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COAL ;(,EASE AGREEMENT <br />THIS COAL LEASE AGREEMENT ("Lease") is entered into and made effective as of <br />the lst day of January 2001 by aztd between F. R. Hill, Jr., d/b/a F. E. Hill Company, whose <br />address is P. 0. Box 22G, Fairfield, Texas 75840 and B. F. Hill d/b/a 1-Iill Ranclt, whose address <br />is 3974-C Highway 67 West, Glen Rose, Texas 76043 (collectively, the "Hills"), attd <br />LORENCITO COAL COMPANX, LLC, a Colorado limited liability company ("Lorencito"), <br />whose address is 4422 Bryatt Station Road, Lexington, Kentucky 40516. <br />RECITALS <br />WHEREAS according to those deeds recorded in the real property records of Las Animas <br />County in Book 906 at Page 745, Book 906 at Page 759, and Book 912 at Page 924, t}le Hills are <br />the owners of an undivided 46.54% of all minerals, including coal, in or upon the Leased lands, <br />and an undivided 46.54% interest in certain surface use rights appurtenant to such mineral <br />interest. According to that deed recorded in ttte real property records of Las Animas Cormty in <br />Book 998 at Page 276, Hill Ranch is the owner of 100% of the surface estate in the Leased Lurds <br />(including sand, gravel and surface minerals); and <br />WHEREAS, Hi)Is and Lorencito desire to enter into the agreement set forth below; <br />NOW, THEREFORE, for and in consideration oC the prortuses and agreements contained <br />herein, and other good and valuable consideration, the receipt of which is ackrtowlcdged, the <br />parries agree as follows: <br />Grant of Lease <br />Hills hereby lease and let approximately 3,142. acres described on Exhibit B hereto (the <br />"Leased Lands") unto Lorencito, for the purpose of exploring, developing, mining, <br />removing, preparing and loading all of the coal from the surface to the bottom of the <br />Primero seam lying in, under and upon the Leased Lands, during the term of this Lease <br />and subject to the limitations and conditions herein provided. Lorencito shall have the <br />following rights and privileges associated with the leasehold granted herein: <br />a. To take and appropriate to its own use and purposes al] the coal from the surface <br />to the bottom of the Primero seam lying in, under and upon the Leased Lands by <br />any arrd aU mining methods including surface coal mining methods. <br />b. To mine, transport, store, blend, and sell on the Leased Lands all coal mined fiom <br />the Leased Lands; and <br />c. To enter upon the Leased Lands after tennination of this Lease to conduct arry and <br />all required reclamation or restoration activity as may be necessary to comply <br />with applicable laws, ordinances and regulations; and <br />COAL LCAS6 FMAL 6-25-Ol.doc <br />