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WELBORN, G cFORD, BROWN f3 TOOLEY Frank J. Woodrow, Esq. May 6, 1986 Paqe 3 under the 1975 Agreement if the mine is totally reclaimed as_ currently required by the reclamation permit, which, in any event, we believe would comply with paragraph 11. .,~ •" ? ~•'~ .'i nip' . f- - - From your letter of April 14, the Allens' primary concern appacerttly is that complete reclamation would deprive them of any further recovery of coal from the mine. This also follows from your letter of March 25 which states that the future use of the property will involve mining activities. If this is correct, we have a package proposal which should satisfy alI parties and which is•made in an attempt to compromise the matter, while reserving the positions stated above. GMPC and BRCC would reconvey to the Allens the coal rights reserved in their warranty deed to U.S. Steel, in addition, they would assign Sublease i to the Allens, and Sublease II as well. We think these assignments require U.S. Steel's consent. Since it has announced its intention to relinquish all of Lease No. C-033301, to the extent of its authority, U.S. Steel may prefer a direct assignment of those portions of the federal lease to the Allens, putting them in the position of primary lessee to the BLM. We think U.S. Steel is likely to agree to one of these approaches. GMPC and BRCC would also transfer the reclamation permit to the Allens so that they would have immediate authority to commence mining. The Allens would agree to assume all obligations for the part of the federal coal lease conveyed and the reclamation permit, including the obligation to post bonds. The present bond for the Subleases is $50,000, but likely could be reduced to about $15,000 until production resumes. The permit bond is $115,000, but could probably be reduced to about $100,000 to reflect the work already done. This proposal is subject to the agencies' approvals of the transfers and release of GMPC/BRCC's obligations, and to U.S. Steel's consent with respect to the federal coal lease transfer. In this fashion, the Allens would be in a position to 1 obtain additional compensation from the remaining coal, beyond , what they are due and have been paid under the 1975 Agreement. ~.~'`~ ASV ~ Since GMPC and BRCC must proceed with their reclamation << ,•~ obligations on a timely basis, the foregoing package proposal '`~~ will remain open for the Allens' acceptance until 4:00 p.m. MST on May 23, 1986. if the Allens choose to accept it, a further condition is that the Allens secure the required bonds by June 13, 1986, so that the transfer applications can be filed by that date.