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LAFARGE <br />North America <br />VIA FEDEX <br />Timothy J. Flanagan <br />Fowler, Schimberg & Flanagan <br />1640 Grant Street <br />Denver, CO 80203 <br />Dear Mr. Flanagan, <br />August 27, 2010 <br />Anne Johnson has asked me to follow up with you in regards to Lafarge's upcoming <br />departure from the M&G Pit, as it relates to several issues. First, as is evident from the <br />attached letter from the DRMS, please be aware that Lafarge has received approval of our <br />Technical Revision. That effectively means that the next step is for Lafarge to <br />adjudicate water rights through water court (with water shares provided by your clients). <br />Second, you have asserted in prior correspondence that that Lafarge is required to backfill <br />material on the site. However, the lease is clear in several places that it is intended to <br />allow Lafarge the right to do so, not to require Lafarge to do so. For example, Section 1 <br />of the Lease provides a term that is as long as Lafarge is able to and "elects to" deposit <br />material in the pit, and Section 7 expressly allows Lafarge to terminate the lease, if in <br />Lafarge's "sole reasonable judgment" there is insufficient material to deposit "at a cost <br />that is acceptable to [Lafarge]". In short, if it becomes uneconomical for Lafarge to <br />operate the site, as it has become, Lafarge is no longer required to do so. Moreover, the <br />intention of the lease was to utilize the property as a repository for fill material generated <br />at Lafarge operations. It was never the intent to operate a third party construction <br />material landfill, as I understand your clients may desire Lafarge to do. Therefore, <br />Lafarge will not import any more fill material into the site, whether from Lafarge or third <br />party operations. Finally, your clients met with Lafarge prior to their purchase of the site, <br />and were aware from those meetings that Lafarge would not be depositing further fill <br />material at the site, and that they would either have to fill the hole or be responsible for <br />augmentation. <br />Third, during a recent inspection with the State, it came to our attention that people may <br />be living or working within the Mine Permit boundary. Habitation within a Mine Permit <br />boundary is unsafe and a violation of our permit. Please be aware that we have taken <br />necessary immediate steps to correct this issue by requesting an acreage reduction to <br />remove the residential dwellings and outbuildings from the Mining Permit. Your clients <br />were provided with a copy of the request on August 19, 2010. <br />Fourth, as the earthwork portion of our permit is completed, Lafarge has requested a <br />Surety Bond reduction. Weed and seed activities are all that we will be bonding for upon <br />LAFARGE NORTH AMERICA INC. <br />12018 Sunrise Valley Drive, Suite 500 <br />Reston, VA 20191-3432 <br />(703) 480.3600 <br />www.lafargenorthamerica.com <br />