Geeze! You are being asked to tie up your mineral property for eight years at very low bonus rates. I don't know what State/County your minerals are located in. The other issues are what is the geology of your area and production potential. Are there any nearby producing wells? What is the trend or play in your area? Is it oil or natural gas or both? Do you have any competition for your minerals in your area? Are you in a high risk exploration area where "wildcat" exploratory well is being planned or a low risk drilling area such as the oil and gas shale plays where commercial production is highly probable? All this can determine your negotiation position. My experience in Texas is that the average royalty rates being offered are around 20% and bonus payments can range from a hundred bucks per acre to thousands per acre in the known producing trends.
As to your question on the 3 year option to extend, the $26.25 per net mineral acre is lower than the original bonus payment for the primary term. This option term and bonus payment should be displayed in the lease agreement. Prior to the expiration of your lease primary term the Operator may exercise the option period to extend or let the lease expire. The Operator would send you the option period bonus check to extend the lease prior to the primary term expiring.
The typical recommended primary term to lease is 3 years in Texas. If you are in an area with good potential I would opt for the shorter primary term and no option to extend. If you are in a high risk exploratory area I could go a bit longer but that is a judgement call. Also I would advise having an Oil and Gas Attorney help you with the lease provisions and that is very important if you are also the surface estate owner and need protection on surface damages and potential drillsite location.