PERMFILE108463

• Permit No: C1981020A
• IBM Index Class Name: Permit File
• Doc Date: 5/13/2002
• Section_Exhibit Name: APPENDIX E
• Media Type: D
• Archive: Yes

• Grand Valley Coal Comnanv
McClane Canyon and Muncer Canyon Hines Locical Minino Unit
The Mineral Leasing Act of February 25, 1920, as amended by the Federal Coal
Leasing Amendments Act of 1976, authorizes the consolidation of coal leases
into a logical mining unit (CHIT). An LHU is an area of land in which the coal
resources can be developed in an efficient, economical, and orderly manner as
a unit with due regard to conservation of coal resources and other resources.
As a result of an application for an LMU designation filed by Grand valley
Coal Company, the McClane Canyon/hunger Canyon Mince LMII ie approved effective
December 28, 1992, and provides as follows:
1. UNIT AREA. The area specified on the map enclosed hereto marked Exhibit A
is hereby designated the LMU area, containing 7,645.38 acres consisting of
three federal leases and fee holdings ae described in Exhibit B.
2. UNIT OPERATOR. Grand Valley Coal Company is hereby designated as the Unit
Operator.
3. STIPULATIONS. Ae a consideration to the approval of this LHU, the
operator/lessee consents to the following stipulations which make all federal
leases within the LHU subject to uniform requirements for submittal of ,
resource recovery .and protection plans, L2lU recoverable coal reserves
'exhaustion,. diligent development, continued operation, maximum economic
recovery, advance royalty, and royalty reporting periods (but not royalty
rates).' As of the effective date of this LHU, the diligence terms and
conditions of federal leases C-0125439, C-0125515, and C-0125516 are eubject
to or are superseded by the diligence requirements imposed by the LMU.
• a. SUPERVISION: The Resource Azea Hanager located at the Bureau of
Land Management, Grand Junction Resource Area, 2815 H Road, Grand Junction,
Colorado 81506, is responsible for the review and approval of exploration
plans and operations, and modifications thereto, prior to the commencement of
mining operations within a permit area approved pursuant to the Surface Mining
Control and Reclamation Act of 1977. That Resource Area Hanager is also
responsible for review and approval of resource recovery and protection plane
and modifications thereto. That Resource Area Hanager is also responsible for
inspection and enforcement, including production verification of such
operations and all lands and all coal within the LMU and for implementing all
other applicable provisions of the 43 CFR Group 3400 rules.
b. RESOURCE RECOVERY AND PROTECTION PLAN (R2P21: The existing R2P2s
for the McClane canyon and Hunger Canyon Mines meet all the requirements of 43
CFR 3482.1(c) for the life-of-the-mine for the LHU. If Grand Valley Coal
Company decides to modify the existing R2P2s, such modification shall be
submitted to the Resource Area Manager for review and approval.
c. DILIGENT DEVELOPMENT AND CONTINUED OPERATION: Pursuant to 43 CFR
3480.0-5(a)(13)(ii)(B), the diligent development period for the LMU began on
Hay 1, 1988. Therefore, the LMU must have production of commercial quantities
before Hay 1, 1998. The LMU recoverable coal reserve total has been slightly
decreased from that given in the application to account for production which
occurred prior to the beginning of the diligent development period. The
adjusted LMU recoverable reserve figure of 57,795,000 tons will require that
Grand Valley Coal Company mine 577,900 tons from anywhere within the LHU to
achieve diligent development, and 577,900 tons each year thereafter, to
maintain continued operation or request to be allowed to pay advance royalty
in lieu of continued operation. Production reported into the Minerals
Management Service Production Accounting and Auditing System indicate that
• 530,404 tons have been produced within the LMU since the leases became subject
to diligence.