CONTRACT NO. AT(05-1)-737 17th THIS CONTRACT, entered into and effective this _17 day of September 1957, by and between the UNITED STATES OF AMERICA (hereinafter called the "Government"), represented by the UNITED STATES ATOMIC ENERGY COMMISSION (hereinafter called the "Commission") and PHILLIPS PETROLEUM COMPANY, a corporation organized and existing under the laws of the State of Delaware, with offices in Bartlesville, Oklahoma (hereinafter called the "Contractor"); WITNESSETH THAT: WHEREAS, the Contractor represents that it has control of, or available to its use, uranium-bearing ore necessary in the operation of a mill, having a daily capacity of approximately seventeen hundred and twenty-five (1725) tons of ore and the Contractor desires to operate such mill for the production of uranium concentrate from ore to be produced principally in the Ambrosia Lake area of McKinley County, New Mexico, and desires to construct and operate a uranium ore processing plant in the vicinity of Ambrosia Lake, McKinley County, New Mexico, to treat such ore and sell uranium concentrate produced therefrom to the Commission; and WHEREAS, the Commission is willing to purchase from the Contractor uranium concentrate to be produced from such uranium-bearing ore of the Ambrosia Lake area of McKinley County, New Mexico; and WHEREAS, this contract is authorized by and executed under the Atomic Energy Act of 1954, in the interest of the common defense and security; NOW, THEREFORE, the parties hereto do agree as follows: 1. The Contractor agrees to construct, as promptly as possible, a mill on a plant site located in Section 28, Township 14 North, Range 9 West, N.M.P.M., or any abutting section thereto, for the processing of uranium-bearing ore available to the Contractor in the Ambrosia Lake area in McKinley County, New Mexico (hereinafter called the "plant"), having a capacity to process approximately seventeen hundred and twenty-five (1725) tons of uranium-bearing ore daily. The first day of the month in which ore is fed to the fine ore bins in the plant shall be hereinafter referred to as the "effective plant date." The Contractor agrees to operate the plant steadily for the production of uranium concentrate meeting the specifications set forth in Article XXII hereof, at the highest rate consistent with the availability of ore, the ability to treat ore in the plant, and the obligation of the Commission to accept U308 in concentrate hereunder, and to deliver for sale to the Commission the uranium concentrate meeting said specifications produced during the period of this contract which the Commission hereby agrees to purchase in accordance with the provisions of this contract; provided, that unless the Commission shall exercise the option to reduce the quantity of U308 which it is obligated to purchase hereunder and until the effective date of such option, as provided in paragraph 3 of this Article, the Contractor shall not, except as provided below, feed uranium ore to process in the plant at a rate such that at the end of any calendar quarter the average quarterly rate from the effective plant date to the end of such quarter exceeds one hundred seventy-one thousand (171,000) tons without prior written approval of the Commission except, that should the Contractor for any reason fail to process one hundred seventy-one thousand (171,000) tons of ore in the plant during any calendar quarterly period the deficiency may be made up during the remaining part of the contract term prior to such time as said option shall be exercised by the Commission and become effective. In addition to the one hundred seventy-one thousand (171,000) tons of ore which the Contractor may process in the plant per calendar quarter, the Contractor may process any ores acquired from the Commission under the provisions of paragraph 3 of Article VII hereof at any time within one year of the date on which the Commission makes such ores available to the Contractor, except as such requirement may be further reduced as provided in paragraph 3 of this Article. The Contractor shall not be required to sell to the Commission, and the Commission shall not be required to purchase from the Contractor, more than twentyfive million two hundred thousand (25,200,000) pounds of U308 in concentrate plus all U30g in acceptable concentrate produced in the plant from ore which may be purchased from the Commission by the Contractor under the provisions of paragraph 3 of Article VII hereof, except that should the effective plant date be later than July 1, 1958, the said amount of twenty-five million two hundred thousand (25,200,000) pounds as such amount may be reduced by the provisions of paragraph 3 of this Article, will be decreased by two hundred forty-six thousand six hundred (246,600) pounds for each month later than July 1, 1958 that the effective plant date shall occur. 2. The term of this contract shall commence on the effective date hereof and, subject to the provisions of Article XIX hereof, shall extend to and including December 31, 1966. 3. The Contractor will deliver to the Commission and the Commission will purchase from the Contractor all U308 in concentrate meeting specifications set forth in Article XXII hereof, produced in the plant during the term of this contract, within the limitations set forth in paragraph 1 above; provided, that the Commission will not be obligated to purchase, prior to April 1, 1962, more than eleven million one hundred thousand (11,100,000) pounds of U308 in concentrate plus all U308 in acceptable concen- 4. Should the Commission exercise its option as provided in paragraph 3 of this Article to limit the maximum number of pounds of U308 in concentrate produced from the lands listed in Appendix "D" hereof, which the Commission will be obligated to purchase hereunder subsequent to March 31, 1962, the Commission will, in addition thereto, purchase (all U308 in acceptable concentrate produced from ore which may be purchased by the Contractor from the Commission under the provisions of paragraph 3 of Article VII hereof, within one year of the date such ores have been made available to the Contractor. The Commission further agrees that in addition, it will purchase hereunder the first three hundred and eighty-six thousand (386,000) pounds of contained U308 per year and pro rata for parts of a year produced during such period after March 31, 1962, and subsequent to exercise of the Commission's option, from ore which the Contractor is required to accept from independent producers under the provisions of paragraph 1 of said Article VII, 1. Subject to the provisions of Article XVIII hereof, all uranium concentrate delivered under this contract shall be weighed, sampled, and the moisture content thereof determined by the Commission at Grand Junction, Colorado, in accordance with Commission practice. The total weights, samples, and moisture content of each lot delivered hereunder, when arrived at in accordance with the provisions of this Article, shall be final and binding upon the parties hereto. 2. One sample shall be taken from each lot of uranium concentrate delivered under this contract and divided into four equal parts. The Contractor shall receive one part thereof and the remaining parts shall be retained by the Commission. 3. The Commission and the Contractor, each at its own expense, shall make, or cause to be made, independent assays of U308 content of samples of each lot of uranium concentrate. The results of the U30g assays shall be exchanged by crossing registered mail promptly after completion of assays. If the difference in the determination of the U308 content between the assay of the Commission and the assay of the Contractor does not exceed three-tenths of one percent (0.3%), the average of the two results shall be final and binding on both parties. If such difference exceeds three-tenths of one percent (0.3%), one of the parts of the sample retained by the Commission shall be submitted to the National Bureau of Standards or any other mutually acceptable laboratory for umpire assay of the U308 content thereof and the result of such assay shall be final if within the limits of the assays of the two parties; if not, the assay which is nearer to that of the umpire shall prevail. The cost of such assay shall be borne by the party whose original determination of the U308 content is further from the determination of the umpire. In the event the umpire's assay is equally distant from the assay of each party, such cost will be split equally. 4. The Commission shall, in addition to making an assay for U308, make, or cause to be made, assays for each impurity listed in b. to k., inclusive, of paragraph 3. of Article XXII hereof, which may be contained in concentrate delivered hereunder. The Contractor, in addition to making an assay for U308 may, at its option, make, or cause to be made, assays for any impurity listed in b. to k., inclusive, of paragraph 3. of Article XXII hereof, which may be contained in concentrate delivered hereunder. Assays for such constituents will be exchanged simultaneously with the assays for U308. In the event that the assays with respect to such constituents differ, the Commission's assay shall govern unless the Contractor or the Commission shall, within five days of receipt of the other's assay, make a written request for umpire assay of any such impurity in dispute, provided, that the Contractor shall waive his right to umpire assay and shall accept the Commission's assay for any such constituent for which assay results were not exchanged by crossing registered mail simultaneously with U30g assays. In the event that umpire assay is requested, one of the parts of the sample retained by the Commission shall be transmitted to the National Bureau of Standards or |