Common use of Option to Reduce Production Royalty Clause in Contracts

Option to Reduce Production Royalty. At any time during the term of this Lease and as to all Production Royalty payments not yet paid, Lessee shall have the right to reduce the Production Royalty by purchasing a portion of the Lessors Production Royalty such that the Lessor retains a minimum 2% Production Royalty. The purchase price of the Production Royalty shall be $1,000,000 US for each 1% Production Royalty, $500,000 for each 0.5% Production Royalty, and $250,000 for each 0.25% Production Royalty. Such a Production Royalty buy down may take place all at one time or piecemeal. The right to purchase the said Production Royalty interest shall be exercised by Lessee providing the Lessor with notice of the purchase accompanied by payment in full for the amount of the Production Royalty interest being purchased. If only a portion of the Production Royalty is purchased, then in the event of changes in the gold price the Lessor shall retain the remaining unpurchased Production Royalty percentage points on the sliding scale Production Royalty, as outlined in Section 2.2(a) herein. Example: Example: Gold is selling at $370.00 an ounce. Lessee purchases 1.0% of the Production Royalty for 1 million dollars reducing the Production Royalty from 3.0% to 2.0% . Later Gold rises to $500 an ounce and the effective Production Royalty becomes 4.0% . Gold then falls to $250.00 an ounce. The effective Production Royalty would be 2.0% not 1.5% .

Option to Reduce Production Royalty. At any time during the term of this Lease and as to all Production Royalty payments not yet paid, Lessee shall have the right to reduce the Production Royalty by purchasing a portion of the Lessors Lessor's Production Royalty such that the Lessor retains a minimum 2% Production Royalty. The purchase price of the Production Royalty shall be $1,000,000 US for each 1% Production Royalty, $500,000 for each 0.5% Production Royalty, and $250,000 for each 0.25% Production Royalty. Such a Production Royalty buy down may take place all at one time or piecemeal. The right to purchase the said Production Royalty interest shall be exercised by Lessee providing the Lessor with notice of the purchase accompanied by payment in full for the amount of the Production Royalty interest being purchased. If only a portion of the Production Royalty is purchased, then in the event of changes in the gold price the Lessor shall retain the remaining unpurchased Production Royalty percentage points on the sliding scale Production Royalty, as outlined in Section 2.2(a) herein. Example: Example: Gold is selling at $370.00 an ounce. Lessee purchases 1.0% of the Production Royalty for 1 million dollars reducing the Production Royalty from 3.0% to 2.0% %. Later Gold rises to $500 an ounce and the effective Production Royalty becomes 4.0% %. Gold then falls to $250.00 an ounce. The effective Production Royalty would be 2.0% not 1.5% %.

Option to Reduce Production Royalty. At any time during the term of this Lease and as to all Production Royalty payments not yet paid, Lessee shall have the right to reduce the Production Royalty by purchasing a portion of the Lessors Production Royalty such that the Lessor retains a minimum 2% Production Royalty. The purchase price of the Production Royalty shall be $1,000,000 US for each 1% Production Royalty, $500,000 for each 0.5% Production Royalty, and $250,000 for each 0.25% Production Royalty. Such a Production Royalty buy down may take place all at one time or piecemeal. The right to purchase the said Production Royalty interest shall be exercised by Lessee providing the Lessor with notice of the purchase accompanied by payment in full for the amount of the Production Royalty interest being purchased. If only a portion of the Production Royalty is purchased, then in the event of changes in the gold price the Lessor shall retain the remaining unpurchased Production Royalty percentage points on the sliding scale Production Royalty, as outlined in Section 2.2(a) herein. Example: Example: Gold is selling at $370.00 an ounce. Lessee purchases 1.0% of the Production Royalty for 1 million dollars reducing the Production Royalty from 3.0% to 2.0% %. Later Gold rises to $500 an ounce and the effective Production Royalty becomes 4.0% %. Gold then falls to $250.00 an ounce. The effective Production Royalty would be 2.0% not 1.5% %.