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.,:. NI\M ~~~,`~~~ WESTERN NUCLEAR, INC. ~~• ~^- ~~~ rii EzECUTIVE OFFICE t3z UNION BLVD. LnKE w00D, COLOpPDO BJ2dB (303) 966-~S;i • TELEZ P60n2 September 8, 1983 Mr. Vance Mills, President Trinidad Basin Mining, Inc. Route 1, Box 300 Barbourville, Kentucky 40906 Dear Mr. Mills: Pursuant to the Letter Agreement executed as of August 16, 1983 (hereinafter the "Letter Agreement") by and between Vance and Marie Mills, husband and wife (hereinafter collectively referred to as "Seller"), Phelps Dodge Corporation (hereinafter "Phelps Dodge") and Trinidad Basin Mining, Inc. (hereinafter "TB"1"), the purpose of this letter is to provide you with notice of a developing situation which could substantially and adversely affect the purchase option held by Phelps Dodge. As part of its review of the status of TSM, pursuant to sub-Paragraphs 10{a) and. 10 (b) of the Letter Agreement, Phelps Dodge discovered that the Coal Lease dated September 19, 1977 between The Victor-American Fuel Company, as Lessor, and Alvin E. Wiggins and Lillian Wiggins, as Lessee (hereinafter the "Lease"), to which TBPf succeeded by virtue of a subsequent Agreement between TB*1 and Wiggins dated .7uly 31, 1980, had expired according to its terms. After making such discovery, and pursuant to several telephone calls between yourself and Moe Pasha of this office and as referenced in my letter dated August 26, 1983, Gerard Rem, representing Victor-American, was contacted to see if the Lease could be extended or renegotiated, with the inclusion of certain other adjacent properties wanted by T&*! for expansion of its mining operations. As you are aware, while Mr. Rem's initial reaction seemed to be favorable, he has now informed Phelps Dodge that he will only consider an offer on the entire Victor- American land package (rather than the specific properties desired by TB`1), due to his having received an offer for the entire pac}age from an undisclosed third party. Phelps Dodge, yourself and TB*1 all individually declined to substantially match the other offer. As of this date, and again pursuant to several telephone calls between yourself and members of my staff, Phelps Dodge elected to pursue (and will continue to do so) two (2) approaches for resolving this .situation -first, to bring in a third party which would assist in matching the existing offer, or second, [o attempt to acquire a sublease on the properties wanted by TBM from the party who has made the offer to Mr. Rem, in the event that party executes an Agreement with Mr. Rem. Phelps Dodge wishes to clarif}• its position in this matter - that it is acting on behalf of, and with the consent of, yourself and TB"l; that the