2002-07-09_REVISION - M1977342

• Permit No: M1977342
• IBM Index Class Name: Revision
• Doc Date: 7/9/2002
• Doc Name: Financial Warranty Increase/Cost Estimate PART 1
• From: DMG
• To: Climax Molybdenum Company
• Type & Sequence: SI2
• Media Type: D
• Archive: No

STATE OF COLORADO
DIVISION OF MINERALS AND GEOLOGY
Department of NaNral Resources
1313 Sherman St., Room 215
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
July 9, 2002
Anne Beierle
Climax Molybdenum Company
P.O. BOX 68
Empire, CO 80438
RE: Climax Molybdenum Company; Henderson Mine & Mill; Permit No. M-1977-342
Financial Warranty Increase
Dear Ms. Beierle,
DIVISION OF
MINERALS
GEOLOGY
RECLAMATION
MINING•SAFETY
Bill Owens
Governor
Greg E. Walther
Executive Director
Ronald W. Cottony
Acting Division Director
The Division of Minerals and Geology has completed the reclamation cost estimate for the
Henderson Mine & Mill. As you are awaze, the Division has been working on the revised estimate
over the last several months to evaluate the cost of reclamation prescribed in the reclamation plan.
During the meeting of May 1, 2002 between the Division and Climax Molybdenum Company, the
Division presented the initial outline of tasks associated with the bond estimate. With the help of
Climax personnel, the Division has prepared an estimate that reflects commitments of the original
application and subsequent amendments and technical revisions.
Attached with this letter is a revised spreadsheet that outlines the tasks associated with the bond
estimate. The spreadsheet provided to Climax during the meeting of May I, 2002 has been revised
to reflect any changes since the meeting. The intent of the spreadsheet is to document the tasks,
reference where such information was found in the permit, and provide documentation to specific
costs included in the estimate.
According to Rule 4.2.1(1) and (2) of the Hard Rock/Metal Mining Rules and Regulations of the
Colorado Mined Land Reclamation Board, the Division may review a financial warranty at any time
for good cause [o determine if the amount is sufficient to perform reclamation. The Division
currently holds a financial warranty for the Henderson Mine in the amount of $10,133,000.00. The
Division estimates that a bond in the amount of $54,695,000.00 is necessary to reclaim the site to
meet the conditions of the permit and the performance standards of the Rules and Regulations.
This letter is to inform you that your financial wazranty will need to be revised from its current
amount of $10,133,000.00 to $54,695,000.00 within 60 days of receipt of this letter. The operator
has a number of options regarding the amount of required bond;
1. The operator may revise the reclamation plan in order to reflect a reduced cost. The Division's
estimate is based on commitments made in the original application submitted in 1977 and a
number of Amendments and Technical Revisions approved by the Division. In some cases, the
cost to reclaim the site as noted in the permit is high. For example, the application states that
structures at the Mine and Mill will be torn down, salvaged and removed. Therefore, the
Division was required to estimate a cost to remove such structures and dispose of in an approved