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S • Mr. John T. Skinner Mr. David C. Shelton Mr. Richard A. Mills Mr. Donald A. Crane July 24, 1980 Page 2 Lennox coal, with a seam thickness greater than 20 inches, occurs over a small portion of the Wadge seam in Eckman Park. It contains about 11,400 ETU per pound, 7 percent ash, and 2.0 percent sulfur (see Table 1, Lennox Coal Analyses). Due to this high sulfur content, Lennox coal is unacceptable to the customers of Energy Fuels. In fact, our contract with Public Service Company of Colorado specifically prohibits the shipping of Lennox coal in any form. Thus, blending the Lennox coal with the Wadge coal is impossible. Even if blending were permissible, however, Energy Fuels' loadout facility has no capability to blend coals of differing qualities, nor does it have the capa- bility to segregate coals of differing qualities. The Lennox coal seam occurs in a mineable thickness only in limited areas, as it tends to thicken, thin, and split according to the facies en- vironment at deposition (see map). The mineable portion occurs in Eckman Park as a somewhat pearshaped overlay above the Wadge coal which is the prime mining objective. The nature of the seam's occurrence makes the recovery of Lennox coal impracticable even if Energy Fuels could deliver the coal to its customers. The dragline pits for the Wadge seam in the Lennox area (Area 50) are to be as long as 9,000 feet, three times the length of the pits needed to mine the Lennox seam. As a consequence of the mismatch between the pit lengths, the Lennox seam would be mined only infrequently, at odd intervals, and in irregular amounts. For example, one threemonth period could show 200,000 tons of Lennox, while the next quarter would show none. This erratic production schedule makes the coal very difficult to market. It also puts impossible demands on Energy Fuels' coal shooting, loading and hauling capabilities when the Lennox coal is encountered. Energy Fuels would not be able to meet its contractual obligations to deliver Wadge coal during these short, but heavy, Lennox periods. It is not a correct assumption that since the Lennox would be mined through anyway, that demands on the draglines would not be increased. Such a result would be true only if the upper seam (in this case, the Lennox) is part of the marketable coal that the dragline was designed to uncover to meet contracts. Unless the upper seam is compatible to existing markets, the draglines cannot proceed along a pit for 3,000 feet uncovering only Lennox and then return to uncover Wadge. To meet its contracts, Energy Fuels must be uncovering Wadge coal every day. The only way to uncover Lennox would be to work three parallel pits at once. Mine scheduling clearly shows that not only does Energy Fuels not have a sufficient number of drills or dozers to undertake this double benching, but also that the required yardage for the boxcut and the initial Lennox over- burden removal would require far too much time. Energy Fuels' prime mover, the Marion 8050, would be idle for approximately four months while the initial double bench is established. Consequently, Energy Fuels would be in default