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Snell & Wilmer L.L.P. Mr. Mike Long Division of Minerals and Geology 1313 Sherman Street. Suite 215 Denver, CO 80203 December 29, 2000 Page 2 debtor in possession under the bankruptcy laws will make it extremely difficult, and time consuming, for Powderhor [o obtain a replacement bond, and the obtaining of a replacement bond -- even if possible -- or other financial assurance, may require the approval of the bankruptcy court. (/ The grant of this extension will not hams the state. The Powderhom mine ceased mining operations. The DMG has not alleged a violation arising from Powderhorn's own activities, and Powderhom is proceeding with activities necessary to implement its reclamation plan. Moreover, there leas been no finding by the DMG that Frontier is no[ capable of meeting its obligations under the Bond; the Bond remains in full force and effect. Last, [he actions threatened by [he DMG will irreparably harm Powderhom, and contrary to the State's interests, will threaten Powderhorn's ability [o implement its reclamation plan. v I. THE FRONTIER BOND REMAINS IN FULL FORCE AND EFFECT The Frontier Bond remains in full force and effect. To the best of our knowledge, Frontier has not defaulted on any sureties it has written and continues to be able to meet its obligations under the Bond. Under the terms and conditions of the surety, Frontier may not V cancel the Bond and must comply with all Bond obligations. II. THE FRONTIER BOND WHEN ISSUED WAS IN COMPLIANCE WITH STATE AND FEDERAL LAW AND THE INCAPACITY OF THE SURETY MUST FIRST BE DETERIMINEDI BEFORE THE PER,'~IITTEE CAN BE iN VIOLATION Powderhor respectfully submits that the DMG erred by equating the federal government's revocation of Frontier's certificate of authority with a determination that Frontier does not have [he capacity [o satisfy its financial obligations under the Bond. Powderhom acquired this mine in June 1997. As part of qualifying to operate the mine under Colorado law, it obtained the Bond from Frontier, which was then an approved surety under Colorado and federal law. The Bond was deemed acceptable by the State. In June 1998, the State required that the Bond amount be increased, and Powderhom complied with that requirement. Thus, Powderhor had fully complied with Colorado regulations concerning the posting of a reclamation bond. 6??S.1