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3 The Colorado Legislature adds to this interest in the protection f mineral resource in its Declaration under Colorado Revised Statues 34-32. -102, as reproduced and included at the front of this Letter. Regardless, if the i terests of man and land is to be fairly attended to, the cost in time must be c nsidered relative to the other resources involved. To that end, and precedent to any individual or Master 'plan,' this Lett r of Intent [unctions as a commitment to the OSE that water will be placed in trust sufficient to secure replacement water for any future extraction not presently c vered by an existing or proposed Individual Temporary Substitute Supply Pla In like manner, we request that the OSE give written verification to the MG that substitute water is provided for our operations. In this manner, the DM will not require contingency expenditures for backfilling in its financial warranty determinations, which are substantial. Naturally, breach of this Lette of Intent may provoke such a consideration, therefore, th la ent en ial of th DMG t effect such a warranty functions as collateral to this agreement. This concern evolved in this manner. While the OSE does not require ~bstitute water as long as pits are dewatered, the DMG establishes its financial warranty based upon an assumed default at the maximum point of disturbance. hile the OSE does not prevent extraction until or unless an augmentation plan i in place, the DMG by its assumed default will require the 'cost of backfilling the pit' in its financial warranty determinations. This restrictive assumption serves t transfer tremendous pressure and anxiety toward the OSE process until a T mporary Substitute Supply Plan is in place. The resulting 'burden of time' can seriously impair the financial health of an operation. To satisfy all concerned, this Letter of Intent a guarantee oY Varra Compa es, lnc. to the OSE to secure a Trustee to manage our existing water and hold in trust should it be needed for augmentation purposes prior to securing ither an approved Individual or Master Temporary Substitute Supply Plan from he OSE. We request the OSE to act on the force of this Letter of Intent, si ned and notarized by the President of Varra Companies, Inc., Christopher L. Var , , The reason the Letter of Intent must act as the initial instrument o[ trust is the fact that no Trustee or related agreement has been determined yet. Neither has the mechanism for management. Since it is reasonable to believe tha such a Trustee and mechanism can be established, we are asking the OSE to ct upon the good faith of our commitment to the same. This requires some judgment on the part of the OSE, but so does t e entire process, and we in turn trust that judgment, as evidenced by this reques . Based upon OSE approval of this Letter of Intent, and with the OSE letter to t e DMG validating the initial application of water by 'Intent,' o efull effe five b 1 A ril Wednesday 5 March 1997 Letter of Intent to Form a Master Temporary Substitute Supp Plan for the Colorado Office of the State Engineer and Varra Companies, Inc.