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Form 3400-L3 iJNIT,STATES III IIIIIIIII (III III' Serial Vumber
<br />(April 1966)
<br />DEPARTMENT OF THE INTERIOh
<br />BUREAU OF LAUD MANAGEMENT COC 60941
<br />COAL LEASE
<br />PART I. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the U,`1ITED STA'I'EJ or' ANER[CA, hereinafter called lessor, through the Bureau of Land Management. and
<br />INamr and Address
<br />National King Coal, LLC
<br />P.O. Box 2905
<br />Durango, Colorado 81302
<br />hereinafter called !asses, is effecti•+e +d~t~L'T ' '~8, for a period of •20 years and for so long thereafter as coal ie produced in commercial
<br />quan[ities From [he leased lands, subject w readjus[ment of lease terms a[ the end of the ?0th lease year and each LO-year period thereafter.
<br />Sec. I. This lease is issued pursuant and subject to the terms and provisions of.[he:
<br />`l7 Mineral Lando Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred w ae the Act;
<br />11ineral Leasing Act far Acquired Lando. Ac[ of August 7, 1947, 61 Stat. 913, 30 U.S.C. 351.359:
<br />and to the regulations and formal orders of the Secretary of the Interior which are now or hereafrer in force, when not inconsiswnt with the express
<br />end specific provisions herein. -
<br />Sec. 2. Lessor, in considera[ion of any bonuses, reties, and royalties to be paid, and the conditions and covenan[s to be observed as herein set forth.
<br />hereby grants and leases to lessee the exclusive right and privilege to drill for, mine, extract, remove, or otherwise process and dispose of the coal
<br />depositsEe;~.peR,w++wder~la~fctlwtoagia~~al~na= limited to the coal recoverable by underground mining
<br />methods in the Upper Menefee seam on the 7 South Mains Tract in LaPlata County, Colorado.
<br />New Mexico Principal Meridian
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<br />T. 34 N., R..11 W., t~ '~
<br />sec. 6, lots 1 to 5, inclusive, NE~SW`~, ,~~~-
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<br />containing 194.79 ac: es, more or less, together with the right co construct such works, buildings, plants, structures, equipment and appliances
<br />and the right to use such on-lease rights-of way which may be necessary and convenient in the exercise of the rights and privileges gran4d, subject w
<br />the conditions herein provided.
<br />PART II. TERMS AND CONDITIONS
<br />Sec I. lal RENTAL PA?? -Lasses shall pay lessor rental annually ar.d
<br />in advance for racF. ~~• rfractien [hrreol during [he con [inuance uC
<br />the lease at the role ui 3 3.00 for each lease year.
<br />Ibi RENTAL CREDITS - Renal shell no[ be crediced against either
<br />prod uct:on or advance ro7: alt:es for any year
<br />Sec ?. •. al PRODUCTION ROvALTIES -The royalty shalt 'ae B.Oarr
<br />cent of the value oC[he coal as sec forth in the regulations. Royalties ar?
<br />due to lessor the final day oC[he month succeeding the calendar month
<br />in which [he royally obligation accrues.
<br />ib~ ADVANCE ROYALTIES - L'pon request by the lessee, [he authorized
<br />officer may accepe. Cor a total of not more [han 10 years, the 7aYmen: of
<br />advance royalties in !iru of continued operation, consistent with •.he
<br />regulations. The advance royalty shag be based on a percent of the
<br />value oC a minimum number of tons determined in [he manner
<br />established by the advance royalty regulations in effect at the time the
<br />lessee requester approval :o pay advance roy skies in lieu of continued
<br />operation.
<br />Src. 3. BONDS-Lessee shall main Cain in the proper officealease bond
<br />in the amoun[ of $ 17, 000 . The authonted officer may require an
<br />increase in chts amount when additional coverage is determined
<br />appropriate.
<br />Sec. 4. DILIGENCE -This lease is subject to the conditions of diligent
<br />de~: elopment and continued opera[ion, excepe that :here conditions are
<br />excused when operations under the lease are incerrupted by s[rikes, the
<br />elements, or casualctes not atcribu[able to the lessee. The lessor. in the
<br />public interest, may suspend the condi[ion of continued operation upon
<br />payment of advance royalties in accordance with the regulations in
<br />existence ac the time of the suspension. Lessee's failure to produce coal
<br />:n commercial quan[ittes ac the end of 10 years shall terminate [he
<br />lease. Lessee shall submit ar. opera ion and reclama[ion plan pursuan[
<br />to Srcnon T of [he Act nut later than 3 years after lease issuance.
<br />The lessor reserves the power to assent to or order [he suspension oCthe
<br />terms and conditions of this lease in accordance with. inter olio.
<br />Section 39 of the Mineral Leasing Act, 30 U.S.C. 209.
<br />Sec. 5. LOGICAL MINING UNIT ILMUI -Either upon approval by the
<br />lessor of the lessee's application or at the direction of the lessor, this
<br />lease shall become an LMU or part of an LMU. subject to the provisions
<br />se[ Yorth in the regulations.
<br />The stipulations established in an LMU approval in effect a[the timeof
<br />L~1U approval will supersede [he relevant inconsisten[ terms of [his
<br />lease so long as the lease remains committed to the LbIU. If the LMU of
<br />which :his lease is a part is dissolved. the lease shall then be subject [o
<br />the (rase terms which would have been applied ifthe lease had not been
<br />included in an LMU.
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