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the Water Account is the same as the Dewatering Account. After twelve months, the account is <br />projected to have a balance of $180,000. <br />Loloff s water engineers at Applegate Group have analyzed the type and amount of water <br />necessary to provide the water required by the DWS. Applegate has estimated that seven shares <br />of Greeley Irrigation Company ( "GIC ") would replace summer depletions caused by the Loloff <br />mine between May and September. The present cost of a share of GIC ranges from $60,000 to <br />$70,000. Winter depletions will require an additional nine NCLPIC shares, with a current <br />expense estimate of $30,000 per share. Loloff is presently negotiating with owners of GIC and <br />NCLPIC shares to purchase the necessary water. Based on estimated production, there will be <br />sufficient money in the Water Account to purchase all necessary GIC shares on or before <br />December, 2017. Loloff intends to confirm this purchase right by means of option agreements, <br />which will be available for DRIVIS. <br />Just as with the Dewatering Account, Loloff would agree to a written escrow agreement that <br />would allow the DRMS to monitor the account, and that any withdrawals be made with prior <br />notice to DRMS. <br />The above proposals are designed to meet the objectives of DRMS to ensure that there are <br />adequate resources available to reclaim the Loloff mine in the event Loloff fails to meet its <br />reclamation obligations. While non - traditional, this proposal does provide a steady stream of <br />income to fund water depletions and potential dewatering expenses. Given the refusal of sureties <br />to provide traditional reclamation bonds to individual mine operators, Loloff does not have the <br />ability to offer more traditional options. <br />Please let me know what additional information I can provide to assist in evaluating Loloff s <br />request for a technical revision of permit No. M- 1085 -112. <br />Sincerely, <br />Joseph King <br />enc: Material Production Agreement <br />