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<br />
<br />F I E ~ 2 2000
<br />
<br />UNITED STATES
<br />DEPARTMENT OF THE INTERIOR
<br />BUREAU OF LAND MANAGEMENT
<br />MODIFIED COAL LEASE
<br />Serial No. COC 60941
<br />Dale of Lease: October 1, 1998
<br />PART I
<br />THIS MODIFIED COAL LEASE is entered into on by and between the UNITED STATES OF
<br />AMERICA, hereinafter called the Lessor, through the Bureau of Land Management, and
<br />National King Coal, LLC
<br />P. o. Box 2905
<br />Durango, Colorado 81302
<br />hereinafter called Lessee
<br />This modifietl lease shall retain the effective date of October 1, 1998, of the original COAL LEASE COC 60991, and is
<br />effective for a period of 20 years therefrom, and for so long thereafter as coal is produced in commercial quantities from
<br />the leased lands, subject [o readjustment of lease terms at the end of the 20th lease year ~OCtoDer 1, 2018), and each 10-
<br />year periotl [hereafter.
<br />Sec. 1. This Lease is issued pursuant and subject to the terms antl provisions of the Mineral Lands Leasing AcC of 1920,
<br />as amended, 41 Sta[. 937, 30 U.S.C. 181-20"7, hereinafter referred to as the Act;
<br />and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not
<br />inconsistent with the express and specific provisions herein.
<br />Sec. 2. Lessee as the holder of Coal Lease COC 60991, issued effective October 1, 1998, was granted the exclusive right
<br />and privilege to drill fox, mine, extract, remove or otherwise process and dispose of the coal deposits limited to the coal
<br />recoverable by underground mining methods in the Upper Menefee seam on the 7 South Mains tract in the lands described below
<br />as Tract 1. '
<br />T. 3d tl., R. 11 W., New Mexico P.M.
<br />sec. 6, lots 1 to 5, inclusive, NESiSW'F, and NW%SESL.
<br />194.79 acres, La Plata County, Colorado
<br />The Lessor in consideration of fair market value, rents and royalties to be paid, and the conditions and covenants to be
<br />observed as herein set forth, hereby grants and leases to Lessee the exclusive right and privilege to drill for, mine,
<br />extract, remove, or otherwise process and dispose of the coal deposits limited to the coal recoverable by underground mining
<br />methods in the Upper Menefee seam on the 7 South Mains tract in the lands described below as Tract 2.
<br />T. 39 N., R. 11 W., New Mexico P.H.
<br />sec. 6, EhSWMSEN, antl SWHSWHSEN;
<br />sec. 7, NENNEN, and NEHNWNNEH;
<br />sec. 0, N4NWH.
<br />160.00 acres, La Plata County, Colorado
<br />containing 354.79 acres, more or less, together with the rrght to construct such works, buildings, plants, structures,
<br />equipment and appliances and the right to use such on-lease rights-of-way which may be necessary and convenient in the
<br />exercise of the rights and privileges granted, subject to the conditions herein provided.
<br />Part II. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE - Lessee shall pay Lessor rental
<br />annually and in advance for each acre or fraction [hereof
<br />during the continuance of the lease at the rate of
<br />53.00 Eor each lease year.
<br />(b) RENTAL CREDITS - Rental shall not be credited
<br />against either production of advance royalties for any
<br />year.
<br />See. 2. (a) PRODUCTION ROYALTIES - The loyalty shall be
<br />8.0 percent of the value of the coal as set forth in the
<br />regulations. Royaltres are due Co Lessor the final day of
<br />the month succeeding the cal entlat month in which the
<br />royalty obligation accrues.
<br />(b) ADVANCE ROYALTIES - Upan request by the
<br />Lessee, the authorized officer may accept, For a total of
<br />not more than 10 years, the payment of advance royalties
<br />in lieu of continued operation, consistent with the
<br />regulations. The advance royally shall be based on a
<br />percent of the value of a minimum number of tons
<br />determined in the manner established Dy the advance
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