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III IIIIIIIIIIIII III 999 • -~ BASIN RESOURCES, ~N~. a subsidiary of ENTECN, Inc. Dewey and Ellen Anderson 2134 St. Mary's Drive Salt Lake City, Utah 84106 Dear Mr. and Mrs. Anderson: May 6, 1994 14300 Highway 12 Weston, Colorado 81091 (719)868-2761 Purchasing (719) 868-2768 Fax (719)868-2275 EARL R. WHITE President and General Manage I understand you may have purchased property in the Rancho Escondido subdivision near Trinidad, Colorado. I am the President and General Manager of Basin Resources, Inc. ("Basin"), which owns and operates the Golden Eagle coal mine. Our surface facilities are located in the Purgatoire River valley immediately east of the road leading to Rancho Escondido. The area currently being mined, or planned to be mined, underlies much of the Rancho Escondido subdivision. • We are writing in order to ensure you have full knowledge of our presence and plans. Depending upon when you purchased your lot, you may have received incomplete information concerning our mining activities. We understand that lot purchasers were made generally aware of the fact that the surface and mineral ownerships in this area are severed. However, we are concerned that some past purchasers of lots in Rancho Escondido may not have received full and accurate disclosure concerning the nature and extent of Basin's mining and the potential effect of its operations on the surface. I thought it would be helpful to briefly describe the history of ownership in Rancho Escondido. In the 1950s, the surface and coal estates in what is not Rancho Escondido were severed. Basin's predecessor-in-interest owned the coal, and had the right to use the surface lands as necessary to develop the coal. Rancho Escondido's predecessor-in-interest owned the surface. In 1976, Las Animas County issued Special Use Permit #75-025 to Basin's predecessor, authorizing operation of what is now the Golden Eagle Mine. This permit remains in effect. The approved mining method in the Rancho Escondido area is "longwall" mining. Longwall mining is a preferred mining method under federal and state law, because it results in "planned subsidence." Planned subsidence is more predictable and generally occurs more quickly than subsidence from other types of mining, however, it is likely to result in some surface subsidence, which can • cause damage.