GENERAL47535

• Permit No: M1977208
• IBM Index Class Name: General Documents
• Doc Date: 3/6/2003
• Doc Name: Reclamation Cost for Demolition of the Cement Plant
• From: DMG
• To: CEMEX
• Media Type: D
• Archive: No

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STATE OF COLORADO
DIVISION OF MINERALS AND GEOLOGY
Department of Natural Resources
1313 Sherman SL, Room 215
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
Mazch 6, 2003
Mr. Steve Mossberg
CEMEX
P.O. BOX 529
Lyons, CO 80540
RE: CEMEX, Inc., Lyons Mine, Permit No. M-_1977-208
Reclamation Cost for Demolition of the Cement Plant
Deaz Mr. Mossberg,
DIVISION OF
MINERALS
GEOLOGY
RECLAMATION
MINING•SAFETY
Bill Owens
Governor
Greg E. Walther
Executive Director
Ronald W. Cottony
Division Director
The Division received the initial bond calculation for the Lyons Mine, Permi[ No. M-1977-208
conducted by CEMEX's consultant Banks and Gesso. The Division has the fol]owing
comments regarding the estimate that will need to be addressed by the operator and. . .
incorporated into the reclamation cost estimate;
- 1. -Banks and Gesso states that equipment, steel structures, conveyors and offices on the site
. have salvage values greater than the cost of removal. Therefore, the cost of equipment
removal or demolition was not included in the bond calculation. The Division concurs that
mining equipment and machinery stored on site does not need to be included in the
reclamation cost estimate (and any contents within the buildings). However, structures such
as offices, steel structures (gas tanks, utility lines, etc..) and conveyors need to be included
in the reclamation cost estimate. The Division does not accept the face value of salvage
credit for structures unless it meets the standards defined by Rule 4.12 of the Construction
Materials Rules and Regulations.
Rule 4.12 specifically outlines the requirements for salvage credit. In order to determine the
appropriate salvage credit for each structure, CEMEX will be required to provide an
itemized listing of the appraised salvage value of each structure, not including the salvage
value of fixtures contained therein (4.12.2(1)). The appraisal should be by a qualified
independent appraiser (4.9.1(2)(b)(i) and 4.12.2(3)). CEMEX will also need to annually
verify the value of the structure (4.12.2(1)) and to provide an annual fee to fund the
Division's cost to establish and review [he salvage value component of the bond (4.1.2(9)).
In addition CEMEX would have to report on encumbrances (4.12.2(2)) and would not be
allowed to remove the structure from the permit azea without prior consent of the Board
(4.12.1(c) and 4.9.3(c)) and would be required to insure the structures (4.12.1(c) and
4.9.3(c)). A copy of the regulations regarding salvage credit is included for reference.
In addition, 100 percent of the salvage value could not be deducted from the amount of the
required bond. Rather, some percentage of the total salvage credit could be deducted to
allow for contractor profit and for administrative costs. Rule 4.9.1(1) states that the Board
or Office may accept interests in real or personal property as Financial Warranties of not