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AM W COLORADO <br />Division of Reclamation, <br />Mining( and Safety <br />Department of Natural Resources <br />1313 Sherman Street, Room 215 <br />Denver, CO 80203 <br />January 6, 2016 <br />Jerry Nettleton <br />Twentymile Coal, LLC. <br />29515 Routt County Road 27 <br />Oak Creek, CO 80467 <br />RE: Foidel Creek Mine; C-1982-056; Proposed Bond Adjustment <br />SI -02; Informal Conference Notice. <br />Dear Mr. Nettleton, <br />The Colorado Division of Reclamation, Mining and Safety (Division) is proposing a bond <br />adjustment/surety increase (SI -02) for the Foidel Creek Mine. During the Midterm Review No. 7 (MT -07) <br />in accordance with Rule 3.02.2(4) the Division has reviewed the adequacy of the reclamation bonding <br />instruments and we have also reviewed the adequacy of the reclamation cost estimate. There is currently a <br />Self -Bond in place for the Foidel Creek Mine in the amount of $10,056,089.00. Prior to MT -07, a compiled <br />reclamation cost estimate was developed by the Division as a part of the Permit Renewal No. 6 (RN -06) <br />process that was approved on October 8, 2013. The Division's reclamation unit costs for the tasks identified <br />in the RN -06 cost estimate had not been updated until the MT -07 review. Also, a number of revisions have <br />been approved since the issuance of RN -06 that resulted in an increase in reclamation liability. For the MT - <br />07 review, the Division consolidated the reclamation tasks from the RN -06 estimate and tasks associated with <br />the various revisions approved after the issuance of RN -06 and thus developed a single consolidated <br />reclamation cost estimate. This reclamation cost estimate was sent to Twentymile Coal with the MT -07 <br />findings document on November 23, 2015. The Division requested that Twentymile Coal review the cost <br />estimate and provide any comments regarding the estimate to the Division by December 23, 2015. No <br />comments were received. <br />Prior to conducting the midterm review (MT -07), the reclamation liability at the site was set at <br />$9,909,129.69. During MT -07, the Division estimated the reclamation cost liability to be $10,553,208.47. <br />Subsequent to the issuance of MT -07, the Division approved a minor revision (MR -291) for the construction <br />of the 13LT Outby Utility Borehole. As a result, the liability associated with the activities proposed by MR - <br />291 the liability was also increased by $24,381.10. Given the cost estimate update conducted for MT -07 and <br />the approval of MR -291, the total reclamation liability amount for the site is proposed to be set at <br />$10,577,589.57. This amount is $521,500.57 more than the current bond held and is $644,078.78 more than <br />the liability currently set for the site. Twentymile Coal, LLC. should have a copy of both reclamation cost <br />estimates conducted for MT -07 and MR -291. <br />In accordance with Rule 3.02.2(4)(a), the Division is required to the notify the permittee of any proposed <br />bond adjustment and provide the permittee with an opportunity for an informal conference on the adjustment. <br />This letter serves as the required notification. If Twentymile Coal, LLC. would like to participate in an <br />01 <br />1313 Sherman Street, Room 215, Denver, CO 80203 P 303.866.3567 F 303.832.8106 http://mining.state.co.us <br />John W. Hickentooper, Governor I Mike King, Executive Director I Virginia Brannon, Director J <br />