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<br />Form 3400-12 Serial Number
<br />(April 1984) UNITED STATES
<br />tFannerlr sszon DEPARTMENT OF THE INTERIOR
<br />BUREAU OF LAND MANAGEMENT COC 53510
<br />COAL LEASE
<br />PAR71. LEASE RIGHTS GRANTED
<br />This lease, enterld into by end between the UNrrso STATES of ANh;RICA, hereinafter called lessor, throw Kh the Hureau of Land Management.:intl
<br />(Name and Address)
<br />Somerset Mining Company
<br />P.O. Box 535
<br />Somerset, Colorado 81434
<br />hereinafter called lessee, is effective u()iJ ~ ~ggZ for a period of 20 years and for su lung thereafter as rnal is produced in commercial
<br />quantities from the leased lands, subjec tea lustment of lease terms at the end of the 20th lease year and each IO-year period thereafter.
<br />Sec. 1. This leave is issued pursuant and subject to the terms and provisions of the:
<br />® Mineral lands Leasing Act of 1920, Act of February 25, 1920, as amended, 4l StaL 437, 30 U.S.C. 181-287, hereinafter referred to us the .act:
<br />^ Mineral Leasing Act for Acquired Lando, Act of Augue[ T, 194 i, 6I Scat. 9I3, 30 U.S.C. 351-3:i9:
<br />and to the regulations and formal orders oCthe Secretary oCthe Interior which are now or hereafter in force, when not inconsistent with th[• express
<br />and specific provisions herein.
<br />Sec. 2. Lessor, in consideration o(any bonuses, rents. and royalties to be paid. and the conditions and covenants w be observed as herein set fur[h.
<br />hereby grants and leases w lessee the exclusive right and privilege to drill for, mine. extract, remove, or otherwise process and dispose u(the coal
<br />deposits limited to the coal recoverable by underground mining methods in the B and C coal seams
<br />in the following lands in Gunnison County:
<br />Sixth Principal Meridian
<br />T. 13 S., R. 90 W.,
<br />sec. 1, lots 14 to 19, inclusive;
<br />sec. 2, lots 13 to 20, inclusive;
<br />sec. 3, lots 13, 14, 17, and 18;
<br />sec. 10,E lo[s 1 and 2, and 17E~ySEt-t;
<br />sec. 11, lots 1 to 8, inclusive;
<br />sec. 12, lots 2 to 4, inclusive, SWt-tNW%, and [hose
<br />portions of SW~,.NE% and SE%r,NWti lying north
<br />of the North For',c of the Gunnison River,
<br />containing 1339.56 acres, more or less.together with the right to construct such works,buildings,plants.structures, equipment and appliances
<br />and [he righ[ w use such on~lease nghrs-of way which may be necessary and convenien[ to the exercise uCthe rights and privileges granted, subjece to
<br />the conditions herein provided.
<br />PART II. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE -Lessee shall pay lessor rental an nually and
<br />in advance Cor each acre or fraction thereoCduring the Continuance of
<br />the lease at the rate of 3 3.00 -- for each lease year.
<br />(bl RENTAL CREDITS - RenWI shall not be credited agains[ either
<br />production or advance royalties for any year.
<br />Set. 2. (a) PRODUCTION ROYALTIES -The royalty shall be B per
<br />tent oCthe value of the coal as set forth in the regulations. Royalties are
<br />due to lessor the final day of the month succeeding [he calendar month
<br />in which the royalty ohligacion accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the lessee, the au[horized
<br />officer may accept, Cor a total of not more than LO years. the paymen t of
<br />advance royalties in lieu of continued operation, consistent with the
<br />regulations. The advance royalty shall be based on a percent of the
<br />value of a minimum number of tons determined in the manner
<br />established by the advance royalty regulations in effect a[ [he time the
<br />lessee requests approval to pay advance royalties in lieu oC continued
<br />operation.
<br />Set. 3. BONDS-Lessee shall main[ain in [he proper ofCicealease bond
<br />in theamoun[ofE $25,000 .Theauthorized officer may require an
<br />increase in this emoun[ w en additional coverage is determined
<br />Set. {. DILIGENCE - •1'his lease is subject d, the cunditi•~nw nl' ddi¢ent
<br />development and continued operation. except chat theseomdi[iun. ur~•
<br />excused when opera tinnsonder the lease arc interrupted by strikes. the
<br />elements, or casualties not at[ributable to the lessee.'I'he Irsunr, in [he
<br />public interes[. may suspend the cnndi[inn of continued operation up~m
<br />payment of advance royal ties m accordance with the regulau~~ns in
<br />existence at the time of the suspension. Lessee's failure to pn~duce coal
<br />in commercial quantities tit the end of 10 years shall [erminatr the
<br />lease. I~ssee shall submit an operation and rrclama[ion plain pursuant
<br />to Section 7 0(the Act nut later than 3 years after lease issuance.
<br />The lessor reserves the power to assent t„murder the suspension otthe
<br />terms and conditions of this lease in accordance with. inter :ilia.
<br />Section S9 oC the Miners! Leasing Act. JU U.S.C. !U9.
<br />Sec. :i. LOGICAL h11 NING UNIT (LM U) -tither upon appru vat by the
<br />lessor of the lessee's application or at the direc[ion of the lessor. this
<br />lease shall become an I.MU or part of an I_NU. subject to the provisions
<br />sec (ooh in [he regulations. ~'r~
<br />The s[ipulations established in an LMU approval in effect at [he time of
<br />(.MU approval will supersede [he relevan[ inconsistent terms o(this
<br />lease so long as the lease remains committed u. the LM U. ICthe LM l' oC
<br />which [his lease is a pan [s dissolved, the lease shall [hen be subject to
<br />the lease terms which would have been applied if the lease had nut been
<br />i nrlud+d in an LM1.'
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