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FROM FRX N0. 17198464975 Sep. 18 2006 11:38AM P1 <br />Picketwire Processing LLC <br />4422 Bryan Station Road <br />Lexington, ICIf 40516 <br />September 18, 2006 <br />Kent Gorham <br />Division of Reclamation, Muting and Safety <br />1313 Sherman St. Room 215 <br />Denver, CO 80203 <br />Re: New Elk Mine, Permit C-81-012 <br />Notice of Violation CV-2006-003 <br />Dear Mr. Gorham: <br />Picketwire Processing (PPLLC) has been working diligently with the New Elk Coal <br />Company (NECC) to secure adequate bonding to facilitate the transfer of the mining <br />permit from PPLLC to NECC and to abate the above referenced violation. <br />NECC has advised PPLLC that it is proceeding on two alternative methods to secure the <br />required reclamation bond: <br />1. A corporate surety bond to be issued by ACSTAR coveruig the full reclamation <br />bond requirement. ACSTAR has approved the bond pending acceptance of an <br />adequate letter of credit to secure the performance bond. The U.S Merchants <br />Bank has issued this letter of credit to ACSTAR and ACSTAR should be in <br />receipt of this letter of credit from US Merchants Bank on Monday September ] 8, <br />2D06. Upon review and acceptance of the letter of credit, the subject bond will be <br />issued. <br />2. NECG is meeting with a group of investors in Denver Tuesday September 19, <br />2006 to finalize funding the bonding deficiency though an equity position with the <br />group. This will enable NECC to post the additional amount required to fully <br />fund the reclamation bond requiremerrt of $3,03$,059. <br />In either case, NECC will have in hand and be able to present the full reclamation bond to <br />the Division by Monday September 25, 2006. Subsequent to this, NF,CC will expediently <br />post the full reclamation bond for the Lorencito Canyon Mine. <br />Therefore, PPLLC requests an extension of the abatement period to September 25, 2006 <br />for the Notice of Violation No. CV-2006-003 issued for failure to post adequate <br />reclamation bonding for the New Elk Mine. <br />Sincerely, f ~~ ~ ~~ <br />Bruce Addington <br />President <br />