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In addition to maintaining the 3:1 slope, an account has been established Points West <br />Community Bank in Windsor, Colorado for the specific purpose of "pre- funding" dewatering. <br />Loloff has contracted with Mill Iron Mining, LLC to perform the actual mining activities at the <br />mine. Specifically, under the Material Production Agreement between Loloff and Mill Iron <br />Mining, LLC (the "Production Agreement "), Mill Iron is obligated to deposit $.50 /ton for all <br />material removed from the mine. A copy of the Production Agreement is attached. The <br />obligation to make these deposits is found in paragraph 7. The limited purpose of this account is <br />to cover the expense of dewatering in the event Loloff or Mill Iron stop mining activities. I will <br />refer to this account as the "Dewatering Account." <br />The Dewatering Account number is 2002277. The present balance is $2,371.47. The bank <br />officer associated with this account is Mark Brase. Based on Mr. York's estimate that 2,600,000 <br />tons of gravel remain available to be mined, the Production Agreement will generate $1,300,000 <br />specifically for dewatering expenses. Mill Iron estimates that based on current demand and <br />production capacity, an average of 30,000 tons will be removed from the pit on a monthly basis. <br />Based on these estimates, the Dewatering Account balance should be $180,000 within twelve <br />months. Although there is no escrow agreement in place, Loloff and Mill Iron are prepared to <br />sign an escrow agreement that would restrict any withdrawals from this account to expenses for <br />dewatering, and only in the event your office receives notice and agrees to the withdrawal. In <br />effect, this would be a type of financial guaranty to cover the costs of dewatering. It is not <br />expected that the funds in this account would be used, as the slope of all disturbed non - active <br />mining areas will be maintained at a 3:1 slope. <br />Item 24: Reclamation Costs: <br />A reclamation bond is already in place for the mine. I understand the present concern involves <br />addressing exposed ground water and out -of- priority water depletions. Loloff intends to obtain <br />approval from the Division of Water Resources for future compliance with CRS §37 -90- 137(11). <br />I understand that Kim Lawrence, representing Loloff, made a proposal to you in April 2012 to <br />establish an Individual Reclamation Fund under MMR rules 4.3.6 and 4.9.1 to guaranty to <br />financial resources to purchase sufficient water to make a permanent dedication in support of the <br />existing Substitute Water Supply Plan ( "SWSP "). Similar to the Dewatering Account detailed <br />above, Loloff has established an escrow account with Points West Community Bank in Windsor <br />to marshal the funds necessary to permanently dedicate water to the SWSP. <br />Paragraph 7 of the Production Agreement requires Loloff to deposit $.50 /ton of material <br />removed from the mine into an escrow account to be held and used only to purchase water to <br />dedicate to the SWSP. This account will be referred to as the "Water Account." The Water <br />Account number is 2002285, and has a balance of $2,371.72. The projection for deposits into <br />