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<br />Cotter Corporation <br />Mr. Bruce Humphries <br />October 27, 1994 <br />Page 2 <br />Preamble <br /> <br />The Schwartzwalder Mine, located in Jefferson County <br />approximately 12 miles northwest of Golden, Colorado, is owned by <br />Commonwealth Edison Company, and operated by Cotter Corp~~ration, <br />a wholly owned subsidiary. The mine is operated under a 112 <br />permit, number M-77-300 approved by the Colorado Mined Land <br />Reclamation Board. The mine has been in operation under various <br />owners since 1953, and has produced 1,787,000 tons of or.a <br />containing 16,226,000 pounds of U3O8 in the period 1953-1386. <br />Mine life estimates at the time of permit application were <br />premised on maintaining production rates with uninterrupted <br />production schedules for the life of the mine, which wer~a <br />consistent with the economics of the day. The reclamati~~n plan <br />and its timetable also were based upon an optimistic for~acast for <br />uranium mining. Reclamation of the mine is guaranteed for the <br />permitted 57 acres by a financial warranty, the sufficiency of <br />which is currently under review. <br />Rationale <br />Beginning in the early 1980's, the world market for <br />uranium, as well as most other metals, went into a rapid decline. <br />In response to the conditions, large world inventories g:Lutted <br />the market, and greatly decreased demand put metal pricer into a <br />downward spiral. Widespread and large scale layoffs occurred as <br />metal producers, including Cotter, radically ceased or c~irtailed <br />production and downsized their operations. The uranium wining <br />industry went into a true depression, with many mining companies <br />going out of existence. <br />Due to supply commitment to Commonwealth Edison, Cotter <br />was able to continue full-scale production at the Schwartzwalder <br />Mine through 1986, however in January, 1987 production cfaased and <br />large scale layoffs were enacted. After production ceasEad, a <br />program to deepen the mine an additional two operating levels by <br />a ramp and decline system was initiated. By the end of :L989 the <br />uranium market had not improved, quite the contrary the price <br />continued to decline, and the deepening of the mine was :suspended <br />after achieving only one additional level. Since 1989 t}ie mine <br />has operated with 10-13 managerial and technical personnel <br />conducting activities which are defined in the Mineral Roles and <br />Regulations as mining operations. <br />While there is a definite future for the uranium mining <br />industry, and specifically the Schwartzwalder Mine, that future <br />will be subject to the world economy and the world market: for the <br />