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11/04/2009 10:15 FAX 970 240 5967 BLM/USFS <br />r~oo2 <br />„' <br />Tract 2: T. 13 S.. R 90 W., bth P.M. <br />Modi$cation sea 35, Beginning at the northwes[ corner of said sec. 35; <br />Thence S 89°45'E,2308.02 feet along the north line to the earth to corner of said sec. 35; <br />Theooe S 89°517;,755.52 feet along the norW line of said sec. 35: <br />Thence S 1°33'W, 2605.75 feet; <br />Thence N 77 °34'26"W,3118.74 feU to the west line of said sec. 35; <br />Thence N 1 °33'E,1946,48 feet alwtg the west line of said sec. 35 to the Point of Beginning <br />160 acres, Gunnison County, Colorado. <br />Containing 4,996.36 acres. mare or less, together wiW the right to constrtiu such works, buildings, plants. strncnnes, equipmen[ and <br />appliances and the right to use such on-lease rights-ofway wltiUt tnay be necessary and convenient in the exercise of the rights, and <br />privileges granted, subjeU to the conditions berein provided. <br />Part II. TERMS AND CONDITIONS <br />Sec. 1. (a) RENTAL RATE -Lessee shall pay Lessor rental <br />tmnually andut advance for each acre or fraction thueaf during <br />the rnntinuance of the lease at the rate of <br />$3.00 far each lease year. <br />' (b) RENTAL, CREDITS -Rental shall not be aeAited <br />against either production or advance royalties for any year. <br />Sec:,2. (a) PROpUCTION ROYALTIES -The royalty shall <br />be 8.0 percent af'the value of the coal as set forth in the <br />regulations. Royalties are tine to Lessor Ote final day of dte <br />month succeeding the calendar month in which the royalty <br />obligation accrues. <br />(b) ADVANCE ROYALTIES • Upon request by the <br />Leases Weauthmirxd officermay accept, for a total ofnormore <br />than 10 years, the payment of advance royalties in lieu of <br />continued. operation, consistent with the regulations. The <br />advance royalty shall be based on a pecan[ of We value of a <br />minimum number oftons determined in the manner established <br />by rho advance royalty regulations in effect at the rime the <br />Lessee requests approval to pay advance royalties in lieu of <br />wntinned operation. <br />Sec. 3. BONDS -Lessee shall maiataln in the proper offiw a <br />lease bond in the amount of $1,035,000. The authorized affic~ <br />mayrequireaninaeasein thisamountwhenaddidonalcoverage <br />is determined appropriate. <br />Sec.4. DILIGENCE • This leasearLieved diligent development <br />on November 30, 1993, and is subjec[ to the conditions of <br />continued operation. Continued operations may be excused <br />when operations under the Lease are interrupted by strr7res, the <br />elements, or casualties not attributable to the Lessee. The <br />Lessor, in dte public interest, may suspend the conditioa of <br />continued operation upon payment of advance royalties in <br />accordance with the regulations in existence at the time of the <br />suspensive. <br />. r "-"• <br />The I.essar reserves We power to assent to or order the <br />suspension of tite terms and tonditions of Wis lease in <br />accordance with, inter all Section 39 of the Mineral Leasing <br />Aa, 30 U.S.C. 209. <br />Sec. 5. LOGICAL MINING UNIT (LMCn' -The lands <br />contained in rite original tease are included in West Elk Mine <br />LMU, serial number COC 57201 effective September 27.1989. <br />Within 30 days after the effective dateofthis leasemotiification, <br />the Lessee shall amend its West Ellt Mine LMU to include the <br />160 arses added to Coal Lease C-1362 by this modification. The <br />modified Jand shall besegregated into antrthtx Federal coal lease <br />should WeI.essee fail to file sack amendment. <br />The stipulations established in an LMU approvaLw effeu at the <br />time of LMU approval m modification will supersede the <br />relevant inconsistent terms of this lease so long as the lease <br />remains committed to We LMU. If theLMU of wbidt this lease <br />is a part is dissolved, the lease shall Wen be subject to the lease <br />terms which would have been applied if the lease had not been <br />included in an LM[I. <br />Sec. 6. DOCUMENTS, EVIDENt~ AND INSPECTION - <br />Atsuch times end in such farm aS Lessor maypresaibe, lessee <br />shall furnish derailed statements showing the amounts and <br />quality of all products rrmeved and sold from the lease, the <br />proceeds therefrom, and the amount used for production <br />purposes or unavoidably lost <br />Lessee shall keep apes at allreasonable times for the inspeuion <br />ofanydulyanWotizedofficerofLussar, Weleasedpremisesand <br />all sutiace and underground improvements, works, machinery, <br />ore stocdcpiles, equipment, and all books, accounts, maps, and <br />records relative to operations, surveys, or investigations on or <br />under the leased lands. <br />Lessee shall allow Lessor access to and copying of documents <br />reasonablynecessaryto verrfyLesseecompliancewithteams and <br />condiions of the lease. <br />While this lease remains in effect, information obtained under <br />