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~i,_..;.• ,., APPENDIX B ~'
<br />Form 3400.12 Serial Number
<br />(April 1984) UNITED STATES
<br />to°,x,.rlrssmn DEPARTMENT OF THE INTERIOR
<br />BUREAU OF LAND MANAGEMENT COC 53510.
<br />COAL LEASE
<br />PART I. LEASE RIGHTS GRANTED
<br />Thi9 IeaBl, entered into by and between the UNITED $TATESOF-AMERICA. herelnaRef called 1e99or. fhrOUKh the RUreau 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, ie effective u()(j ~ 1992 for a period of 20 years and for su lung thereafter as coal is produced in commercial
<br />quantities from the leased lands, subjec rea lustment of lease terms at the end of the 20th lease year and each !0•year period thereafter.
<br />See. 1. This lease is issued pursuant and subject to the terms and provisions of the:
<br />® Mineral Lando Leasing Ad of 1920, Act of February 25, 1920, as amended. 41 Srat 437, 30 U.S.C. I81-287, hereinafter referred to as the Act:
<br />^ Mineral Leasing Act for Acquired Londe, Act of August 7, 1947, 61 StaL 913, 30 U.S.C. 351.39;
<br />and to the regulations and formal orders of the Secretary of the Interior which ere now or hereafter in force, when not inconsistent with thr express
<br />and specific provisions herein.
<br />Sec. 2. Lessor, in consideration of any bonuses, rents, and royalties to be paid, and the conditions and covenants w be observed as herein set forth,
<br />hereby grants and leases to lessee the exclusive right and privilege to drill for, mine, extract, remove, or otherwise process and dispose of 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 Courity:
<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, lots 1 and 2, and.17E'~SEk;
<br />sec. 11, lots 1 to 8, inclusive;
<br />sec. 12, lots 2 to 4, inclusive, SW!aNWit, and those
<br />portions of SW'~NEZ and SEStNWIt lying north
<br />of the North Fork of.the Gunnison River,
<br />containing 1339.56 acres, more orleas,togetherwiththerighttoconattvcteuchworks,buildings,plants,~structures,equipment andcppliances
<br />and the right to use such on•lease rightsof~way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to
<br />the conditions herein provided. -
<br />PART II. TERMS AND CONDITIONS
<br />Sec. I. (a) RENTAL RATE -Lessee shall pay lessor rental annually and
<br />in advance for each acre or fraction thereof during the continuance of
<br />the lease at the rate of E 3.00 -- Cor each lease year.
<br />(b) RENTAL CREDITS -Rental shall not be credited against either
<br />production or advance royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES -The royalty shall be 8 per-
<br />cent ofthe vtil ue ofthe coal as set forth in the regulations. Royalties are
<br />due to lessor the f nal day of the month succeeding the calendar moo th
<br />in which the royalty obligation accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the lessee, the authorized
<br />officer may aceept, Cor a total o[not more than 30 years, the payment 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 at the time the
<br />lessee requests approval to pay advance royalties in lieu of continued
<br />operation.
<br />Sec. 3. BONDS-Lessee shall maintain in the proper officealease bond
<br />in theamountoCE 825,000 .Theauthorized officer may require an
<br />inrrease in this amount w en additional ca uses ¢e is determined
<br />Sec. 4. DILIGENCE - -Phis lease is subject to the conditions of tlilixent
<br />development and con ti n ued operation. except that these amd ition.. ar,•
<br />excused when operations under the lease arc inlertupted by strikes. the
<br />element9, or casualties not attributable ur the lessee.'1'he li :~sur, in the
<br />public interest may suspend the condition u(tontinued operation ul>•~n
<br />payment of advance rgvaltiea in accordance with the reKUlations in
<br />existence at the time of the suspension. Lessee's failure to produce rnal
<br />in commercial quantities at the end of III years shall lerminutc the
<br />lease. Lessee shall submitan operation end reclamation plan pursuant
<br />to Section 7 of the Act nut later than 3 years after lease issuunte.
<br />The lessor reserves the power to assent to murder the suspension of the
<br />terms and conditions of this lease in accordance with, inter ;ilia.
<br />Section 39 of the Mineral Leasing Act. 3U U.S.C. 209.
<br />Sec. +>. LOGICAL MINING UNIT (LMU) - I•:i[her upon approval by the
<br />lessor of the lessee's application or at the direction of the lessor, this
<br />leaseshall become an I.MUor part of an I MU,subject to the provisions
<br />set forth in the regulations.
<br />The stipulations established in an LNU approval in effect atthe timeo(
<br />LMU approval will supersede the relevant inconsistent terms of this
<br />lease so long es the lease rem sins committed to the LM U. If the LM LI uC
<br />which this lease is a part is dissolved, the lease shall then be subject to
<br />the lease terms which would have been aoolied if the lease had not been
<br />
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