Hi,
I own 33 acres of land in Crescent Valley, Nevada, where several
mining company are actively exploring and mining Gold. I have been
contacted by a Gold exploration and mining company that wants to lease
my property. They have sent me Mining Lease and Option to Purchase
Agreement and Memorandum, import parts of which are listed below.
Could anyone kindly suggest if the contract terms below seems fair? 
Are their proposed payment terms fair? 
Should I remove option to purchase from the contract? 
Should I have the contract reviewed by a lawyer?
Appreciate any other words of advice!

Thanks!

Mining Lease and Option to Purchase Agreement

Term.  The term of this Agreement shall be from the Effective Date for
ten (10) years, unless terminated or canceled as provided in this
Agreement, and for so long after the end of the primary term as
Minning Company conducts exploration or development activities on the
Property or Minning Company mines or produces Minerals from the
Property.

	Payments.  Minning Company shall make the following payments to Owner:

	Execution Payment.  On Owner?s execution of this Agreement Minning
Company shall pay to Owner the sum of ONE THOUSAND DOLLARS ($1,000.00)
in cash.

Minimum Payments.  Minning Company shall pay to Owner the following
Minimum Payments:
		$1,000.00	December 1, 2006		
		  1,000.00	December 1, 2007		 
		  1,000.00	December 1, 2008		 
		  1,000.00	December 1, 2009		 
		  1,000.00	December 1, 2010		 
		  3,000.00	December 1, 2011		 
		  3,000.00	December 1, 2012		 
		  3,000.00	December 1, 2013		 
		  3,000.00	December 1, 2014		 
		  5,000.00	December 1, 2015 and each December 1st thereafter so long
as this agreement is in effect.

	Production Royalty.  Minning Company shall pay to Owner the Royalty.
Payments of the Royalty shall be determined at the end of each quarter
after the Effective Date.  ....  The Royalty percentage rate shall be
three percent (3%) of Net Smelter Returns.

5.7     Purchase Option.  Owner grants to Minning Company the
exclusive right to purchase the Property.  The Purchase Price for the
Property shall be One Hundred Thousand Dollars ($100,000.00 ) United
States currency.  All Production Royalties, as described in 5.3, paid
to Owner shall be applied to the Purchase Price.

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Clarification of Question by goldmine-ga on 11 Dec 2005 18:24 PST

Thank you  jadayu-ga and worminger-ga for your feedback. 

I was wondering if you could point to any sample contract dealing with
mining lease. I want to make amendments to the contract sent to me by
the mining company.

Thanks!

---

Clarification of Question by goldmine-ga on 12 Dec 2005 22:26 PST

Thanks you myoarin-ga, now I have something to compare my contract against!

I've contacted a laywer in Nevada and his charges are $250/hr and he
think it will take 4 hours minimum to review the contract. Does his
fee sound reasonable? Would you recommend any laywers?

No one put their comments in "answers" section....So, as a token of my
gratitude, how can I pay everyone who responded to my question?

I appreciate everyone's feedback!

You got to have these vetted by a lawyer who has experience in Mine
leasing activities.   The 5.7 does not look nice, if the miniing sites
becomes productive and they start paying the royalties,the figure of
100,000 would be easily met by the royalty payment alone with a meagre
balance.

No, sire, you got to get a leagal head's opinion on it.

Yu should mmost certainly get a lawyre's advice. A useful approach may
be to require the prospective lessor to reimburse you for the legal
advice costs (but importantly it should be your choice of lawyer) -
and if the deal goes through, you might consider allowing them to net
off that cost against whatever payments may become due, though this is
a matter of negotiation.

You should ensure that you choose a lawyer with experience in this
filed, hopefully one with experience locally, and that the lawyer has
no conflict, ie does not act for this mining company.

Generally it seems to me that any deal whereby your royalty depends
upon the net after they have allocated costs puts you at risk of not
being able to find out if they have properly allocated cost, so is too
easily manipulated. Gross is always better in my view.

Another possibility may be to get them to pay for a joint survey, so
you all know what the land might yield, then base prices on that.

Anyway, don't hesitate, get a lawyer, one that knows this market. The
mining company does not have your interests at heart when they draw up
their standard contract, that's for sure.

Note: This is not legal advice.

Worminger

A further thought; the contrac essentially gives the mining company,
for the mere payment of US$1,000, the option to purchase. On what
terms is teh contract cancellable? By you? By them? If you can't
cancel you're at risk of lock in, it would seem. Presumably if the
property is worth mining they will pay the 100k and take it, rather
than mine and pay royalty.

Lots to say about this contract I would say.

Note: this is not legal advice

Worminger

Goldmine,
You should indeed go to an experienced lawyer, but perhaps this
example can help you.  I have not read the document:
http://contracts.onecle.com/arabian/pioche-ely.explore.1997.10.21.shtml