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<br />UNITED STATES
<br />DEPARTMENT OF THE INTERIOR Serial Number D-047201
<br />BUREAU OF LAND MANAGEMENT
<br />Lease Date Julv 25, 1936
<br />COAL LEASE READJUSTMENT
<br />PART1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor,
<br />through the Hureau of Land Management, and
<br />Blue Mountain Energy, Inc.
<br />10714 S. Jordan Gateway, Ste. 300
<br />South Jordan, UT 84095
<br />hereinafter Called lessee, is readjusted, effective July 25, 2006, for a period of 10 years and for so
<br />long thereafter as coal is produced in commer~c ial quantities from the leased lands, subject to
<br />readjustment of lease terms at the end of each 10-year lease period.
<br />Sec.l. This lease readjustment is issued pursuz~nt 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. 437, 30 U.S.C. 181-
<br />287, hereinafter referred to as the Act;
<br />and to the regulations and formal orders of the Sscretary of the Interior which are now or hereafter in
<br />force, when not inconsistent with the express and Spec ifiC 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, or
<br />under the following described lands:
<br />T. 2 N., R. 101 W.
<br />Sec. 2, SW'/<;
<br />Sec. 3, SE'/a;
<br />Sec . 10 , NE'/+NE'/4;
<br />Sec. 11, lot 3, NE'/,N4y`/, and W'/.NW'/a.
<br />containing 513.00 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.l. (a) RENTAL RATE - Lessee shall pay lessor
<br />rental annually and in advance for each acre or
<br />fraction thereof during the continuance of the
<br />lease at the rate of 53.00 for each lease 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 12'h percent of the value of the coal
<br />produced by strip or auger methods and 8.0
<br />percent of the value of the coal produced by
<br />underground mining methods as set forth in the
<br />regulations. Royalties are due to lessor the
<br />final day of the month succeeding the calendar
<br />month in which the royalty obligation accrues.
<br />(b} ADVANCE ROYALTIES - Upon request by the
<br />lessee, the authorized officer may accept, for a
<br />total of not more than 10 years, the payment of
<br />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.9. 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 7
<br />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 3
<br />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 alia,
<br />Section 39 of the Mineral Leasing Act, 30 U.S.C.
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