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Lorencito Mine • • <br />November 9, 2000 <br />Page 2 <br />wash plant area, but do plan to start reclamation on Picketwire in the next two to three months". <br />The October 27, 2000 letter also states "We will probably give up our mine permit at Lorencito <br />which means the mine bond will be released. If Frontier does not provide the necessary security, in <br />the state of Colorado's sole judgement, we will proceed with substitute bonds." <br />As indicated in our previous letters, the bonding situation is of significant concern to the DMG. We <br />are currently reviewing this matter with the Attorney General's Office, and in the near future we <br />will advise you of our regulatory position regazding the need to replace the Frontier bonds. In the <br />meantime, we strongly encourage the replacement of the existing Frontier bonds. The resources <br />engaged in support of the Lorencito Mine bond might be best utilized in obtaining replacement <br />bonds for the NOI and New Elk permits. We are also concerned that required reclamation of <br />disturbance created under the NOI and the disturbance at the New Elk project cannot be delayed <br />any further. <br />Please provide the following information by November 24, 2000, so that we can adequately <br />evaluate the pending request for an extension of the Lorencito Canyon Mine permit. <br />1) Due to several factors, including extensive methane development now occurring within the <br />Lorencito Canyon Mine permit area, major changes to the permit will be required if the <br />Lorencito Canyon Mine is to proceed. A Permit Revision will be required if an extension is <br />granted. Please provide a proposed timeline for Permit Revision submittal. <br />2) Please also provide a general description of the revised mine plan that will be necessary if <br />the Lorencito Canyon Mine proceeds. Would surface mining be eliminated from the <br />currently approved plan if the project goes forward? <br />3) The railroad line located in the Purgatoire Valley is a key component of any coal mining in <br />the area. We understand that the railroad was sold to a Utah entity known as A & K <br />Railroad. Please provide details concerning any ownership, right-of--way agreements, and <br />lease arrangements related to coal transport from the proposed Lorencito Canyon Mine and <br />New Elk processing site. <br />4) Why would reclamation operations at the New Elk site not occur during the winter season? <br />Activities such as structural demolition could occur. We understand that reclamation is <br />planned and that a reclamation contractor has been retained. We also understand that the <br />loadout structures have been sold. Please discuss these issues in detail. <br />5) Please update the status of any and all surface and mineral right -of--entry lease agreements <br />for the proposed Lorencito Canyon Mine. Any changes to the previously approved permit <br />must be processed as a revision, if an extension is granted. <br />6) Provide updated ownership and controller information for Lorencito Coal Company, A.P. <br />Maxwell and Picketwire Processing, including all coal mining operations for which Bruce <br />