Ariz. Rev. Stat. § 27-254
Following discovery of a valuable mineral deposit upon the state land covered by a mineral exploration permit within a rectangular subdivision of twenty acres, more or less, or lot, of the public land survey, the permittee may apply to the commissioner for a mineral lease upon the state land within such rectangular subdivision, or lot, and such land shall, for the purpose of the application and any mineral lease issued pursuant to such application, constitute a mineral claim without extralateral rights, and shall be deemed to have been located as of the date of filing the application for the mineral lease. Upon receipt of an application from the permittee for a mineral lease, and satisfactory proof of discovery of a valuable mineral deposit, the commissioner shall issue a mineral lease to the applicant for the mineral claim or claims covered by the application. From and after the date of issuance of a mineral lease, the mineral claim or claims covered by such mineral lease shall be deemed to be excluded from the exploration permit. Upon application to the commissioner, not less than thirty nor more than sixty days prior to the expiration of the lease, the lessee, if not delinquent in the payment of rental or royalty on the date of expiration of the lease, shall have a preferred right to renew the lease bearing even date with the expiration of the old lease for a term of twenty years.
A.R.S. § 27-254