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Colowvo Coal Comnany <br />Colowvo Mine Logical Minin¢ Unit Modification <br />c. DILIGENT DEVELOPMENT AND CONTINUED OPERATION: Pursuant to <br />43 CFR 3480.0-5(a)(13)(ii)(B) and 34835(8), the diligent development period for this LMU <br />begins on October 25, 1984. Original total LMU recoverable reserves were estimated at <br />328,260,000 tons (300,260,000 togs federal). Therefore, the LMU must produce <br />commercial quantities (3,282,600 tons) before October 25, 1994. Lease production from <br />October 25, 1984, to the effective date of the LMU was sufficient to meet diligence. <br />According the Colowvo LMU achieved diligent developrrient on ATril 1 1992 and <br />continued operation year 1 (COY 1) started on May 1. 1992. <br />The modified LMU recoverable reserves are estimated at 352,060,000 toris, effective <br />Mzrcti 28, 1993. Adjustment; to the recoverable reserves are effective the beginning of the <br />next continued operation year. Therefore, effective May 1, 1993, the be rg.nnin~of COY 2. <br />Colowvo Coal Company must mine 3,520,600 tons per continued operation Rear to maintain <br />continued operation or request to be allowed to pay advance royalty in lieu of continued <br />operation, This LMU may be modified in accordance with 43 CFR 3487.1(8). <br />d.. ADVANCE ROYALTY: No advance royalty paid prior to October 25, 2004, <br />may be credited against production royalty after that date. <br />e. REPORTING PERIOD: The rental amount of each federal coal lease is to be <br />prorated to the effective date of the LMU. Thereafter, the LMU rentals for all fedezal coal - <br />leases within the LMU will be due in a lump sum on each annual anniversary of the effective <br />date of the LMU approval.. Upon approval and for the duration of This LMU, no federal <br />rentals may be credited against production royalties for any federal coal lease terms which <br />allowed for such credits prior to the effective date of the LMU. <br />Royalties for federal recoverable coal reserves produced within the LMU will be paid in a <br />lump sum, identified by individual federal coal lease on the form specified by [he Minerals <br />Management Service every royalty reporting period. The LMU report period will be on a <br />monthly basis beginning the royalty-reporting period after the date that coal is first produced <br />from the LMU, following the effective date of LMU approval. If coal is being produced on <br />the effective date of LMU approval, the first royalty reporting period will begin the first day <br />of-the month following the effective date of the LMU approval. Progress maps and reports <br />required by 43 CFR 3482.3 shall show all federal and nonfederal production from anywhere <br />within the LMU. <br />f. RECOVERABLE COAL RESERVES EXHAUSTION: The 40-year LMU <br />recoverable coal reserves exhaustion period commences the date that coal is first produced <br />from the LMU, following the effective date of the LMU approval. If there is production <br />occurring within the LMU on the effective date of LMU approval, the 40-year clock begins <br />on the effective date of LMU approval. <br />4 <br />