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P <br />- - ~ UNITED STATES <br />DEPARTMENT OF THE INTERIOR <br />BUREAU OF LAND MANAGEMENT <br />COAL LEASE READJIISTMENT <br />PART 1. LEASE RIGHTS GRANTED <br />~II I~~I~~~~~~I~~ I~~ <br />sss <br />Serial Flumber P-058300 <br />Lease Dace September 11. 1941 <br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor, through <br />the Bureau of Land Management, and <br />National King Coal, LLC <br />P. O. Box 2905 <br />Durango, Colorado 81301 <br />hereinafter called lessee, is readjusted, effective September 11, 2001, for a period of 10 years and for <br />so long thereafter as coal is produced in commercial quantities from the leased lands, subject to <br />readjustment of lease terms at the end of each 10-year lease period. <br />Sec. 1. This lease readjus anent is issued pursuant and subject to the tezms and provisions of the Mineral <br />Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181-2H7, <br />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 <br />force, when not inconsistent with the express and specific provisions herein. <br />Sec. 2. Lessor, in consideration of any rents, and royalties to be paid, and the conditions and covenants <br />to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill <br />for, mine, extract, remove, or otherwise process and dispose of the coal deposits in, upon, or under the <br />following described lands: <br />T. 35 N., R.11 W., N.M. P.M. <br />sec. 31, SEYd`IE'/~; <br />sec. 32, w'hNW'k, and SE'/.NW'/.; <br />containing 160 acres, more or less, together with the right to construct such works, buildings, plants, <br />structures, equipment and appliances and the right to use such on-lease rights-of-way which may be <br />necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions <br />herein provided. <br />PART II. TERMS AND CONDITIONS <br />Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor <br />rental annually and in advance for each acre oz <br />fraction thereof during the continuance of the <br />lease at the rate of $3.00 for each lease year. <br />(b) RENTAL CREDITS - Rental shall not be credited <br />against either production or advance royalties <br />for any year. <br />Sec. 2. (al PRODUCTION ROYALTIES - The royalty <br />shall be 8.0 percent of the value of the coal as <br />set forth in the regulations. Royalties are due <br />to lessor the final day of the month succeeding <br />the calendar month in which the royalty <br />obligation accrues. <br />(b) ADVANCE ROYALTIES - Upon request by the <br />lessee, the authorized officer may accept, for a <br />total of not more than 10 years, the payment of <br />advance royalties in lieu of continued operation, <br />consistent with the regulations. The advance <br />royalty shall be based on a percent of the value <br />of a minimum number of tons determined in the <br />manner established by the advance royalty <br />regulations in effect at the time the lessee <br />requests approval to pay advance royalties in <br />lieu of continued operation. <br />Sec. 3. BONDS - Lessee shall maintain in the <br />proper office a lease bond in the amount of <br />$5,000. The authorized officer may require an <br />increase in this amount when additional coverage <br />is determined appropriate. <br />Sec. 9. DILIGENCE - The lessee is subject to the <br />conditions of diligent development and continued <br />operations, except that these conditions are <br />excused when operations under the lease are <br />interrupted by strikes, the elements, or <br />casualties not attributable to the lessee. The <br />lessor in the public interest, may suspend the <br />conditions of continued operation upon payment of <br />advance royalties in accordance with the <br />regulations in existence at the time of the <br />suspension. Lessee's failure to produce coal in <br />commercial quantities at the end of 10 years <br />shall terminate the lease, pursuant to Section 7 <br />of the Act. If not submitted already, lessee <br />shall submit an operation and reclamation plan <br />pursuant to Section 7 of the Act no later than 3 <br />years after the effective date of this lease <br />readjustment. <br />The lessor reserves the power to assent [o or <br />order the suspension of the terms and conditions <br />of this lease in accordance with, inter alia, <br />Section 39 of the Mineral Leasing Act, 30 U.S.C. <br />209. <br />Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon <br />approval by the lessor of the lessee's <br />application or at the direction of the lessor, <br />this lease shall become an LMU or pazt of an LMU <br />subject to the provisions set forth in the <br />