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SUPPLEMENTAL INFORMATION 3) Basis of Right to Enter for Exploration and Reclamation Table 1, Location, Drillhole Dimensions, and Ownership, details proposed corehole/drillhole locations and surface and coal ownership at these sites. A map is also attached illustrating exploration locations. All of the proposed drill sites are on lands where the surface is owned and controlled by Cottonwood Land Company, a wholly-owned subsidiary of Peabody Energy, or surface access and use is allowed under existing surface use agreements with the landowners, Rio-Ro-Mo Ranch and J.A.T.K.Y. 4) Description of Land to be Affected The proposed exploration area of approximately 8,000 acres, as shown on Map 1, encompasses portions of Township 5 North, Range 89 West, Sections 9, 10, ]4, 15, 16, 21, 22, 23, 24,25,26, 27, 28, 35, and 36. The area is approximately 10 miles south and east of the town of Hayden, Colorado and is south of the Yampa River and north of the Williams Fork River. The proposed exploration locations aze generally in azeas previously disturbed by historic exploration activities or agricultural operations, and have been located adjacent to existing ranch roads, where feasible. Cultural resource clearances have been completed for both the proposed drill-sites and the azea of the phased geotechnical investigations (refer to accompanying documentation). Review of the proposed locations by the Colorado Division of Wildlife did not identify any potentially impacted resowces requiring avoidance or specific mitigation measures (refer to accompanying documentation). The coreholes may intercept the Trout Creek, Twentymile, and/or "J" Sandstones. Surface Topoeranhv -The general topography of the area is characterized by relatively gentle north-northeast facing dip-slopes, with steep south-southwest facing escarpments on the south end of the project area. Topographic relief in the proposed exploration area is approximately 1,400 feet, ranging from 6,500 feet to 7,900 feet. Geotoeic Setting -Coal-bearing strata of the project azea aze part of the Iles and Williams Fork Formations of the Mesaverde Group. The coals of primary economic interest are designated as the Middle Coal Group, and include the Lennox, Wadge, Sage Creek, and Wolf Creek coal seams. These units and their stratigraphic sequence are illustrated by Figure 1, General Stratigaphic Column. The proposed exploration area is located in the southern extension of the Washakie/Sand Wash Structural Basin. The basin is bordered on the east by the Pazk Range and on the southwest by the Axial Basin Anticline. Stratigraphically, the Middle Coal Group was deposited between two regressive sandstone deposits. Surface expressions of these two sandstone units, the Twentymile Sandstone Member of the Williams Fork Formation, and the Trout Creek Sandstone Member of the Iles Formation appeaz as prominent cliff-fomting units throughout the Williams Fork Mountains. The coal seams in the project area occur within a localized structural basin, with the axis both trending and plunging to the north. It is defined by the Sage Creek Anticline on the east, the Buck Peak Anticline on the west, and the Beaver Creek Anticline to the south. Dips range from approximately 7° to the north, to 9° to the west on the west flank of the Sage Creek Anticline. Faulting associated with the Buck Peak Anticline has been identified within the area by USGS geologists. Other faulting in the azea is likely, but not well understood, and better definition of the occurrence and extent of faulting is one of the primary objectives of the proposed exploration program. Surface Water Resources -The project area is bounded on the north and northwest by Breeze Basin and the Yampa River, and on the southeast by Watering Trough Gulch and Dry Creek. Included within the azea aze a number of small sub-watersheds that either flow northeastwazd to the Yampa River or south to the Williams G:\Environmental\EXPLORATION WORK\FJCPLR 2006 BIG ELK\Big Elk 2006 NOI App. Fotm.doc Page 6 of 17