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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources 1313 Sherman St., Room 275 Denver, Colorado 80203 Phone: (303) 8663567 fAX: {3031 832A106 December 29, 2005 Mr. J.E. Stover, P.E. J.E. Stover & Associates, Inc. P.O. Box 60340 Grand Junction, CO 81506 RE: Bowie Resources, LLC Bowie No. I Mine Bond Release Clarification Permit No. C-1981-038 Deaz Mc Stover: COLORADO DIVISION O F MINERALS GEOLOGY RECIANATION•NINING EAf FTT•SCIFNCE Bill Owens Governor Russell George Executive DireROr Ronald W. Cottony Division Director NaNral Rewurce Trustee The Division of Minerals and Geology (Division) has received your December 15, 2005 letter. Bowie Resources, LLC (Bowie) is considering removing structures from the Bowie No. 1 Mine loadout. Based on your letter it seems Bowie's decision to move forwazd with this project is contingent upon whether or not the Division will consider bond release for structural demolition prior to completion of backfilling and grading. This is a valid question given the circumstances of Bowie's bond release application SL-2. A question the Division has is how does Bowie plan to handle the demolition materials at the loadout? The current plan is vague and the Division cannot consider any bond release applications until reclamation is completed according to an approved plan. Both questions aze addressed in this letter. To address the first question a review of the Bowie No. 1 bond release application, SL-2 is warranted. In the SL-2 findings, the Division issued a decision recommending bond release for structural demolition, at the Bowie No. 1 east mine as well as backfilling and grading work and drainage control structures at the west mine. After lengthy consideration, the Office of Surface Mining (OSM) concurred with the Division's decision on that application as documented in their July 13, 2004 concurrence letter. The OSM concurrence withstood an objection from the Public Employee's for Environmental Responsibility as stated in OSM's January 31, 20051etter to that organization. Therefore, we feel the Division has the authority to release bond for structural demolition prior to backfilling and grading. To determine the amount to be released, the Division would fully evaluate the total costs for demolition and all other reclamation activities at the Bowie No. 1 loadout. We would determine what work has been completed and itemize the associated costs. At this point, we cannot estimate what that dollaz amount would be. Phase I bond releases aze limited to 60% of the total reclamation cost estimate. Structural demolition costs aze a subset of the Phase I costs and therefore the amount would be less than 60%. Any release would be limited to the reclamation costs associated with the loadout only. Office of Office of Colorado Mined Land Reclamation Active and InaRive Mines GErologiral Survey