2014-04-04_INSPECTION - C1981012

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March 18, 2014 C- 1981- 012/New Elk Mine LDS 3. NECC Corporate situation LH described the business environment that NECC is currently operating in. Marret Asset Management is the 100% financial backer of Cline Mining, although since Cline was previously publicly owned there are other shareholders. Furthermore, shares in Cline can be traded on a US futures market. Marret is committed to Cline, and, by extension, to NECC. In addition to NECC, Cline has several other assets, but they are not significant income generators. In principle, NECC could be sold as a US company, but it would not be feasible for Marret to simply dissolve Cline and take direct control of NECC. Doug Blackburn's contract was completed. He left with the basic engineering aspects of a new mine plan in place. Some financial modeling remains to be completed before the plan is presented to the board (probably in April). The first stage of the new mine plan sees 3 complete mining units, using continuous miners, operating in the Blue seam for 3 -5 years before ramping down to the Maxwell seam (second stage). The long term (18 -20 years) plan sees more coal being mined from the Allen seam, but without using any of the existing workings for access. In terms of grade, Blue < Maxwell < Allen. Blue seam coal could be sold as a domestic steam coal, but it would be more likely to go to an overseas market as a blend ingredient for metallurgical coal (that would also be the market for Maxwell and Allen coal). 4. Environmental compliance LH confirmed that Marret will ensure that financial support for environmental compliance is in place. It was agreed that compliance issues were more likely to arise as the result of "not knowing what to do ", rather than willful negligence. With this in mind, DRMS will continue to consider LH as the primary contact, but copy all correspondence to RT, JT and MV, to ensure communication is as open as possible. JT said that he needs a calendar for DRMS obligations. 5. NOV CV- 2013 -009 TR69 has been submitted as part of the abatement for NOV. TR69 is under review by DRMS. Action items: a. LS to send adequacy letter following review of submitted material 6. TR68 LS and SB described the permitting process that lead to TR68. This was summarized in an email sent on March 6, 2014, re -sent on March 19, 2014. There was a discussion about the best way to move forward from this point. No conclusion was reached, since the input of RT is critical. The principal difficulty with TR68 is the scale of the administrative task that was begun by revising so many pages of permit text, since the errors in formatting and grammar are very extensive. Number of Partial Inspection this Fiscal Year: 6 Number of Complete Inspections this Fiscal Year: 3 Page 15 of 16