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RULE 4 PERFORMANCE STANDARDS <br />4.23 Auger and Highwall Mining <br />4.23.1 Scope <br />This Section establishes environmental protection performance standards in addition to those applicable <br />performance standards in Rule 4, to prevent any unnecessary loss of coal reserves and to prevent adverse <br />environmental effects from auger mining incident to surface mining activities. <br />4.23.3 Performance Standards <br />4.23.4 Maximize Recoverability of Mineral Reserves <br />Colowyo has currently identified a number of areas that may be suitable for highwall mining that will be <br />accessed from within the West Pit (refer to Map 23, Mine Plan). Highwall mining should allow for the <br />recovery of additional coal resources beyond the currently permitted pit final highwalls and endwalls. <br />These resources were not classified as reserves until the concept of highwall mining was conceived — all <br />coal was previously classified as unmineable due to being uneconomic to mine either by modern surface <br />or underground mining methods. <br />From a strip mining perspective, the previously mined and future permitted limits of the East, West, and <br />Section 16 pits clearly delineate the maximum recoverable coal resources attainable today with modern <br />surface technology and coal market demand and pricing. The proposed highwall mining of many of the <br />same seams around the perimeter and underneath the mined out pits, represents recovery of reserves that <br />would not have been recovered by any other means utilizing either surface or underground mining <br />techniques. <br />The inability to recover these coal reserves by any other mining technique is primarily based on <br />insurmountable geologic factors. The majority of all coal seams experience splitting and thinning to the <br />point of not being economical to mine due to lack of adequate coal quality (unacceptable ash from coal <br />seam splits that cannot be selectively mined from the seam) and/or coal seam thicknesses getting too thin <br />to be mined from either the surface or underground. Additionally, all coal seams proposed to be mined by <br />highwall mining, have experienced natural historic in place burning of the seams which severely limits <br />the extent of mineable coal and also precludes finding intact outcrop locations from which to access these <br />same seams by underground outcrop mining. To the north and east, changing geologic structure gives <br />rise to severe dips and unstable fractured strata that also precludes mining by either surface or <br />underground mining methods. Areas proposed for potential highwall mining activities are shown on Map <br />23. <br />Colowyo was acquired by Tri-State Generation & Transmission Company in December of 2011. <br />However, when Kennecott Energy Corporation acquired Colowyo in 1994, numerous optimization, <br />exploratory drilling, geologic evaluation, and pre - feasibility studies and programs were undertaken to <br />identify all future mining options. By year -end 2003, Colowyo completed pre - feasibility studies on three <br />separate surface mining options and on underground mining options that evaluated all coal seams and all <br />areas within Colowyo's Logical Mining Unit (LMU) and beyond. This comprehensive body of work <br />definitively and unequivocally shows that all coal reserves proposed to be recovered by highwall mining <br />methods have already been depleted by the 27 plus years of mining activities in the West, East, and <br />Section 16 pits and are so limited in thickness and extent that it is not practical to recover the remaining <br />coal reserves by either surface or underground mining methods. At Colowyo, future surface mining will <br />entail moving to separate, distinct, and in some cases distant pits while future underground mining will <br />entail mining totally different seams in different locations. <br />Rule 4 Performance Standards 4.23 -1 Revision Date: 8/7/13 <br />Revision No.: TR -100 <br />