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<br />Fotat 3400-12 UNlT•STATES
<br />- ~ DEPARTMENT OF THE INTERIOR
<br />• r BUREAU OF LAND MANAGEMENT
<br />COAL LEASE
<br />Serial Yumber
<br />COC 60941 ~;-
<br />~>
<br />~~ 3
<br />PART 1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the 1JvITED STATES or AHextCA. hereinafter called lessor, through the Bureau of Land Management. and
<br />(Name and Address
<br />National King Coal, LLC
<br />P.O. Box 2905
<br />Durango, Colorado 81302
<br />hereinafter called lessee, is effective !ddtflC'i '~ 179 for a period of 20 years and for so long [hereafter as coal ie produced in commercial
<br />quantities from the leased lands, subject to readjustment oC lease terms at [he end of the 20th ]ease year and each IO-year period thereafter.
<br />Sec. 1. This lease is issued pursuant and subject to the terms and provisions of [he:
<br />® Mineral Lands Leasing Act of 1920, Act of February 25. 1920, as amended, 41 Stat. 437, 30 U.S.C. 181.287, hereinafter referred to ae the Act;
<br />^ Mineral Leasing Att for Acquired [ands, Act of August 7, 1941, 61 Stat. 913, 30 U.S.C. 351359:
<br />and to the regulations and formal orders of the Secretary of the Interior which are row or hereafter in force, when not inconsistent with the express
<br />and specific provisions herein.
<br />Sec. 2. Lessor, in consideration of any bonuses, rents, and royalties to be paid. and the conditions end covenants to be observed as herein set fonh.
<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 />deposirsiwatpea,-0.~[«der.~ba.tcuawiag~ascrb~t~~~+a~ limited to the coal recoverable by undergrotind Twining
<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., °c
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<br />sec. 6, ~.ots 1 to 5, inclusive, NE'ySW~, No`r',
<br />and N[~SEIy. ~ ar'C
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<br />rnntaining 194.79 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances
<br />end [he right to use such on-lease rights-of way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to
<br />the conditions herein provided.
<br />PART II. TERMS AND CONDITIONS
<br />Sec. l.la) RENTAL RATE -Lessee shall pay lessor rental annually and
<br />in advance for each acre or fraction thereof during the continuance of
<br />the lease at she rate of S 3.00 for each lease year.
<br />(bl RENTAL CREDITS -Rental shall not be credited against either
<br />production or advance royalties for any year.
<br />Sec. '?. (al PRODUCTION ROYALTIES -The royalty shall be 8.Open
<br />ten t of the value of the coal as set fonh i n the regulations. Royalties are
<br />due [o lessor the final day of [he month succeeding the calendar month
<br />in which the royalty obligation accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the lessee, the authorized
<br />officer may accept, for a total of not mare than I O years, the payment o
<br />advance royalties in lieu of continued operation, consistent wi:`.t r:ne
<br />regulations. The advance royalty shall be based on a percent of the
<br />value o[ a minimum number of tons determined in the manner
<br />established by the advance royalty regulations in e[fect at the time the
<br />lessee requests approval [o pay advance royalties in lieu oC continued
<br />operation.
<br />Sec. 3. BONDS-Lessee shall maintain in the proper officealease bond
<br />in theamount ofb 17,000 .The authorized officer may require an
<br />increase in this amount when additional coverage is determined
<br />appropriate.
<br />Sec. 4. DILIGENCE • This lease is subject to the mnditione of diligent
<br />development and continued operation, except that thesernnditions are
<br />excused when operations under the lease are interrupted by strikes, the
<br />elements, or casualnes not attributable to the lessee. The lessor, in the
<br />publ i c i n[eres[, may suspend the condition of continued operation upon
<br />payment of advance royalties in accordance with the regulations in
<br />existence at the time of [he suspension. Lessee's failure to produce coal
<br />in commercial quantities ac the end of 10 years shall terminate the
<br />lease. Lessee shall submitan operation and reclamation plan pursuant
<br />to Section 7 of the Act not later than 3 years after lease issuance.
<br />The lessor reserves [he power to assent to or order the suspension of the
<br />terms and conditions of this lease in accordance with, inter olio.
<br />Section 39 of the Mineral [.easing Act, 30 U.S.C. 209.
<br />Sec. 5. LOGICAL MINING UNIT (LMU) -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 panof an LMU, subject to the provisions
<br />set forth in the regulations.
<br />The stipulations established in an LMU approval in effect at the time of
<br />LML' approval will supersede the relevant inconsistent terms of [his
<br />lease so long as the lease remains committed to the LMU. Cf the LMU aC
<br />which this lease is a pan is dissolved, the lease shall then be subject to
<br />the lease terms which woo Id have been applied if the lease had not been
<br />included in an LMU.
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