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11/04/2009 10:15 FAX 970 240 5967 BLM/USFS
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<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
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