2014-03-21_REPORT - M1988044 - Laserfiche WebLink

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Additional Sheet 2014 Annual Report Coal Creek Resources M- 1988 -044 Schmidt Construction Company Anniversary Date: March 28 Lease and Permit Changes Upcoming: As the lease for this operation expires in mid April 2014, a lease extension was sought. In February a new leasing arrangement was approved. This operation is on a parcel of Stewardship Trust land owned by the State of Colorado and administered by the Colorado State Board of Land Commissioners. After the Land Board considered the various ramifications and needs of this special class of State land, the lease was extended for a five year period instead of the requested ten year period. Of greater significance is that the land allowed to be mined will be restricted to only Area 1U in the permit plan. All prior mining areas (2U, 1L, and 2L) will not be included in the new lease. Furthermore, at the conclusion of the five years the operation will close as no further lease extensions will be provided. Although the Land Board recognizes that the reclamation that has been performed is very good to excellent, they decided that mining on this property is contrary to the unique qualities of this property. Oil and gas development, however, will continue as well as the reintroduction of grazing using a grazing management plan that is more appropriate for the property than that which was allowed previously. The grasslands have recovered from the overgrazing that occurred in the past and is now ready for some well managed grazing. A lease has been granted to a rancher who is in the process of preparing the facilities needed to implement proper grazing use. The new lease area for this operation will only include about 850 of the existing lease and permit area. As the land beyond that new lease area will no longer be in the lease and will no longer include a right to enter and mine, nearly 2,000 of the existing permitted acres will need to be removed from the permit. This includes the remaining about 26 acres of land that has not been released from bond and contained in the South Lowland section of the permit. That land has recovered from the flood that occurred in June 2012 and, in our opinion, is now ready for release. Thus, once that reclamation is approved that land will be removed from reclamation obligation and can be removed from the permit along with the rest of the land that will no longer be under lease. No changes in the permitted mining or reclamation plans will be required other than the removal of a large amount of land that has not be disturbed and the South Lowland parcel that has been reclaimed. This will be done after the lease is finalized and signed. These changes in the lease will not have any impact on the reclamation plan for the remaining mining parcel (Area 1U) as it is an essentially independent mining parcel from the other areas. It is expected that these permit changes will be requested starting in April and it should all be completed by sometime in June and well before the next annual report to the Land Board. Utilization of Reclaimed Land: One parcel of land previously reclaimed and released is being planned for utilization for oil and gas development. Although Conoco /Phillips will be establishing a new well head on reclaimed land that will technically remain in the revised permit, the previous technical revision to account for oil and gas development on land within the reclamation permit will be utilized again once the facilities are established and the footprint of the drill pad is established and built. Thus and in accordance with that revision, Schmidt Construction Company assumes no responsibility for this oil and gas development between the time construction is begun and the removal from the permit is completed. Schmidt will be monitoring the development closely to insure that changes in the land are documented to separate Conoco /Phillips disturbances from Schmidt disturbances. Schmidt Construction 2014 Annual Report M- 1988 -044 Coal Creek Resources Page 1 of 1