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I Lune 2, 2000 More Family Ranches, L.L.C. Post Office Box 770894 Steamboat Springs, CO 80477 Jazle Halsnes Post Office Box 774623 Steamboat Springs; CO 80477' R E C E! V E D OCT 3 0' 2001 Dear Mr. Halsnes: Division of Minerals and Geology Thank you for your interest in a sand and gravel operation on our property. We mutually have located approximately 105.16 acres which is being surveyed; together with non exclusive right of ingress and egress both to~the west to 131 (primary access) and to the north on Routt County ~toa~20 (secondary access), together with sufficient water for evaporation loss.~~~ ~M Essentially, our concept is that we enter into a 2 yeaz sand and gravel lease, contingent upon coumy approval of a special use permit for those purposes. You, at your expense would pursue the same with ceasonable diligence. During the term of the two year lease you world pay 516,212.16 monthly rental beginning on aggroval of the special use permit which entitles operator to 1 ton per $1.00 paid compounded during the balance of the lease. In other words, the payment of rental of $16,212.16 in one month would entitle operator to remove 16,212.16 tons at any time during the remaining term of the lease. Additionally, tonnage may be removed at the rate of $1.00 per ton. You would have at the conclusion of the lease, an option to purchase the property for $2,103,200.00 dollars. Closing would occur at the end of the lease unless otherwise agreed, but you would give us 45 days prior without notice of intent to exercise the option. Title would be merchantable, subject to items and defects of record, but free and clear of all liens and encumbrances s;xcept taxes. Additional points of agreement and discussion include; a, operation and development plan would be mutually agreed upon; and b. time would not be of the essence and grounds for technical default and disputes if arty would be resolved by binding azbitration; and c. after exercise of the option More Family Ranches, LLC shall retain for the life of the pit an overriding royalty of not less than .15~ per ton or $15,000.00 per year which ever is greaten. More Family Ranches, LLC understands that not all gravel in the pit will be mined or exhausted. T his shall be covenant running with the land; and d. in the event of later LPS development with common area (i.e. pond site), the common area use would be available to the owner of the More remainder property; and e. for the 3 years on or after closing of sale pursuant to the option, free use of Exhibit 1 HOLLORAN-0102