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MEMORANDUM OF UNDERSTANDING <br /> REGARDING INTERIM FUNDING FOR COMPLIANCE WITH <br /> SCHWARTZWALDER MINE SITE <br /> PERMIT NO. M-1977-300 <br /> MODFIED May 2023 <br /> This MEMORANDUM OF UNDERSTANDING REGARDING INTERIM <br /> FUNDING FOR COMPLIANCE WITH SCHWARTZWALDER MINE SITE PERMIT <br /> NO.M-1977-300 (this"Memorandum")is entered into as of April 18,2023 (the"Effective Date") <br /> is made and entered into by and between the Colorado Division of Reclamation,Mining and Safety <br /> ("Division"), Colorado Legacy Lands, LLC ("CLL" or "Operator") and The Hanover Insurance <br /> Company ("Hanover")(jointly referred to as "Parties"). <br /> Recitals <br /> A. CLL has a I I2d-2 designated mining operation permit,M-1977-300("Permit"),for <br /> a uranium mine known as the Schwartzwalder Mine, located in Section 25, Township 2 South, <br /> Range 71 West,6th Principal Meridian,under which is currently is conducting surface reclamation <br /> ("Surface Reclamation") and the treatment of the mine pool through an onsite water treatment <br /> facility. <br /> B. Under the Permit,water is pumped from the underground workings of the mine and <br /> is treated using a reverse osmosis system, before it is discharged to Ralston Creek and ultimately <br /> Ralston Reservoir, which provides drinking water to the cities of Denver and Arvada. CLL holds <br /> a discharge permit issued by the Colorado Department of Public Health and Environment, Water <br /> Quality Control Division. <br /> C. The water treatment plant is operated on a seasonal basis and normally comes back <br /> online in May, with shutdown occurring in August or September. One of the conditions of the <br /> permit is to maintain the mine pool at an elevation of 150' below the Steve Level portal. This <br /> regulatory limit was imposed to ensure that the mine pool did not communicate with Ralston <br /> Creek. <br /> D. Based on the anticipated rate of refill, the Division expects that the mine pool will <br /> refill and exceed the regulatory limit sometime in June of 2023. <br /> E. Hanover serves as the Surety and financial warrantor for the bond. The current <br /> amount of the financial warranty is $7,674,022.00 ("Hanover Bond"). <br /> F. On February 15, 2023, the Division received verbal notification from CLL that it <br /> would not be able to fulfill its obligations under the Permit to operate the on-site water treatment <br /> facility at the Schwartzwalder Mine due to financial circumstances and lack of funds.Additionally, <br /> CLL notified the Division that due to its financial circumstances it would be unable to cover the <br /> premium costs and maintain its financial warranty with Hanover. <br /> 1 <br />