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<br />UNITED STATES
<br />DEPARTMENT OF THE INTERIOR Serial Number coc 30656
<br />BUREAU OF LAND MANAGEMENT
<br />Lease Date July 1, 1981
<br />COAL LEASE READJIISTMENT
<br />PART 1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor,
<br />through the Bureau of Land Management, and
<br />RAG Empire Corporation
<br />P.O. Box 68
<br />Craig, Colorado 81626
<br />hereinafter called lessee, is readjusted, effective July 1 2001, for a period of 10 years and for so
<br />long thereafter as coal is produced in commnercial 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 readjustment is issued pursuant and subject to the terms and provisions of the
<br />Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 937, 30 U.S.C. 181-
<br />287, 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
<br />in 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
<br />covenants to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege
<br />to drill for, mine, extract, remove, or otherwise process and dispose of the coal deposits in, upon,
<br />or under the following described lands:
<br />T. 5 N., R. 91 W., 6`" P.M.
<br />sec. 5, lots 5 to 12, inclusive;
<br />sec. 8, lots 1 to 8, inclusive;
<br />containing 681.55 acres, more or less, together with the right to construct such works, buildings,
<br />plants, structures, equipment and appliances and the right to use such on-lease rights-of-way which may
<br />be necessary and convenient in the exercise of the rights and privileges granted, subject to the
<br />conditions herein provided.
<br />PART II. TERMS AND CONDITIONS
<br />Sec. 1. lal RENTAL RATE - Lessee shall pay
<br />lessor rental annually and in advance for each
<br />acre or fraction thereof during the continuance
<br />of the lease at the rate of $3.00 for each lease
<br />year.
<br />(b) RENTAL CREDITS - Rental shall not be
<br />credited against either production or advance
<br />royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES - The royalty
<br />shall be 8 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
<br />a total of not more than 10 years, the payment
<br />of advance royalties in lieu of continued
<br />operation, consistent with the regulations. The
<br />advance royalty shall be based on a percent of
<br />the value of a minimum number of tons determined
<br />in the 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. 4. 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
<br />of 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
<br />7 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
<br />3 years after the effective date of this lease
<br />readjustment.
<br />The lessor reserves the power to assent to or
<br />order the suspension of the terms and conditions
<br />of this lease in accordance with, inter ali a,
<br />Section 39 of the Mineral Leasing Act, 30 U.S.C.
<br />209.
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