EXHIBIT 10.53
EXHIBIT "H"
MINERAL LEASE AGREEMENT
BETWEEN
THE GREEN MOUNTAIN MINING VENTURE,
AS LESSOR,
AND
S. ENERGY CORP.
AND
CRESTED CORP.
D/B/A
USE/CC
AS LESSEE
EXHIBIT 10.53
MINERAL LEASE AGREEMENT
THIS MINERAL LEASE AGREEMENT (the "Agreement") is entered into this 23rd
day of June, 1997 (the "Effective Date"), by and between the GREEN MOUNTAIN
MINING VENTURE (the "GMMV"), a Mining Venture between Kennecott Uranium Company,
a Delaware corporation ("XXX"), U.S. Energy Corp., a Wyoming corporation
("USE"), and a joint venture between USE and Crested Corp., a Colorado
corporation ("Crested") (the joint venture between USE and Crested is referred
to as "USE/CC" and USE, Crested and USE/CC are referred to as the "USE
Parties"), as lessor, and USE/CC, in its separate capacity, as lessee.
RECITALS
A. The GMMV owns or controls certain patented and unpatented mining
claims and other property in Fremont County, Wyoming (the "Mining Properties").
The Mining Properties are more particularly described in Exhibit A to this
Agreement.
B. USE/CC desires to lease the Mining Properties from the GMMV and to
conduct certain operations as more particularly described in Exhibit D to this
Agreement (the "Work") on the Mining Properties pursuant to the terms of this
Agreement. USE/CC has the skill and expertise necessary to develop a strategy
for, and to supervise and to perform the design, engineering, permitting,
procurement, construction and other work necessary to complete the Work.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are acknowledged by each of the parties, the GMMV and USE/CC agree as
follows:
1. GRANT OF LEASE.
The GMMV leases the Mining Properties to USE/CC and USE/CC leases and
takes the Mining Properties from the GMMV for the purposes and on the terms and
conditions set forth in this Agreement.
2. TERM.
The term of this Agreement commences on the Effective Date and
terminates on the date of termination of the Acquisition Agreement, dated the
same date as this Agreement, between XXX and the USE/CC Parties (the
"Acquisition Agreement"), unless sooner terminated as provided in this
Agreement, provided that in no case shall the term of this Agreement extend
beyond October 30, 1998.
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EXHIBIT 10.53
3. USE OF THE MINING PROPERTIES.
USE/CC is granted the following rights with respect to the Mining
Properties insofar as such rights are necessary to perform the Work:
(a) The right of access, ingress and egress to the Mining Properties and
the right to enter upon and occupy the Mining Properties for all purposes
reasonably incident to evaluating the environmental condition and potential for
mineral development of the Mining Properties, including the right to explore
for, to develop, to mine (by underground mining, surface mining, strip mining,
or any other surface or subsurface method), extract, mill, stockpile, store,
process, remove and market all merchantable ores, metals and minerals
(collectively, "Mineral Products") found in the Mining Properties, provided that
USE/CC shall have the right to respond to requests for bids on uranium
concentrates as agent for the GMMV and for Plateau Resources Ltd., provided
USE/CC delivers a copy of each such response to the GMMV in the manner provided
in Section 14 hereof for notices. USE/CC shall not enter into any contracts for
sale of Mineral Products on behalf of the GMMV prior to closing under the
Acquisition Agreement. The Parties agree that no final acceptance or approval of
any contract committing the GMMV will be made prior to closing under the
Acquisition Agreement. The USE Parties covenant and agree that the provisions of
the preceding two sentences shall be disclosed in writing in each bid or
proposed contract contemplated hereunder.
(b) The right to mine and remove Mineral Products existing on or under
the Mining Properties through or by means of portals, shafts, openings, or pits
that presently exist on the Mining Properties or that may be sunk or made upon
the Mining Properties or upon adjoining and nearby property, and the right to
stockpile any Mineral Products produced from the Mining Properties upon grounds
situated upon any such properties;
(c) The right to commingle Mineral Products produced from the Mining
Properties with ores and minerals produced from other properties; provided,
however, that USE/CC shall calculate from representative samples the average
grade of the ores and minerals to be commingled and shall weigh (or calculate by
volume) the ores and minerals from each property before commingling. If
yellowcake or any other concentrates are produced from the commingled ores and
minerals, USE/CC shall also calculate from representative samples the average
recovery percentage for all such concentrates produced during the calendar
quarter and shall allocate a percentage of concentrate production to the Mining
Properties according to such calculations. In obtaining representative samples
and calculating the average grade of the ore and average recovery percentages,
USE/CC shall use procedures generally accepted in the mining and metallurgical
industry;
(d) The right to temporarily or permanently deposit waste rock,
overburden, surface stripping, and all other materials mined from the Mining
Properties on or off the Mining Properties;
(e) The right to beneficiate, concentrate, process, and/or otherwise
treat Mineral Products produced from the Mining Properties by any physical or
chemical method;
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EXHIBIT 10.53
(f) The right to use the GMMV's water rights on, about, under, or which
are appurtenant to the Mining Properties in connection with the activities
described in items (a) through (f) above; and
(g) The right to use all rights, improvements, privileges,
hereditaments, and appurtenances belonging or in any way appertaining to the
Mining Properties in connection with the above described activities; provided,
however, that nothing in this Agreement shall be deemed to create any express or
implied right in USE/CC to use the GMMV's Sweetwater Mill with respect to the
activities of USE/CC undertaken pursuant to this Agreement.
4. PERMITS AND BONDS.
(a) During the term of this Agreement, the GMMV will use commercially
reasonable efforts to maintain, or to cause XXX to maintain, the operating
permits and bonds set out in Exhibit B to this Agreement; provided, however,
that the GMMV does not make any representation or warranty with respect to its
ability to maintain or to cause to be maintained such permits or bonds, or with
respect to the ability of USE/CC to conduct any operations on or with respect to
the Mining Properties pursuant to such permits and bonds nor does the GMMV
represent or warrant that such permits and bonds are the only permits and bonds
required to conduct operations on the Mining Properties. For all permits and
bonds that remain in the name of the GMMV or XXX, the GMMV will make all
payments and provide all notices required with respect to such permits and
bonds. USE/CC shall develop and shall recommend to the GMMV a strategy for
negotiation of all amendments, renewals or other modifications to such permits
or bonds as may be necessary to allow USE/CC to complete the Work. The GMMV will
implement such strategy in cooperation with USE/CC unless such strategy is, in
the GMMV's reasonable judgment, inconsistent with applicable law, regulation or
administrative policy or the terms of this Agreement, such strategy jeopardizes
the continued existence of such permits or bonds or such strategy will subject
the GMMV to penalties under such law, regulation, policy, permits or bonds. To
the extent permitted by applicable law, regulation and administrative policy and
so long as such direction is consistent with the preceding sentence, USE/CC will
prepare all correspondence, drawings and other documents related to, and will
direct the course of all negotiations with such agencies and businesses with
respect to the terms, conditions, renewals, amendments, extensions, replacement
or transfer of such permits and bonds; provided that the GMMV will initiate all
contacts with the agencies or businesses involved and will participate in all
meetings and telephone conferences or other conversations with such agencies and
businesses and will approve in advance the form and content of all
correspondence and other documents prepared by USE/CC in connection with such
negotiations prior to submission to such agencies and businesses.
(b) USE/CC shall also promptly develop a strategy with respect to, and
advise the GMMV as to, any additional permit or bond or increase in the amount
of an existing bond that is or will be required with respect to the Work. Within
15 days of receiving notice from USE/CC as to any such need, the GMMV will
determine if it desires to obtain such permit, bond or increase in the amount of
a bond in its own name, in which case the permit or bond will be treated in the
same manner as the permits and bonds set out in Exhibit B, or if it desires for
USE/CC to secure the permit or bond in USE/CC's own name, in which case USE/CC
shall be
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EXHIBIT 10.53
solely responsible for the costs, terms and conditions of such permit, bond or
increase in the amount of a bond provided that such permit or bond cannot be
binding on the GMMV or extend beyond the date of termination of this Agreement.
If requested by USE/CC, the GMMV will participate in, and cooperate with respect
to, negotiation of such permits and bonds.
(c) All costs and expenses incurred by the GMMV in carrying out the
activities in this Section 4 shall be included in Transition Costs as defined in
the Acquisition Agreement.
5. PAYMENTS.
(a) In consideration for the lease by the GMMV to USE/CC of the Mining
Properties and for the GMMV's agreement to maintain certain permits and bonds as
provided in Section 4 above, USE/CC agrees to pay to the GMMV a monthly fee of
$3,363. The fee will be due and payable on the first business day of each month
during the term of this Agreement commencing with the first payment which is due
on July 1, 1997.
(b) USE/CC, as full compensation for performance of the Work, shall be
paid for all Reimbursable Costs, and such other costs as may be approved in
writing by the GMMV, as are incurred by USE/CC in performance of the Work to the
extent and only to the extent that (i) such costs are expressly authorized in
Exhibit E to this Agreement and otherwise are incurred in compliance with this
Agreement; and (ii) the total of such costs, when taken together with the total
costs spent by USE/CC pursuant to that certain Contract Services Agreement,
dated as of the same date as this Agreement, between XXX and USE/CC, amounts
expended by the GMMV after May 1, 1997 pursuant to Subsection 3(a) of the GMMV
Amendment (as defined below) and all Transition Costs is not more than
$16,000,000.
(c) USE/CC shall use all reasonable efforts to obtain any cash, trade,
quantity, freight or other discount or allowance available and refunds of sales
taxes and/or taxes and all such cash, quantity discounts or allowances, refunds
and rebates shall be for the GMMV's benefit and credited against Reimbursable
Costs or paid directly to the GMMV. USE/CC will exercise its best efforts to
minimize excess materials purchases. Excess materials or scrap generated by
USE/CC as a result of its work under this Agreement will remain the property of
the GMMV. USE/CC will stockpile or dispose of such materials as directed by the
GMMV.
(d) XXX has initially advanced $1,000,000 to the GMMV pursuant to the
provisions of Subsection 4(a) of the Amendment of Mining Venture Agreement,
dated as of the same date as this Agreement, among XXX and the USE/CC Parties
(the "GMMV Amendment") in order to establish a working capital account (the
"Working Capital Account") which USE/CC may draw upon to fund activities
associated with the Work and which will qualify as Reimbursable Costs.
(e) From time to time, but at least once per month, USE/CC shall submit
an itemized invoice (the "Invoice") to the GMMV for all Reimbursable Costs for
Work performed accompanied by such supporting documentation as the GMMV may from
time to time reasonably request, together with evidence, including lien waiver
forms satisfactory to the GMMV, of the payment and release of all
subcontractor's, mechanics', materialmen's and other liens (collectively,
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EXHIBIT 10.53
the "Supporting Documentation"). Supporting Documentation for the Reimbursable
Costs for which USE/CC seeks reimbursement shall include, but not be limited to
the following:
(i) Labor costs shall be supported by payroll abstracts
which will identify each employee of USE/CC or its subcontractors
engaged in performing the Work, the employee's title, the date
and hours worked, the pay rate and a description of the work
performed;
(ii) Costs for materials, supplies, equipment, tools and
other tangible property shall be supported by invoices and bills
of sale showing ownership of all such materials, supplies,
equipment, tools and other tangible property in Owner's name;
(iii) Xxxxxxxx by USE/CC for GMMV approved services,
expenses and other costs for outside commitments, of vendors,
suppliers and subcontractors shall be supported by copy of such
third parties' original invoice and related supporting
documentation and will be attached to a GMMV approved
authorization;
(iv) Xxxxxxxx for travel and subsistence expenses shall be
supported by travel expense reports supported by, among other
things, copies of airline tickets and copies of auto rental
invoices, copies of hotel/motel bills and appropriate receipts.
All expense reports will show the business purpose of the travel;
and
(v) Xxxxxxxx for all other items for which USE/CC seeks
reimbursement shall be supported by documentation in a form
reasonably satisfactory to the GMMV.
(f) Within 20 days of presentation to and receipt by the GMMV of the
Invoice and the Supporting Documentation, the GMMV will (i) provide to USE/CC
funds adequate to reimburse USE/CC for the Reimbursable Costs incurred and to
restore the Working Capital Account to its initial balance; or (ii) the GMMV
will advise USE/CC of any amounts with respect to such Invoice or Supporting
Documentation that the GMMV believes in good faith are not supported by adequate
explanation or were not spent in compliance with the terms of this Agreement,
together with an explanation, in reasonable detail, of the basis for the GMMV's
objection to such Invoice or Supporting Documentation, in which case the GMMV
will provide funds to the extent that it does not contest the Invoice or
Supporting Documentation. Each dollar paid by the GMMV pursuant to this
Agreement shall go toward satisfaction of XXX'x obligation to provide up to
$16,000,000 to the Green Mountain Mining Venture as provided in Section 3 of the
GMMV Amendment. At such time as the balance of XXX'x obligation to fund
$16,000,000 to the Green Mountain Mining Venture as provided in Section 3 of the
GMMV Amendment has been reduced to less than $1,000,000, its obligation to
restore the Working Capital Account balance shall be reduced to be no more than
the amount of the remaining obligation.
(g) Payment by the GMMV of USE/CC's Invoices shall be without prejudice
to the GMMV's right to audit the invoices in accordance with provisions of this
Agreement, and to challenge the correctness of the invoice at any time
thereafter. Payments otherwise due USE/CC
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EXHIBIT 10.53
may be withheld in an amount sufficient to satisfy any claim which the GMMV may
have against USE/CC and any amounts necessary to correct nonconforming, faulty
or defective Work.
6. ACCESS TO INFORMATION.
During the term of this Agreement, the GMMV will make available for
inspection and use by USE/CC all exploration data, assays, logs, maps, including
any mine plan maps, geological, geochemical and geophysical surveys and reports
and records or data relating to production or development that the GMMV has in
its possession relating to the Mining Properties. Upon written request of the
GMMV made after expiration or termination of this Agreement, USE/CC shall return
all information obtained from the GMMV pursuant to this Agreement together with
copies of all data, assays, logs, maps, core and other surveys, studies and
other information generated by or on behalf of USE/CC during the term of this
Agreement pertaining to the Mining Properties.
7. TITLE TO THE MINING PROPERTIES.
(a) The GMMV makes no representation or warranty with respect to title
to the Mining Properties or the other rights and information provided to USE/CC
pursuant to this Agreement, the condition or adequacy of any buildings,
equipment or improvements on or associated with the Mining Properties, or the
completeness or accuracy of any information provided to USE/CC with respect to
the Mining Properties. USE/CC represents and warrants that it has made such
inquiries and investigations as it, in its sole discretion, deems advisable with
respect to the Mining Properties and the other rights, and the buildings and
equipment and improvements and other information provided to USE/CC pursuant to
this Agreement and the condition of such properties and rights, and USE/CC
warrants to the GMMV that it accepts such properties and rights AS IS/WHERE IS,
WITH NO REPRESENTATIONS OR WARRANTIES WHATSOEVER.
(b) In the event the title to all or any part of the Mining Properties
is determined to be defective or in the event that a third party challenges the
title to all or any part of the Mining Properties, the GMMV shall have the
right, but not the obligation, to defend title to the Mining Properties and
USE/CC shall cooperate fully in such defense. The GMMV shall not be liable to
USE/CC if the GMMV is unsuccessful in, withdraws from, or discontinues title
litigation or other curative work. If the GMMV elects not to defend title to all
or any part of the Mining Properties, USE/CC shall have the right to undertake
defense of the GMMV's title at USE/CC's sole cost and expense and the GMMV will
cooperate fully in such defense. Any improvement or perfection of title to the
Mining Properties shall inure to the benefit of the GMMV and USE/CC in the same
manner and to the same extent as if such improvement or perfection has been made
prior to the execution of this Agreement.
(c) Should the GMMV or USE/CC institute any action for adverse
possession, suit to quiet title, or other action aimed at obtaining title to
property, or should the GMMV or USE/CC purchase any undivided interest in the
Mining Properties from any third party during the term of this Agreement, the
property rights so acquired shall inure to the benefit of the GMMV and
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EXHIBIT 10.53
USE/CC in the same manner and to the same extent as if such property rights had
been obtained prior to the execution of this Agreement.
8. CLAIM MAINTENANCE.
(a) While this Agreement is in effect, USE/CC agrees to make the mining
claim rental or maintenance fee payments required by federal and state law with
respect to all of the unpatented mining claims included in the Mining Properties
and to file and record such notices or affidavits as are necessary to maintain
said claims. All such costs shall be included in the Reimbursable Costs
reimbursable to USE/CC pursuant to this Agreement. If this Agreement is
terminated or expires between July 31 and September 1 of any year, USE/CC shall
make the payments and perform the filings and recordings required for that year.
If the time for payment of rental or maintenance fees or performance of annual
assessment work, or other annual maintenance requirements, changes to date or
dates different than August 31 or September 1 of each year, then USE/CC shall be
responsible for the satisfaction of any such obligation that must be completed
within 30 days after termination of this Agreement. USE/CC shall be reimbursed
for such payments notwithstanding the prior termination of this Agreement.
(b) If federal assessment work requirements are reinstated, or
independent state assessment work requirements are imposed, at any time during
the term of this Agreement, USE/CC shall perform or cause to be performed such
assessment work as required by law in order to maintain the unpatented mining
claims. With respect to such work, USE/CC shall during the term of this
Agreement record or file with the appropriate county, state and federal agencies
copies of assessment affidavits or notices as may then be required by law within
the time prescribed for such recording or filing. USE/CC shall have the right to
perform the assessment work required hereunder pursuant to a common plan of
exploration, and continued actual occupancy of each claim shall not be required.
USE/CC shall provide evidence to the GMMV that USE/CC has completed or will
complete the assessment work, if required, for that assessment year by the end
of the assessment year.
(c) During the term of this Agreement, if requested by USE/CC, the GMMV
may (i) amend or relocate any unpatented mining claim included within the Mining
Properties, (ii) locate any fractions resulting from such amendment or
relocation, and (iii) apply for mining patents or mining leases or other forms
of mineral tenure for any such unpatented claims.
9. ADDITIONAL OBLIGATIONS OF USE/CC.
In addition to the other obligations of USE/CC set out in this
Agreement:
(a) USE/CC shall perform all of its operations on the Mining Properties
in a good and minerlike manner and in compliance with all applicable federal,
state, and local laws and regulations including environmental protection,
reclamation, and bonding. In particular, USE/CC represents and guarantees that
all Work will conform with that degree of skill and judgment which is normally
exercised by recognized professional consulting (including environmental
consulting), engineering, procurement and construction management firms
performing services of a similar nature taking into account the oversight
responsibilities of affected administrative
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EXHIBIT 10.53
agencies with respect to the Work and shall be free of faulty planning,
consulting, engineering design, procurement, construction management and quality
assurance, field engineering and other services of USE/CC and that the Work
shall be performed and shall conform to generally accepted consulting,
engineering and construction management standards and practices. USE/CC will
maintain all existing facilities on the Mining Properties in a condition that is
at least as good as their present conditions, normal wear and tear excepted.
USE/CC shall, if requested by the GMMV, at the conclusion of the activities and
operations undertaken pursuant to this Agreement, conduct such reclamation with
respect to the activities conducted by USE/CC as required by applicable federal,
state and local law;
(b) USE/CC shall keep the Mining Properties free and clear of all liens,
assessments and other encumbrances created by, through or under USE/CC or that
result from USE/CC's control, occupancy of, or operations on, the Mining
Properties during the term of this Agreement; provided that USE/CC shall not be
required to remove any such lien so long as it is contesting the validity or the
amount thereof, or if payment of the amount secured by the lien is not yet due
as in the case of mechanics', suppliers' or similar liens;
(c) USE/CC shall protect the GMMV against any damages arising out of
USE/CC's operations on the Mining Properties and shall indemnify the GMMV
against any and all liability resulting from USE/CC's operations on the Mining
Properties. USE/CC shall establish a sinking fund for all reclamation costs
anticipated to be associated with its activities and operations under this
Agreement. USE/CC will fund such sinking fund at the end of each calendar
quarter with an amount of money reasonably sufficient to cover all reclamation
activities that will result from the operations carried out in the quarter and
all such funds shall constitute Reimbursable Costs reimbursable pursuant to the
terms of this Agreement. USE/CC shall carry liability insurance protecting the
GMMV against damages arising out of USE/CC's operations on the Mining Properties
in the amounts specified in Exhibit C to this Agreement;
(d) USE/CC covenants and agrees to pay promptly before delinquency all
rental, leasehold, property and other payments relating to the Mining Properties
and all utility and other payments, taxes and assessments that may be assessed
during the term of this Agreement upon the Mining Properties and USE/CC's
activities upon the Mining Properties regardless of whether such payments, taxes
and assessments arise out of USE/CC's activities on the Mining Properties or
arise out of the GMMV's ownership or control of the properties. USE/CC shall
have the right to contest, in the courts or otherwise, the validity or amount of
any such payments, taxes or assessments, or to take such other steps or
proceedings as it may deem necessary to secure a cancellation, reduction,
re-adjustment, or equalization thereof, before it shall be required to pay such
payments, taxes or assessments. Notwithstanding the foregoing, USE/CC shall not
permit any part of the Mining Properties to be conveyed or for title to be lost
as the result of nonpayment of such payments, taxes and assessments. If
requested by the GMMV, USE/CC shall provide the GMMV with copies of all receipts
evidencing payment of such payments, taxes and assessments. If the GMMV receives
utility, tax bills or claims that are the responsibility of USE/CC pursuant to
this Agreement, the GMMV will promptly forward such bills or claims to USE/CC
for appropriate action;
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EXHIBIT 10.53
(e) USE/CC will provide to the GMMV a program, in reasonable detail, of
the operations and activities that USE/CC expects to undertake in progressing to
accomplish the Work in the ensuing calendar quarter. The program will be
submitted to the GMMV at least 15 days prior to the commencement of any such
operations or activities. Within 30 days after the end of each calendar quarter,
USE/CC will submit to the GMMV a report, in reasonable detail, that describes
the operations and activities that were actually undertaken in the calendar
quarter and any activities described in the program that were not undertaken and
accomplished;
(f) USE/CC will not undertake any operations or activities that depart
from the Work or the operations and activities set out in the program without
submitting to the GMMV a proposed amendment to the program to the GMMV that
describes such amended operations and activities and, if such amendment would
require a modification of the Work as described in Exhibit D, a proposed
amendment to the Work. Within 20 days of any such proposal, the GMMV will notify
USE/CC of its acceptance or rejection or the proposed amendment, which
acceptance will not be unreasonably withheld so long as the proposed amendment
does not materially depart from the overall scope of the Work and is consistent
with the other terms and provisions of this Agreement. With respect to any
proposal for modification of the program prepared by USE/CC or any proposal to
modify the Work that departs from the overall scope of Work as described in
Exhibit D, the GMMV may accept or reject such proposal at the GMMV's sole
discretion; and
(g) Upon reasonable advance notice of not less than 24 hours, USE/CC
shall allow the GMMV and its agents and representatives access to the Mining
Properties for the purposes of viewing or inspecting USE/CC's operations. The
GMMV shall conduct such inspections in a manner that does not unreasonably
interfere with USE/CC's operations. All representatives of the GMMV shall be
required to comply with all applicable safety and operational rules of USE/CC.
10. INDEMNIFICATION.
USE/CC agrees to indemnify, defend, release and hold harmless the GMMV,
XXX and XXX'x parents, subsidiaries, affiliates, successors and assigns and the
respective officers, directors, employees, agents, contractors and professional
advisors of each of them from and against the entirety of any and all Adverse
Consequences, whether arising during or after the term of this Agreement, any of
them shall suffer:
(a) As the result of any breach of any obligation, representation,
covenant or warranty of USE/CC as set forth in this Agreement; and
(b) As the result of (i) the release, threatened release, discharge,
storage, treatment, disposal or presence of Hazardous Materials at, upon, about
or beneath the Mining Properties as a result of USE/CC's operations; (ii) the
release, threatened release, or discharge of Hazardous Materials emanating or
migrating, or threatening to emanate or migrate to, from or across the Mining
Properties arising out of USE/CC's operations; (iii) any violation of any
Environmental Laws pertaining to the Mining Properties and the activities
thereon; or (iv) the treatment, storage,
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EXHIBIT 10.53
disposal, arrangement for disposal, or transportation of Hazardous Materials by
USE/CC at or to a facility other than one on the Mining Properties;
(c) For the purposes of this Agreement:
(i) "Adverse Consequences" means any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages
(including natural resource damages), dues, penalties, fines,
encumbrances, liens, costs and expenses of defense of a claim (whether
or not such claim is ultimately defeated), good faith settlements of
claims, judgments and disputes, costs (including without limitation
costs of investigative, reporting, clean-up, response, removal,
remedial, corrective action and closure activities relating to Hazardous
Materials), liabilities (including strict liability), obligations,
taxes, liens, losses, expenses and fees, including consultants' and
attorneys' fees and court costs and expenses;
(ii) "Environmental Laws" means all applicable statutes,
treaties, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, authorizations and similar items of all federal,
state, and local governmental branches, agencies, departments,
commissions, boards, bureaus or instrumentalities, whether domestic or
foreign, having jurisdiction, and all applicable judicial and
administrative and regulatory decrees, judgments and orders and all
covenants running with the land that relate to the protection of health
or the environment, including without limitation those that relate to
the existence, handling, manufacture, treatment, storage, disposal, use,
generation, release, discharge, refining or recycling of Hazardous
Materials or reclaiming real property. Without limiting the foregoing,
Environmental Laws include the Hazardous Materials Transportation Act
(49 U.S.C. " 1801 ET SEQ.), the Resource Conservation and Recovery Act
of 1976, (42 U.S.C. " 6901 ET SEQ.), the Clean Air Act (42 U.S.C. " 7401
ET SEQ.), the Federal Water Pollution Control Act (33 U.S.C. ' 1251),
the Safe Drinking Water Act (42 U.S.C. " 300f ET SEQ.), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. " 9601 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. " 2601 ET SEQ.), the Emergency Planning and Community Right to
Know Act (42 U.S.C. "11001, ET SEQ.), the Occupational Safety and Health
Act (26 U.S.C. " 651 ET SEQ.), the Pollution Prevention Act of 1990 (42
U.S.C " 13101 ET SEQ.), the Atomic Energy Act of 1954, 68 Stat. 919, the
Energy Reorganization Act of 1974, the Mine Safety and Health Act of
1977, the Uranium Mill Tailings Radiation Control Act (42 U.S.C " 7901
ET SEQ.), and all similar or additional federal, state, local or foreign
statutes, all as amended, and all regulations promulgated thereunder;
and
(iii) "Hazardous Materials" means any substance: (A) the presence
of which requires reporting, investigation, removal or remediation under
any Environmental Laws; (B) that is defined as a "hazardous waste,"
"hazardous substance" or "pollutant" or "contaminant" under any
Environmental Laws; (C) that is toxic, explosive, corrosive, flammable,
ignitable, infectious, radioactive, reactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated under any Environmental Laws; (D)
the presence of which on a property causes or threatens to cause a
nuisance upon the property or to
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EXHIBIT 10.53
adjacent properties or poses or threatens to pose a hazard to the health
or safety of persons on or about the property; (E) that contains
gasoline, diesel fuel or other petroleum hydrocarbons; or (F) that
contains PCBs, asbestos or urea formaldehyde foam insulation.
11. TERMINATION OR EXPIRATION.
(a) This Agreement will terminate as provided in Section 2 above.
(b) In the event the GMMV determines that USE/CC has not complied with
any material obligation hereunder, the GMMV shall notify USE/CC in writing
setting out specifically in what respect it is claimed that USE/CC has failed to
comply with this Agreement. If the alleged failure is not cured to the GMMV's
reasonable satisfaction within ten (10) days after written notice is given, or
if USE/CC has not within that time either commenced to cure the alleged breach
to the GMMV's reasonable satisfaction and does not thereafter diligently
complete such cure, or fails successfully to challenge the legitimacy of the
allegation, the GMMV may terminate this Agreement by delivering to USE/CC notice
of such termination or the GMMV may seek such other remedies, at law or in
equity, to which it is entitled.
(c) USE/CC shall have the right to terminate this Agreement at any time
with respect to all but not less than all of the Mining Properties by giving
written notice to the GMMV. Upon such termination, all right, title, and
interest of USE/CC under this Agreement shall terminate and USE/CC shall be
relieved of all further obligations set forth in this Agreement which arise out
of USE/CC's activities prior to the date of such termination except for the
obligations in Sections 8 and 9, the indemnifications provided for in Section
10, any other obligation expressly set forth in this Agreement as a
post-expiration or post-termination obligation, and any reclamation required by
applicable law arising from USE/CC's operations.
(d) Upon termination or expiration of this Agreement, USE/CC will
relinquish possession of the Mining Properties to the GMMV free and clear of all
obligations, liens and encumbrances. USE/CC will also relinquish possession of
all buildings, structures, facilities, improvements, machinery and equipment
that were on the Mining Properties as of the Effective Date or that were
acquired by, erected, placed, or became situated on the Mining Properties or
were acquired in connection with USE/CC's activities on the Mining Properties
and were paid for by funds provided to USE/CC by the GMMV (collectively,
"Fixtures and Personalty"). In connection with the relinquishment of the Mining
Properties and the Fixtures and Personalty, USE/CC will provide a release, in
recordable form, executed by USE/CC for the benefit of the GMMV in order to
clear title to the Mining Properties and appropriate assignments and bills of
sale with respect to the Fixtures and Personalty. In any such release,
assignments and bills of sale, USE/CC will represent that the Mining Properties,
Fixtures and Personalty are free and clear of all obligations, liens or
encumbrances created by, through or under USE/CC. USE/CC will also transfer
control of the sinking fund established pursuant to Section 9(c) above to the
GMMV.
(e) Upon termination or expiration of this Agreement, USE/CC will
commence and will diligently pursue to completion, reclamation of all
disturbance caused by the USE/CC Parties
11
EXHIBIT 10.53
in connection with its activities under this Agreement in accordance with
applicable laws, orders and regulations, provided that USE/CC shall leave in
place and not reclaim any foundations or other improvements of a permanent
nature, supports, track, and pipe placed in shafts, drifts, or openings in the
Mining Properties, roads, development work, portals, declines or other workings,
and water xxxxx and piezometers constructed on the Mining Properties unless
otherwise requested by the GMMV. Such reclamation activities will be funded from
the sinking fund created pursuant to Section 9(c) and USE/CC may draw upon such
fund from time-to-time by providing evidence reasonably satisfactory to the GMMV
of the expenditures made by USE/CC in conducting such reclamation activities.
USE/CC shall be solely responsible for completing the reclamation activities
required by this Agreement and the amount of funds in the sinking fund shall in
no way limit USE/CC's obligation to complete the reclamation required by this
Agreement. USE/CC shall, within a period of three months from and after the
termination or expiration of this Agreement, remove from the Mining Properties
all personal property that is owned solely by USE/CC. If USE/CC desires not to
remove any item of its personal property from the Mining Properties and the GMMV
agrees in writing to allow such property to remain on the Mining Properties,
such property shall become the property of the GMMV unless GMMV agrees
otherwise.
12. FORCE MAJEURE.
Except as provided in Subsections 12(b) or 12(c) below, the failure to
perform or to comply with any of the covenants or conditions contained in this
Agreement, either expressed or implied, on the part of either party shall not be
a ground for cancellation or termination or forfeiture of this Agreement, and
shall not create a liability for the party for failure to perform its
obligations during any period in which performance is prevented, in whole or
part, by causes herein termed "force majeure".
(a) For purposes of this Agreement, the term "force majeure" shall be
limited to substantial and unforeseeable events beyond the control of a party
that cannot be avoided through the diligent actions of a party, including
extreme weather conditions; earthquakes or cave-ins; unforeseeable
unavailability of labor, transportation, materials, machinery, equipment,
supplies, utilities, or services even on premium terms; serious accidents;
unavoidable breakdown of major equipment, machinery, or facilities; injunctions
issued by any court; inability to obtain licenses, permits, or other
authorizations in spite of diligent efforts to do so; curtailment or suspension
of activities to remedy or avoid an actual, serious violation of environmental
laws; acts of war or conditions arising out of or attributable to war; riot;
civil strife; fire; explosion; or any similar cause beyond the reasonable
control of the party declaring force majeure.
(b) If either party desires to invoke the provisions of this Section 12,
the invoking party shall give notice to the other party of the commencement of
the circumstances giving rise to such force majeure. The time for discharging
the party's obligations with respect to the prevented performance shall be
extended for the period of force majeure, provided that the party invoking force
majeure pursues diligent efforts to eliminate the event that gave rise to the
condition of force majeure. The existence of any event of force majeure shall
not relieve a party of the obligation to make any payments required of a party
with respect to maintenance of the Mining Properties or the permits and bonds
associated with the properties in accordance with the
12
EXHIBIT 10.53
terms of this Agreement, making payments due under Section 5, the payments,
filings and recordings due under Sections 8 and 9, and the indemnities required
by Section 10, nor shall an event of force majeure extend the term of this
Agreement.
(c) Notwithstanding the foregoing, neither party may invoke force
majeure with respect to any event that would otherwise constitute force majeure
if the duration of such event is less than 15 days.
13. MINING LAW REVISION.
If any time during the term of this Agreement, the Mining Law of 1872,
30 U.S.C. " 22 et seq., is amended, modified, or repealed and superseded by a
new law providing for the initiation and maintenance of mining rights upon the
public lands, this Agreement shall be deemed to have been amended so as to
include in this Agreement any new rights that are afforded the GMMV in the
Mining Properties that arise from the application of such modified or new law to
the Mining Properties. If any actions are required to be taken by the new law to
maintain rights to the ground encompassed by the Mining Properties hereunder, or
to convert the unpatented mining claims within the Mining Properties to a new
form of right, USE/CC is hereby authorized to take such actions as it may deem
reasonably necessary to maintain the rights of the parties hereto in and to the
lands encompassed within the Mining Properties at the sole cost and expense of
USE/CC. The GMMV covenants and agrees to execute such documents and take such
actions as USE/CC may reasonably require to effectuate the maintenance of the
parties' rights and interest in and to the lands encompassed by the Mining
Properties.
14. NOTICES.
Any required notice, payment, or other communication contemplated by
this Agreement shall be in writing and shall be effective with respect to a
party (i) when personally delivered or delivered by courier at the party's
address as set out below; (ii) when delivered by electronic communication at the
party's telecopier number described below or at such other telecopy number as
the party may designate in writing provided that such electronic communication
is followed by a delivery by mail or by personal service to the party's address;
or (iii) when delivered by mail deposited in the United States mail, postage
prepaid and registered or certified, with return receipt requested, and
addressed to the party at the party's address:
IF TO THE GMMV: COPY TO:
Kennecott Uranium Company Kennecott Corporation
Attn: President Attn: Legal Department
Caller Box 3009 8315 West 3595 South
000 Xxxxx Xxxxxxxx Xxxxxx P. O. Box 6001
Gillette, WY 82717-3009 Xxxxx, XX 00000-0000
FAX (000) 000-0000 FAX (000) 000-0000
13
EXHIBIT 10.53
IF TO USE/CC: COPY TO:
U.S. Energy Corp. U.S. Energy Corp.
Attn: Xxxx X. Xxxxxx Attn: X.X. Xxxxxx
000 Xxxxx 0xx Xxxx 000 Xxxxx 0xx Xxxx
Xxxxxxxx, Xxxxxxx 00000 Xxxxxxxx, XX 00000
FAX: (000) 000-0000 FAX: (000) 000-0000
Either the GMMV or USE/CC may change its address for future notices by providing
written notice to that effect to the other party.
15. INTENTIONALLY OMITTED.
16. ASSIGNMENTS AND TRANSFERS OF INTEREST.
During the term of this Agreement, neither USE/CC nor the GMMV shall
transfer, or enter into any agreement to transfer, any interest in the Mining
Properties or in this Agreement without the prior written consent of the other.
17. IMPLIED COVENANTS.
There are no implied covenants in this Agreement except for the
covenants of good faith and fair dealing. Nothing in this Agreement shall impose
any obligation or covenant upon USE/CC, express or implied, to conduct any
exploration, development, or mining operations upon the Mining Properties except
as provided in Exhibit D, it being the intent of the parties that USE/CC shall
otherwise have the sole discretion to determine the economic feasibility, time,
method, manner, and rate of conducting any such operations, except as otherwise
required by this Agreement.
18. MISCELLANEOUS.
(a) As to any provision in this Agreement, the parties do not intend
that there shall be any violation of the Rule Against Perpetuities or any
related Rule. If any violation should inadvertently occur, it is the wish of the
parties that the appropriate court reform such provision so as to approximate
most closely the intent of the parties within the limits permissible under such
Rule.
(b) This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Wyoming without giving effect to any choice or
conflict of law provision or rule (whether of the State of Wyoming or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Wyoming.
(c) Each of the parties hereto agrees that it shall not seek a jury
trial in any proceeding based upon or arising out of or otherwise related to
this Agreement or any of the other documents and instruments contemplated hereby
and EACH OF THE PARTIES HERETO HEREBY WAIVES ANY AND ALL RIGHT TO ANY SUCH JURY
TRIAL.
14
EXHIBIT 10.53
(d) The provisions of this Agreement shall inure to the benefit of and
be binding upon the parties and their respective heirs, executors,
administrators, personal representatives, beneficiaries, successors, and
assigns.
(e) This Agreement shall not be recorded. Upon the request of either
party, the parties shall execute a Memorandum of this Agreement in a recordable
form sufficient under the laws of the State of Wyoming to give notice to third
parties of the rights granted hereunder. Either party shall have the right to
record such Memorandum at any time.
(f) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which shall constitute
one and the same instrument.
(g) This Agreement and its Exhibits, all of which are incorporated
herein by reference, constitute the sole understanding and entire agreement of
the parties with respect to the subject matter herein. No modification or
alteration of this Agreement shall be effective unless in writing and executed
by the parties.
(h) The headings appearing in this Agreement are inserted for convenient
reference purposes only, and are not definitive as to the provisions contained
within said Sections in the interpretation and construction of this Agreement.
(i) In the event any of the terms or provisions of this Agreement
conflict with or are inconsistent with the terms or provisions of the
Acquisition Agreement, the terms and conditions of the Acquisition Agreement
shall prevail.
15
EXHIBIT 10.53
Executed to be effective as of the date first above set forth.
KENNECOTT URANIUM COMPANY
By /s/ X. X. Xxxxxx-Xxxxx
----------------------------------------
Its Director/Assistant Secretary
-------------------------------------
U.S. ENERGY CORP.
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Its President
----------------------------------
U.S. ENERGY CORP. and
CRESTED CORP. dba the
USE/CC JOINT VENTURE
By: U.S. ENERGY CORP.
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Its President
----------------------------------
By: CRESTED CORP.
By /s/ Xxx X. Xxxxx.
----------------------------------------
Its President
----------------------------------
16
EXHIBIT 10.53
EXHIBIT A
Mining Properties.
This Exhibit is not filed with this Form 10-K for the year ended May 31, 1997.
17
EXHIBIT 10.53
EXHIBIT B
TO MINERAL LEASE AGREEMENT
OPERATING PERMITS AND BONDS
I. JACKPOT MINE
ACTIVE PERMITS & APPROVALS OR PERMITS REQUIRED
TYPE IN NAME OF STATUS (1/28/97)
---- ---------- ----------------
DEQ
---
Permit to Mine GMMV No. 660
License to Mine GMMV No 660-L1
* Air Quality Permit Engineering
WQD - NPDES Permit USE XX0000000 - Renewal
12/31/97
* WQD - Construct Sewage System Engineering
WQD - Construct Sediment Basin Approved - Completed
* WQD - Construct Treatment Ponds & Plant Engineering
Drill Site 28-86-1 XXX 000XX-XXX Inspection
* Enhancement Drilling Program GMMV 297DN - To Be Completed
PZ & JP Monitor Holes (various) USE Complete
* Storm Water Permit - Pollution Prevention Plan Engineering
* Permit Amendment for Widening Access Road
STATE ENGINEERS OFFICE
----------------------
Appropriate Water From Well USE UW 75407
Appropriate Water From Underground Mine USE/BLM UW 75520
* Construct Water Treatment Ponds Engineering
* Construct Permanent Diversion Ditch Engineering
Sediment Reservoir (Jackpot No. 1) GMMV No. 10090R
PZ & JP Monitor Xxxxx USE Completed No. Issued
BLM
---
Power Line Easement PP&L Complete
Access Road - 179LE USE W71827
* To Widen Road to 40' (Jackpot to Big Eagle) Engineering
Haul Road to Mill Engineering Required
* Plan of Operations (approved in conjunction Approved
with Jackpot Mine Permit)
* Xxxxxxxx Xxxx XXX 000XX
* ROW Amendment Big Eagle Haul Road GMMV Engineering
18
EXHIBIT 10.53
U.S. ARMY CORP OF ENGINEERS
---------------------------
* Nationwide Permits 14 and 26 (33 CFR Part Approved - NPDES
330, Appendices A(B) 14 and 26) and Section Renewal 4/6/95
404
- Road Crossing
- Headwaters and Isolated Waters Discharge
II. BIG EAGLE MINE
ACTIVE PERMITS
Status
or
TYPE Permit No. Transfer Date In Name Of Expiration
---- ---------- ------------- ---------- ----------
DEQ
---
* Mine Permit Pt 451 12-31-90 XXX IMS
IMS (Interim Mine Stabilization & Amendment to permit required) 11-2-97
NPDES WY-0025950 12-31-90 GMMV 6-30-98
Air Quality 12-31-90 Engineering
* Industrial Landfill ** Engineering
Wash Evap. Pond 77-427R ** with 451
Septic Tank/Drain Field 77-300R ** with 451
Storm Water Permit XXX000000 Aug. 31, 0000 XXX
XXXXX ENGINEERS OFFICE
----------------------
Rock Well Xx. 0 XX 00000 1-11-91 GMMV Complete
Rock Well No. 2 UW 35444 1-11-91 GMMV Complete
GM Diversion Ditch P25671D 1-14-91 GMMV Complete
GM Mine Reservoir P7863R 1-14-91 GMMV 00-00-00
Xxxx Xxxxxxxxx X0000X 1-14-91 GMMV 12-31-97
Zenith #1 (shop water) UW 41033 1-11-91 GMMV Complete
Xxxxxx Reservoir P7862R 1-14-91 GMMV Complete
Xxxxxx Xx. 0 XX 00000 1-11-91 GMMV Complete
Stream Gauging Sta-Esmt 1917 12-31-90 GMMV 6-29-77
(granted)
19
EXHIBIT 10.53
STATE LAND OFFICE
-----------------
LEASES Lease No. Lessor Transfer Date
------ --------- ------ -------------
State Mineral Lease
Sec. 36, T28N,R92W 26528 State of WY 4-3-91 USE 50%, XXX
50% dba GMMV
Exp 5/1/01
FEE SURFACE LANDS SECTION Ownership
----------------- ------- ---------
X00X, X00X Sec. 2, S1/2 GMMV
Sec. 11, N1/2 GMMV
XXX = Kennecott Uranium Company
GMMV = Green Mountain Mining Venture
* Needed for Jackpot Decline Development
** Not Transferred
20
EXHIBIT 10.53
EXHIBIT C
INSURANCE
(a) During the term of the Agreement and all times during performance,
and until completion of the Work, USE/CC shall maintain in force the insurance
described in this Exhibit C, for the benefit of the parties to the Agreement,
all of their personnel and the personnel of all subcontractors on site with
companies satisfactory to the GMMV. USE/CC shall be responsible for compliance
by all its contractors with these insurance requirements and shall furnish
certificates as provided herein evidencing the required insurance for the
contractors.
(b) Certificates of such insurance shall be made out to the GMMV and
shall be furnished to the GMMV promptly and must reflect both the endorsement
provisions requiring 30 days prior written notice to be given before
cancellation or material change, and the additional interest where applicable.
Each certificate shall specify the date when such benefits and insurance expire.
USE/CC agrees that such benefits and insurance, as specified above, shall be
provided and maintained until the entire work under the Agreement has been
completed and accepted by the GMMV. An original copy of each certificate shall
be mailed or delivered to:
Kennecott Uranium Company
Caller Box 3009
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000-0000
FAX (000) 000-0000
The GMMV's approval or failure to disapprove insurance certificates furnished by
USE/CC or subcontractors shall not release USE/CC or its contractors from full
responsibility for liability, damage, and accidents as set forth herein.
(c) It shall be a condition of approval that the required insurance must
be arranged with insurance companies authorized to do business in the State of
Wyoming.
(d) If at any time the USE/CC-required insurance policies should be
canceled, terminated or modified so that the insurance is not in full force and
effect as required herein, the GMMV may terminate the Agreement for default or
obtain insurance coverage equal to that required herein and recover costs
therefor from USE/CC.
(e) USE/CC and contractors shall bear all risk of loss of or damage to,
and shall, as they deem necessary, carry fire, theft, physical damage, or other
insurance on their own and their employees' tools, equipment, reusable materials
(such as metal forms and metal scaffolding), trailers, any property of their
employees.
(f) The liability of USE/CC assumed under the Agreement shall in no
manner be limited by the amount of insurance furnished by GMMV or by the amount
of insurance which Contractor has or is required to provide by the terms
thereof.
21
EXHIBIT 10.53
(g) In addition to USE/CC's liability for property damage as set forth
in the Agreement, USE/CC shall also be responsible for any damage to its
vehicles and the vehicles of its contractors, employees, and agents or
representatives of USE/CC or contractors while the vehicles are parked or used
on the GMMV's property.
(h) USE/CC shall be responsible for and shall bear any and all risk of
loss or of damage to work in progress.
(i) All policies of insurance carried by USE/CC pursuant to this
Agreement shall:
(i) provide that they may not be canceled or the protection afforded
thereby substantially changed without 30 days prior written notice to
GMMV. Upon request, USE/CC shall permit GMMV to examine any of the
insurance policies specified herein.
(ii) be endorsed to include Kennecott Uranium Company and all
subsidiary, associated, and affiliated companies, as additional insured.
(iii) contain endorsements stating that USE/CC'S coverage is primary to
any coverage GMMV may elect to carry for its own account, or for USE/CC.
(iv) contain endorsements waiving the insurer's right to subrogation
against GMMV, its subsidiaries, agents, and affiliated companies, and
their employees, officers, and directors.
(i) Any and all deductibles specified in the above described USE/CC
insurance policies shall be assumed by, for the account of, and at the
sole risk of USE/CC.
(j) The insurance required hereunder is as follows:
WORKER'S COMPENSATION AND OCCUPATIONAL DISEASE insurance in compliance
with all state and federal regulations in the jurisdiction where the
work and services are to be performed with the statutory limit required.
USE/CC shall require each consultant and contractor to carry Worker's
Compensation and Employer's Liability insurance.
COMMERCIAL GENERAL LIABILITY insurance covering all operations of USE/CC
in the performance of work, including contractual liability insurance
covering the liability assumed in this Contract. Said insurance policy
or policies shall provide $2,000,000 combined single limits for all
injuries or death to persons and damages to property per occurrence.
COMPREHENSIVE AUTOMOBILE LIABILITY insurance including all owned, non
owned, and hired vehicles, with the following limits:
Bodily Injury $1,000,000 each person
$1,000,000 each occurrence
Property Damage $1,000,000 each occurrence
22
EXHIBIT 10.53
(k) USE/CC shall not commence work at the site until a certificate in
evidence of insurance coverage has been approved by GMMV.
(l) USE/CC shall be responsible for compliance by all contractors with
these insurance requirements and shall furnish certificates as provided herein
evidencing the required insurance for the contractors.
(m) The liability of USE/CC assumed under the Agreement shall in no
manner be limited by the amount of insurance furnished by the GMMV or by the
amount of insurance which USE/CC has or is required to provide by the terms
thereof.
23
EXHIBIT 10.53
EXHIBIT D
THE WORK
The Work is described in the pages that follow this cover sheet and shall
include the Objectives and Activities described in Exhibit E to the Agreement.
The balance of this Exhibit is not filed with this Form 10-K for the year ended
May 31, 1997.
24
EXHIBIT 10.53
EXHIBIT E
Reimbursable Costs.
Description and Detail of Reimbursable Costs are not filed with this Form 10-K
for the year ended May 31, 1997. Following are Objectives and Activities.
25
EXHIBIT 10.53
GREEN MOUNTAIN MINING VENTURE
JACKPOT
OBJECTIVES AND ACTIVITIES
DECLINE DEVELOPMENT
OBJECTIVES:
Complete site preparation.
Develop dual declines into ore zones.
ACTIVITIES:
Site preparation - Completion of site preparation during May and June, which
will allow for the development of dual declines to commence in July.
Excavation for Conveyor - Complete preparation of declines for conveyor system
and install conveyor.
Declines development - Commence development of dual declines at an advancement
of 5 feet per cutting hour utilizing a drum miner. Development schedule will be
two shifts per day seven day per week. As manpower increases programs will be
developed.
Mine water ponds - Upon receiving approval, from the state agencies, construct
two lined treatment ponds and water treatment facility and monitoring station.
Install electric station - This includes labor and supplies to maintain permits
and conditions set forth in the permits and transfer all permits to new owner.
The balance of this Exhibit is not filed with this Form 10-K for the year ended
May 31, 1997.
26
