Upon establishing to the satisfaction of the commission that commercially valuable deposits of minerals have been discovered within the limits of any permit, the permittee shall be entitled to a lease for not more than 960 acres of the land included in the prospecting permit, if there is that number of acres within the permit. The area selected by the permittee shall be in compact form and, if surveyed, shall be described by the legal subdivisions of the public lands surveys; if unsurveyed, the area shall be surveyed by the commission at the expense of the applicant for the lease, in accordance with rules and regulations prescribed by the commission, and the lands leased shall be conformed to, and taken in accordance with, the legal subdivisions of the surveys. The lease shall provide for the payment of an annual rental of not less than one dollar ($1) per acre, as determined by the commission. The lease shall also provide for payment, which may be taken in kind, of either a royalty, to be taken in money or in kind, at the option of the commission, of not less than 10 percent of the gross value of all mineral production from the leased lands, less any charges approved by the commission that were made or incurred with respect to transporting or processing the state’s royalty share of production, or a percentage, to be determined by the commission, of the net profits derived from mineral extraction operations under the lease. Payment as a royalty or as a percentage of net profits shall be specified in the permit. Notwithstanding the 960-acre limitation of this section, whenever the lands for which a lease is sought are tide and submerged lands, the commission may divide the lands into the size and number of parcels as the commission determines will not substantially impair the public rights to navigation and fishing or interfere with the trust upon which the lands are held.

(Amended by Stats. 1985, Ch. 383, Sec. 1.)