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r Memorandum Re: Kerr Historical Overview November 28, 1994 Page 2 A new pit (commonly called the "720 Pit") was opened shortly after acquisition of the mine by Energy Fuels. The 720 Pit was designed to accommodate increasing the depth of mining from the 150 ft. in the Marr Pit to 350 ft. in the 720 Pit to allow more reserves to be recovered. The 720 Pit ultimately extended to the southern end of the non-federal lease. In 1977, mining was continuing on non-federal property under the terms and conditions of a mining permit issued in 1976 by the State of Colorado. Reclamation of the Marr Pit began shortly after the acquisition by Energy Fuels. The area of the Marr Pit immediately south of the current Pit 1 area on the federal lease was utilized by BLM personnel as a revegetation test area in 1979. Results of that effort are described in an article by BLM personnel published in 1984, a copy of which is attached. Land Position. The property position of the mine at the time of Energy Fuels' acquisition was a non-federal lease of 720 acres. Theze was no possibility of extension to the south as another mining operation was already in existence on the property immediately south of the existing operation. Although coal reserves on the non-federal lease were limited (approximately 2.0 million tons as of August, 1977), Energy Fuels believed that mining could successfully be extended to the north some three miles and then turn and follow the east limb of the Johnny Moore syncline. Initial estimates of total recoverable coal reserves were set at 42.0 million tons. in t-ugust of 1980, a federal coal lease application was filed for the coal lying immediately north of existing operations. Preliminary estimates of the federal coal reserve were set at 4.0 million tons. In e~ptwb~r of 1979, Energy Fuels obtained a lease of the non-federal coal lying north of the federal tract, some three (3) miles from the Marr Pit. Ia July of 1980, federal lease C-22777 was issued to Kerr. Coal Sales. In early 1978, Kerr began negotiating a sales contract with Union Electric in St. Louis. Negotiations culminated with the issuance by Union Electric of a purchase order in September of 1978 for 500,000 tons of coal to be delivered within a twelve-month period. upon receipt of this purchase order, Kerr had commitments to deliver in excess of 700,000 tons of coal in 1980. Coal reserves remaining on the non-federal property at the beginning of 1979 were approximately 1.6 million tons. In October of 1979, IInion Sl~ctric ~ztand~d its 500,000 ton per yoar purchase order for thr~~ additional years. This contract provided Kerr