(1) The department, upon application by any person, may enter into a contract providing for the sale and removal of rock, gravel, sand, and silt located upon state lands or state forestlands, and providing for payment to be made on a royalty basis.
(2) The issuance of a contract shall be made after public auction and shall not be issued for less than the appraised value of the material.
(3) Each application made pursuant to this section shall:
(a) Set forth the estimated quantity and kind of materials desired to be removed; and
(b) Be accompanied by a map or plat showing the area from which the applicant wishes to remove such materials.
(4) The department may in its discretion include in any contract such terms and conditions required to protect the interests of the state.
(5) Every contract shall provide for a right of forfeiture by the state, upon a failure to operate under the contract or pay royalties for periods therein stipulated. The right of forfeiture is exercised by entry of a declaration of forfeiture in the records of the department.
(6) The department may require a bond with a surety company authorized to transact a surety business in this state, as surety, to secure the performance of the terms and conditions of such contract including the payment of royalties.
(7) The amount of rock, gravel, sand, or silt taken under the contract shall be reported monthly by the purchaser to the department and payment therefor made on the basis of the royalty provided in the contract.
(8) The department may inspect and audit books, contracts, and accounts of each person removing rock, gravel, sand, or silt pursuant to any such contract and make such other investigation and secure or receive any other evidence necessary to determine whether or not the state is being paid the full amount payable to it for the removal of such materials.