Common use of Production Royalty Clause in Contracts

Production Royalty. TOGI shall pay to Owner a production royalty based on the Net Smelter Returns from the production or sale of Minerals from the Property. The Royalty percentage rate for the Property shall be four percent (4%) of the Net Smelter Returns. The Royalty percentage rate for the production of Minerals from any unpatented mining claims located by TOGI or Owner outside the exterior boundaries of the Property and within the Area of Interest shall be four percent (4%) of the Net Smelter Returns and the Royalty percentage rate for the production of Minerals from any mineral rights, mining claims outside the exterior boundaries of the Property and within the Area of Interest which TOGI acquires from any third party shall be one percent (1%) of the Net Smelter Returns (the "Area of Interest Royalty"). TOGI shall have the option to acquire the royalty (the "Royalty Option") in accordance with Section. TOGI shall have the option to purchase one-half (1/2) of the Royalty applicable to the Property representing two percent (2%) of the Net Smelter Returns. TOGI shall have the right to elect to purchase such part of the Royalty in increments representing one percent (1%) of the Net Smelter Returns and the purchase price for each such increment shall be One Million Five Hundred Thousand Dollars ($1,500,000). TOGI shall have the option to purchase one-half (1/2) of the Area of Interest Royalty applicable to mineral rights, mining claims and properties which TOGI acquires from third parties representing one-half percent (.5%) of the Net Smelter Returns. The purchase price for such part of the Area of Interest Royalty shall be Five Hundred Thousand Dollars ($500,000) for the one-half percent (.5%) of the Area of Interest Royalty applicable to mineral rights, mining claims and properties which TOGI acquires from any third party.