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Mine Name /Permit Number: New Horizon North, C- 2010 -089 <br />Violation Number /Date of Issuance: CV- 2013 -003, March 29, 2013 <br />Issuing Agency: Colorado Department of Reclamation, Mining and Safety <br />Nature of Violation: Failure to confine operations to lands within the permit area. <br />Current Status: Abatement Step #1 was satisfied when the Division issued its <br />proposed decision to approve TR -03 on September 3, 2013. WFC was assessed and <br />paid a civil penalty of $850. <br />Mine Name /Permit Number: New Horizon North, C- 2010 -089 <br />Violation Number /Date of Issuance: CV- 2014 -004, June 3, 2014 <br />Issuing Agency: Colorado Department of Reclamation, Mining and Safety <br />Nature of Violation: Significant differences were identified between as -built <br />documentation for NHN -001 East and West Ditches compared to observations made <br />during a complete inspection and combined OSM oversight inspection conducted on <br />June 3, 2014. The as -built documentation does not accurately replicate observed <br />ground conditions regarding the construction of the NHN -001 East and West ditches. <br />Current Status: TR -07 was submitted to abate the violation and is currently in review <br />by DRMS. WFC was assessed and paid a civil penalty of $500. <br />2.03.6 Right of Entry and Operation Information <br />The area to be mined consists of three parcels located in the W %2 of Section 25, <br />bounded by Montrose County Roads Z, 2600, AA, and 2650. The permit area also <br />includes an equipment corridor connecting the NHN permit area to the New Horizon <br />Mine permit area, crossing lands own by WFC <br />2.03.6 -1 Appendix 2.03.6 -1(a) through 2.03.6 -1(f) at the end of this section give the following <br />information to evidence right of entry for mining: <br />Appendix 2.03.6 -1(a). Memorandum of Surface Lease and Purchase Agreement <br />dated August 7, 2009 between Garvey & Co., a Colorado General Partnership <br />and Western Fuels - Colorado, a Limited Liability Company. The lease pertains to <br />the surface at SW1 /4, Section 25, T47N, R16W, NMPM. The lease gives WFC <br />right to enter and mine the property. Garvey & Co. has subsequently changed the <br />name to Garvey & Co. LLC. A letter informing of the change is attached behind <br />the lease agreement. <br />2. Appendix 2.03.6 -1(b). This Appendix includes two documents; (1) <br />Memorandum of Escrow Purchase Agreement dated June 27, 1978 between <br />Donald J. Rice and Marianna Rice ( "Sellers ") and Peabody Coal Company <br />( "Buyer "). Under this agreement Sellers sold to Buyer their rights to coal under <br />W1 /2SW1 /4, Section 25, T47N, R16W, NMPM and (2) Addendum to Escrow <br />Purchase Agreement between Donald J. Rice and Marianna Rice ( "Sellers ") and <br />Peabody Coal Company ( "Buyer ") dated 10th day of February, 1992 where <br />Peabody, with Sellers' consent, transferred its rights to the assets to Western <br />Section 2.03 Page 11 December 2014 (MR -12) <br />N: \WFC \2014 \NHN \DRMS Permit Revisions \MR -12 \2.03 Legal, Financial, Compliance and Related lnformatio_MR- 12.docx <br />