to secure payment for potential injuries to the Property’s
surface and/or mineral estates, water rights appertaining thereto, and/or
improvements on, in and/or under the Property that may result from the Lessee’s
said activities. The Commissioner shall fix or set the required financial
assurance in an amount to be determined by the Commissioner depending upon the
Lessee’s proposed operations but not less than five thousand dollars. The financial
assurance shall be in favor of the Commissioner, but held for the benefit of
the State Land Office Trust and/or its beneficiaries, contract purchasers,
patentees, right-of-way holders, easement grantees, licensees, permitees,
surface and/or other lessees of the Property (including without limitation,
agricultural, grazing, business, commercial, oil and gas, carbon dioxide,
helium, coal bed methane, and/or other mineral estate lessees) with rights to
the Property’s surface and/or mineral estates. Provided that, in lieu of said
financial assurance, the Commissioner may accept a waiver of financial
assurance, duly executed or acknowledged by the owners of the said improvements
and/or other rights described above.

 

C.            Lessees having
multiple leases with the Commissioner may, with the approval of the
Commissioner, provide one instrument to fulfill their total financial assurance
obligations under all such Leases regarding the protection of improvements
and/or other rights described above concerning the Property. The Commissioner
shall fix or set the amount of the Lessee’s consolidated financial assurance
obligation, which amount shall not be less than twenty-five thousand dollars.
The Lessee’s obligation to provide financial assurance for payment of royalties
and reclamation of the Property’s surface and/or mineral estates is not
eligible for coverage under this provision.

 

D.            The financial
assurance required under this Lease and/or 19.2.2.36 NMAC, 19.2.2.37 NMAC, and
19.2.2.38 NMAC is in addition to that which the permitting agency may require
pursuant to the New Mexico Mining Act or comparable law, whichever applies. If
the Commissioner determines that the amount or coverage of financial assurance
required 

 

5

 

by the permitting agency is
insufficient to adequately protect and reclaim the Property’s surface and/or
mineral estate, the Commissioner may require the Lessee to provide additional
financial assurance as a supplemental requirement to this Lease under 19.2.2.26
NMAC.

 

E.             Forms for all
financial assurance instruments required by the Commissioner shall either be
prescribed by the Commissioner or be in a form approved by the Commissioner.

 

20.          Inspections:

 

A.            The
Commissioner has the right to inspect all records and books of account
pertaining to the operations under the mineral Lease, including records and
books relating to mining, production, extraction, processing, transportation,
reduction, returns and reclamation. At the request of the Commissioner, the
Lessee shall furnish such reports, books, records, samples, logs, assays or
cores, as the Commissioner deems reasonably necessary to the proper
administration of the Lease.

 

B.            The
Commissioner has the right to enter the Property and the facilities located
thereon to inspect operations thereon, to conduct a field audit and to inspect
the records and books referred to in Subsection A of this section. To
facilitate field audits and inspections under this subsection, the Lessee shall
keep originals or true and accurate copies of all of the foregoing records,
books, documents and sample materials on the Property unless otherwise approved
by the Commissioner in writing.

 

C.            The Lessee
shall allow the permitting agencies to enter the Property and the facilities
located thereon to conduct activities or inspection consistent with such
agencies’ regulatory jurisdiction over Lessee’s operations or mining activity.

 

D.            No prior notice
is required under this section. Failure to timely comply with this section by
the Lessee, and failure to correct violations noted as a result of site
inspections provided hereunder, shall constitute a breach subjecting the Lease
to cancellation.

 

21.          Compliance With Laws:  The Lessee shall be responsible for
compliance with all laws, regulations, rules, ordinances, permits, licenses and
other requirements applicable to the Leasehold estate and the operations
thereon. Upon receiving notice from a government agency of an actual, potential
or alleged violation of law, the Lessee shall promptly notify the Commissioner
of the alleged violation and provide copies of all related documents to the
Commissioner.

 

22.          Cessation Of Production Before Expiration Of Set Terms:

 

A.            If production
in paying quantities commences during the primary or any subsequent term and
thereafter ceases before the quaternary term would have expired had there been
no such production, then the Lease shall be deemed a “non-producing” Lease on
the date that production in paying quantities ceases. Notwithstanding such
cessation of production in paying quantities, a non-producing Lease shall not
expire if the Lessee continues to pay rent and, if the Lease is in its
quaternary term, advanced royalties.

 

B.            The Lessee may
maintain the mineral Lease in effect under this section until the end of the
quaternary term and so long thereafter as minerals are produced in paying
quantities.

 

23.          Cessation Of Production After Expiration Of Set Terms:  If for any reason beyond the Lessee’s
control, production in paying quantities ceases after the quaternary term would
have expired, then the Lessee may, with the written approval of the
Commissioner, continue the Lease from year to year for an additional period not
to exceed three years. The Lessee shall continue to pay in advance the annual rental
at the rate provided in the quaternary term and an advance royalty of sixty
dollars ($60.00) per acre per each year of the extended term.

 

6

 

24.          Suspension Of Mineral Lease:  After notice and hearing, the Commissioner
may suspend a mineral Lease for a period not exceeding five years if the
Commissioner finds:

 

A.            the Lessee is
not in default,

 

B.            suspension of
the Lease will not affect compliance with safety, reclamation or environmental
requirements,

 

C.            the Lessee
submitted a written request for suspension to the Commissioner prior to
expiration of the Lease,

 

D.            the Lessee
submitted adequate evidence, as determined by the Commissioner, to prove that
the discovery on the Property of an ore body containing valuable mineral
deposits in merchantable quality and quantity, and

 

E.             temporary
conditions beyond the Lessee’s control have precluded mining on the Property
except at an economic loss or at an unreasonable threat to safety.

 

25.          Lessee’s Obligations During Suspension Of Mineral
Lease:  The Lessee’s
obligation to pay rent and royalties shall be suspended during the period the
mineral Lease is suspended. Provided, however, that the Lessee shall pay a
non-refundable fee of sixty dollars ($60.00) per acre for each year of
suspension. Suspension of a mineral Lease shall not operate to relieve the
Lessee from its obligations under this lease, the New Mexico Mining Act and
other applicable laws.

 

26.          Notice Of Commencement Of Production:  Within five (5) days after commencing
production, the Lessee shall notify the Commissioner of such production in
writing, giving the date that production commenced, and stating specifically
the legal subdivision, section, township and range where production occurred.
The Lessee shall provide the same notice where production re-commences after a
period of cessation lasting three consecutive months or longer.

 

27.          Lease Assignments Must Be Approved By Commissioner:  The Lessee may assign this mineral Lease, in
whole or in part, only if the Commissioner approves the assignment. No
purported assignment will bind the Commissioner, or change the Lessee of
record, unless approved in writing by the Commissioner. Provided, however, that
a mere change in the name of the mineral Lessee will not constitute an
assignment requiring approval by the Commissioner. The Lessee shall promptly
notify the Commissioner, in writing, of any change in name or mailing address.

 

28.          Approval Of Lease Assignments:  The Commissioner may approve an assignment of
this mineral Lease, in whole or in part, if the Commissioner finds:

 

A.            the assignment
does not create an undivided interest in the Lease or any part thereof,

 

B.            the assigned
portion of the Property is not less than a legal subdivision,

 

C.            the assignment
is executed in the proper form and by the proper person,

 

D.            the Lease is in
good standing as to the assigned portion of the Property,

 

E.             no litigation
is pending that could affect the Lease or the interest of any person therein,

 

F.             the assignee
has been pre-qualified pursuant to 19.2.2.21 NMAC; and

 

G.            the assignment
will not adversely affect the interests of the trust.

 

29.          Form Of Assignments:  Assignments of mineral Leases shall be upon
forms prescribed and furnished by the Commissioner. The Commissioner’s approval
of an assignment shall be noted on all copies of the assignment. Assignments
shall be executed and acknowledged in the same manner prescribed for conveyance
of real estate and shall be filed in triplicate with the 

 

7

 

Commissioner. One original
shall be recorded permanently, the second filed and the third returned to the
assignee.

 

30.          Assignment Fee:  The non-refundable fee for filing an
assignment of a mineral Lease shall be set forth in the schedule of fees.

 

31.          Subleasing Prohibited:  The Lessee shall not sublease this mineral
Lease.

 

32.          Side Agreements:  Side agreements are not binding upon the
Commissioner and do not change the Lessee’s obligations under this mineral
Lease. The Lessee of record shall remain responsible for compliance with the
terms and conditions of the mineral Lease.

 

33.          Cancellation Of Mineral Lease And Opportunity To Cure:  The Commissioner may cancel any mineral Lease
for non-payment of rentals, non-payment (or underpayment) of royalties and for
violation of any of the terms, covenants or conditions of the mineral Lease.
However, before any such cancellation shall be made, the Commissioner shall
mail a thirty-day (30) notice of cancellation to the Lessee, by registered
or certified mail, at the address of the Lessee shown by the records of the
Commissioner. The thirty-day (30) notice shall specify the default for
which the Lease is subject to cancellation. If the default is not cured within
thirty (30) days after the Commissioner mails the notice, then the
Commissioner may cancel the Lease. No proof of receipt of such notice is
necessary for cancellation. The Lessee shall be liable for all reasonable
attorneys fees and costs incurred by the Commissioner in enforcing the terms of
the Lease, including fees and costs incurred in regaining possession of and
reclaiming the Property.

 

34.          Relinquishment Of Mineral Lease:  With the consent of the Commissioner, a
mineral Lease in good standing may be relinquished, in whole or in part, upon
approval of the Commissioner and payment of the non-refundable filing fee in
accordance with the schedule of fees. However, the Commissioner will not
approve relinquishment of an undivided interest in a Lease or less than a legal
subdivision. Relinquishment does not relieve the Lessee from its obligation to
reclaim the Property.

 

35.          Reservations:  All rights not expressly granted under this
mineral Lease are reserved to the Commissioner. Notwithstanding the issuance of
this mineral Lease, and without limitation of said reservation of rights by the
Commissioner, the Commissioner specifically reserves the right to:

 

A.            Lease the
Property for grazing, agricultural or commercial purposes;

 

B.            Lease the
Property for oil and gas, coal bed methane gas, helium and/or carbon dioxide
exploration and extraction;

 

C.            Lease the
Property for the development of geothermal resources;

 

D.            Lease the
Property for exploration, drilling, development, processing, extraction and/or
mining of minerals on, in, under and/or from the Property other than the
aforedescribed principal mineral and minerals associated therewith which are
the subject of this mineral Lease;

 

E.             Sell the
Property subject to the mineral Lease, reserving all minerals of whatsoever
kind to the New Mexico State Land Office; and

 

F.             Issue rights of
way and easements over, under, upon or across the Property for any purpose,
including but not limited to, public highways, railroads, tramways, telegraph,
telephone and power lines, pipelines, irrigation works, mining, logging and for
exploration and development of geothermal resources.

 

8

 

36.          Cultural Properties:  Any archaeological sites,
historical artifacts or other cultural resources, including but not limited to
pottery, bone, modified stone and early historic remains, on or within the
Property are the Commissioner’s property. Lessee shall immediately stop mining or exploration operations.
report the discovery of any such material to the State Land Office Field
Operations Division Director, and shall consult with the State Land Office
Field Operations Division Director to determine a course of action.

 

A.            Adequate
fencing may be required to protect and preserve any significant sites as
determined by the State Land Office Field Operations Division Director.

 

B.            Liability for
damages to cultural resources, including restoration costs, is that of the
Lessee.

 

C.            In the event
that the presence of cultural resources materially and adversely affects the
ability of the Lessee to use a portion or all of the Property, the Lessee may,
with the approval of the State Land Office Field Operations Division Director,
negotiate an effects mitigation plan for legal removal of the cultural
resources, surrender the entire legal subdivision in which the archaeological
sites or other cultural resources are located or surrender the entire parcel.

 

D.            Unless a
class III Archaeological survey is conducted for the Property and a Letter
of Clearance obtained, the following will apply:

 

i.              An on-site
archaeologist will be required during any ground disturbing activities
conducted under an Exploration permit issued to the Lessee for the Property
under the New Mexico Mining Act.

 

ii.            A letter of
clearance for the specific site to be disturbed from the State Historical
Preservation Officer must be obtained by the Lessee under the New Mexico Mining
Act for the Property prior to any ground disturbing activities initiated under
a minimal impact mining permit.

 

37.          Indemnity:  Lessee shall save, hold harmless, indemnify
and defend the State of New Mexico, Commissioner and Commissioner’s employees,
agents and contractors, in both their official and individual capacities, from
any and all liability, claims, losses, damages, or expenses, including but not
limited to attorney’s fees, court costs, loss of land value or use, third party
claims, penalties, or removal, remedial or restoration costs arising out of, or
alleged to arise out of:

 

A.            The operations
or presence on the Property, or on adjacent or proximate state trust lands,
including those used to access the Property for the purposes of this Lease, of
Lessee or Lessee’s employees, agents, contractors or invitees;

 

B.            The activities
of third parties on the Property, or on adjacent or proximate state trust
lands, including those used to access the Property or other adjacent or
proximate state trust lands, whether with or without Lessee’s knowledge or
consent:

 

C.            Any Hazardous
Materials located in, under, upon or otherwise affecting the Property or
adjacent or proximate property, resulting from the Lessee’s operations.

 

38.          Waiver Of Reservations:  The Commissioner may, at the Commissioner’s
discretion, agree not to exercise one or more of the rights reserved above upon
payment of additional consideration determined by the Commissioner.

 

39.          Commissioner’s Statutory Right To Purchase Production:  The Commissioner has the right to purchase at
any time and from time to time, at the market price prevailing in the area on
the date of purchase, all or part of the minerals that may be produced from the
Property. (The 

 

9

 

Commissioner may waive this
reservation by following the procedure set out in Section 19-14-2 NMSA
1978.)

 

40.          Road Development:  Lessee shall comply with the requirements for
development and closure of roads set forth in 19.2.20 NMAC.

 

41.          Trespass And Prevention Of Waste:  Lessees shall protect the Property and
mineral estate from waste or trespass in accordance with Sections 19-6-1 et seq. NMSA 1978.

 

42.          Water Rights:

 

A.            Any and all
water rights developed on the Property by Lessee shall be developed in the name
of the Commissioner. Lessee, at its own expense, shall comply with all
regulations of, and obtain all necessary permits from, the New Mexico State
Engineer’s Office.

 

B.            Lessee shall
have the use of such water rights solely for Lease operations during the term
of the Lease. Upon expiration or termination of the Lease, such water rights
shall be retained by Commissioner. During the term of the Lease, Lessee shall
preserve, protect and defend such water rights.

 

43.          Venue And Applicable Law:  All legal actions regarding mineral Leases
issued under 19.2.2 NMAC shall be brought in the First Judicial District, Santa
Fe, New Mexico. New Mexico law shall govern.

 

44.          Interest On Late Payments:  Lessee shall pay interest at the rate of one
percent (1%) per month on any late payment of rents, royalties or other
payments required under the mineral Lease. If the Lessee fails to pay the
entire amount owed, then interest shall accrue on the unpaid portion. Interest
shall begin to accrue on the day the payment becomes due and continue to accrue
daily until payment is made.

 

45.          Removal Of Improvements:  Upon termination of the mineral Lease by reason
of forfeiture, surrender, expiration of term or for any other reason, Lessee
may with the Commissioner’s consent and/or approval, pursuant to Section 19-8-29
NMSA 1978, remove all improvements and equipment as can be removed without
material injury to the Property; provided, however, that all rents and
royalties have been paid and that such removal is accomplished within two (2) years
from the termination date or before such earlier date as the Commissioner may
set upon thirty (30) days written notice to the Lessee. All improvements
and equipment remaining upon the Property after the removal date as set in
accordance with this section shall be forfeited to the Commissioner without
compensation, unless such forfeiture is disclaimed by the Commissioner. Notwithstanding
the foregoing, the Commissioner may require the Lessee to remove any and all
improvements from the Property and to reclaim any surface disturbance caused by
such removal in accordance with its reclamation plan.

 

46.          Immediate Cessation Of Operations In The Event Of An
Environmental Or Health And Safety Threat: In the event that the
Commissioner, in his discretion, concludes that there exists any substantial
and imminent environmental or health and safety threat caused by, connected
with, or affecting either Lessee’s operations under this Lease or the Property,
the Commissioner may direct the immediate cessation of Lessee’s operations on
the Property, vacating the Property by Lessee’s personnel, and/or removal of
any equipment or supplies that the Commissioner believes should be removed in
order to abate or avoid the threat.

 

10

 

SIGNATURE PAGE

 

Mineral Lease HG-0061

 

Approved by the Commissioner of Public Lands
on this 3rd day of
January, 2005.

 

	
  /s/ Patrick H. Lyons / AHN

  	
   

  
	
  Patrick H. Lyons

  	
   

  
	
  Commissioner of Public Lands

  	
   

  
	
   

  	
   

  
	
  Great Western Exploration, LLC

  	
   

  
	
   

  	
   

  
	
  /s/ Robert Valois

  	
   

  
	
  Signature of Lessee or Authorized Agent

  	
   

  

 

ACKNOWLEDGMENT IN AN INDIVIDUAL CAPACITY

 

State of COLORADO

 

County of WELD

 

	
  This instrument was acknowledged before me on

  	
  12/27 2004

  	
  by

  	
  Robert Valois

  
	
   

  	
  (date)

  	
   

  	
  (name(s) of
  person(s))

  

 

	
  ARNE G.
  SANSOM

  	
  /s/ Arne G. Sansom

  
	
  Notary
  Public

  	
  Signature of Notarial
  Officer

  
	
  State of
  Colorado

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Seal)

  	
  Printed Name

  	
  ARNE G. SANSOM

  
	
   

  	
   

  	
  (Notary)

  
	
   

  	
   

  	
   

  
	
   

  	
  My commission expires:

  	
  9.3.2008

  

 

11

 

ACKNOWLEDGMENT IN A REPRESENTATIVE CAPACITY

 

State of Colorado

 

County of Weld

 

	
  This instrument was acknowledged before me on

  	
  12/27/04

  	
   

  
	
   

  	
  (date)

  	
   

  
	
   

  	
   

  	
   

  
	
  by

  	
  Robert Valois

  
	
   

  	
  (name(s) of
  person(s))

  
	
   

  	
   

  
	
  as

  	
  Officer—CEO

  
	
   

  	
  (type of authority,
  e.g., officer, trustee, etc.) of

  
	
   

  	
   

  
	
  Great Western
  Exploration, LLC

  
	
  (name of party on behalf
  of whom instrument was executed.)

  
				

 

	
  ARNE G.
  SANSOM

  	
  /s/ Arne G. Sansom

  
	
  Notary
  Public

  	
  Signature of Notarial
  Officer

  
	
  State of
  Colorado

  	
   

  
	
   

  	
   

  	
   

  
	
  (Seal)

  	
  Printed Name:

  	
  ARNE G. SANSOM

  
	
   

  	
   

  	
  (Notary)

  
	
   

  	
   

  	
   

  
	
   

  	
  My commission expires:

  	
  9.3.2008

  

 

12

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