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iii iiiiiiiiiiiu iii Berry, uavla From: Hernandez, Dan Sent: Wednesday, May 02, 2001 7:57 AM To: Berry, David Subject: Lorencito Right to Enter Items Dave: I've reviewed the fax from Bob Bassett regarding Lorencito's "letters of intent" with the landowners and the railroad. Here are my thoughts: (1) With regard to the right to enter and mine the property, Mr. Bassett has submitted what appears to be a letter of intent between Lorencito and an entity named MGP Enterprises. The letter is signed by both Mr. Bassett and a John Meggison. I've never heard of MGP Enterprises or John Meggison. I thought the landowners at Lorencito were a family by the last name of Hill. I therefore can't say if this letter gives us any assurance that Lorencito will obtain the right to enter from the proper landowners. (2) With regard to the railroad agreement, Mr. Bassett has submitted a copy of an Interstate Commerce Commission "Notice of Exemption", dated November 17, 1992. According to the document, Trinidad Railway, Inc had filed a "notice of exemption to acquire and operate" the rail line. The document, however, doesn't seem to indicate that the Interstate Commerce Commission actually acted on the notice. The document also indicates that Trinidad Railway, Inc and The Colorado 8 Wyoming Railway Company had entered into a purchase and sale agreement for the railroad, which according to the document, was to be consummated on December 31, 1992. The notice, however (due to its November, 1992 date), doesn't document that this transaction actually took place. Mr. Bassett indicates in his May 1, 2001, cover letter that the Notice of Exemption serves to demonstrate that Trinidad Railway, Inc (whoever they are) has a "common carrier obligation" to "provide shippers with rail service on reasonable demand." Mr. Bassett goes on to state that "Lorencito and Trinidad Railway may agree upon special rates, but the obligation to provide service remains in place under authority granted by the Surtace Transportation Board". It would appear that what Mr. Bassett has submitted does not indicate that Lorencito and Trinidad Railway have begun discussions regarding rail line use. Not possessing the legal expertise to discern the intricacies of railroad use negotiations and agreements, however, I can't say whether the information submitted by Mr. Bassett regarding a rail line use agreement is what we need to make our decision to "re-activate" the Lorencito permit. We may wish to consult with our attorneys.