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Fplrtt 340612 -- Serial Number
<br />(April t9a4) UNITED STATES
<br />'PO.vnlr aaaan DEPARTMENT OF THE INTERIOR
<br />BUREAU OF LAND MANAGEMENT COC 49465
<br />COAL LEASE
<br />PART I. LEASE RIGHTS GRANTED
<br />This lease, Entered Into by and between the UNITED STATEa OF AMERICA, hereinafter celled Ieuol, through the Bureau of land Management, and
<br />(Nnru and Address]
<br />National King Ccal, Inc.
<br />P.O. Box 2905
<br />Durango, Colorado 81302
<br />hereinafter called lessee, ie effective SEP 1 ~99~ for a period of 20 years and for so long thereafter u troal is produced in commercial
<br />quantities from the leased lands, subjeM to readjustment of lease terms et Lhe end of the ZOth lease year and each 14year period thereafter.
<br />Sec. 1. Thin lease is issued pursuant and subjeM to the terms and provisions of the:
<br />® Mineral Linda Leasing AM of 1920, AM of February 25,192(1, as emended, 41 5tat. 437, 30 U.S.C. 181.287, hereinafter referred to u the AM;
<br />^ Mineral Leasing Act for Acquired Lando, AM of August 7, 3947, 61 Stet. 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 hereafter in fora, when not inconsistent with the expreeE
<br />and specific provisions herein.
<br />Sec. 2. Lessor, in consideration of any bonueea, rents, and royalties to be paid, and the tronditione end covenants to be observed m herein set forth.
<br />hereby grenb and leaaee to lessee the exclusive right and privilege to drill for, mine, extraM, remove, or otherwise process and dispose of the coal
<br />deposits limited to the coal recoverable by underground mining methods from the Upper Menefee
<br />(coal bed 1) in, upon, or under the following lands:
<br />New Mexico Principal Meridian
<br />T. 35 N., R. 11 W.,
<br />sec. 31, lot 4, SW1GNEld> SEtySWt~, and W'~SF3t,
<br />containing 193.08 acres, more or lees, together with the right to construct such works, buildings, plants, etroMUree, equipment and appliann
<br />and the right to use such ondease rightgo8way which may be necessary and convenient in the ezerttiae of the rights and privileges greeted, aubjeM
<br />the rnndi4ons herein provided,
<br />PART 11, TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE - Leeaee shall pay tensor rental annually and
<br />in advance [or each acre or fraction thereof during the continuance of
<br />the lease at the rate of S 3,00 -- for each lease year.
<br />(h) RENTAL CREDITS -Rental shall not be credited against either
<br />production or advance royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES • The royalty shall be 8.0 per-
<br />cent ofthe value of the coal as set forth in the regulations. Royalties are
<br />due to tensor the final day of the 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 more than 10 years, the payment of
<br />advance royalties in lieu of continued operation, consistent with the
<br />regulations. The advance royalty shall be based on a percent of the
<br />value of a minimum number of tons determined in the manner
<br />eetabliahed by the advance royalty regulations in effect at the time the
<br />lessee requeate approval to pay advance royalties in lieu of continued
<br />operation.
<br />Sec. 3. BONDS - Lessee ehal7 maintain in the properoffice a 7eaee bond
<br />in the amount of g5, 000.00. The authorized officer may require an
<br />increase in this amount when additional coverage is determined
<br />appropriate.
<br />Sec. 4. DILIGENCE -This lease u eubjeM W the conditions of diligent
<br />development and continued operation, except that theseconditiona are
<br />excused when operations under the lease are interrupted by strikes, this
<br />elements, or casualties not attributable to the lessee. The lessor, in t).
<br />public interest, may suspend the condition of continued operation upo:
<br />payment of advance royalties in accordance with the regulations it.
<br />existence at the time of the suspension. I.eesee's failure to Drmluce cos
<br />in commercial quantities at the end of 10 years shall terminate th~
<br />lease. L,eesee shall submit an operation and reclamation plan pureuan:
<br />to Section 7 of the Act not later than 3 years after lease issuance.
<br />The leeaor reserves the power to assent to or order the suspension of the
<br />terms and cenditione of this lease in accordance with, inter alia,
<br />Section 39 of the Mineral Leasing AM, 30 U.S.C. 209.
<br />Sec. 5. LOGICAL MINING UNR (LMU) -Either upon approval by tl:.
<br />lessor of the lessee's application or et the direction of the leeaor, this
<br />lease shall became an LMU or partof an LMU, subjeM to the provisions
<br />set forth in the regulations.
<br />The stipulations estebliehed in an LMU approval in eHeM at the time of
<br />LIdU approve] will supersede the relevant inconsistent terms of this
<br />tease so long ae the lease remains committed to the LMU. If the LM U of
<br />which this lease is a pert is dissolved, the lease shall then be subject to
<br />the lease terms which would have been applied if the lease had not been
<br />included in an LMU.
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