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Modification
<br />Tract 3: T. 3. N., R. 101 W., 6th P.M.
<br />sec. 19, EI/25E 1/4, S W I/4SEll4;
<br />sec. 20, Sl/2, Sl/2NW 1/4, SI/ZNl/2NW 1/4;
<br />sec. 28, NEl/4, Nl/2NW 1/4, Nl/2S1/2NW I/4.
<br />840.00 acres, Rio Blanco County. Colorado
<br />Containing 3,512.32 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and
<br />appliances and the right to use such on-lease rights-of--way which may be necessary and convenient in the exemise of the rights and
<br />privileges granted, subject to the conditions herein provided.
<br />Part II. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE -Lessee shall pay lessor rental
<br />annually and in advance for each acre or fraction thereof during
<br />the continuance of the lease at the rate of $3.00 for each lease
<br />yeaz.
<br />(b) RENTAL CREDITS -Rental shall not be credited
<br />against either production or advance royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES -The royalty shall
<br />be 8.0 percent of the value of the coal as set forth in the
<br />regulations. Royalties are due to Lessor the final day of the
<br />month succeeding the calendar month in which the royalty
<br />obligation accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the
<br />Lessee, the authorized officermayaccept, for a total ofno[ more
<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 percent of the value of a
<br />minimum number of tons determined in the manner established
<br />by the advance royalty regulations in effect at the time the Lessee
<br />requests approval to pay advance royalties in lieu of continued
<br />operation.
<br />Sec. 3. BONDS -Lessee shall maintain in the proper office a
<br />lease bond in the amount of $21,000. The authorized officer may
<br />require an increase in this amount when additional coverage is
<br />determined appropriate.
<br />Sec. 4. DILIGENCE -This lease is subject to the conditions of
<br />diligent development and continued operation, except that these
<br />conditions are excused when operations under the lease are
<br />interrupted by strikes, the elements, or casualties not attributable
<br />to the Lessee. The lessor, in the public interest, may suspend the
<br />condition of continued operation upon payment of advance
<br />royalties in accordance with the regulations in existence at the
<br />time of [he suspension, Lessee shall submit an amended
<br />operation and reclamation plan pursuant to Section 7 of the Act
<br />(30 U.S.C. 207(c) within 3 years of the date of modification or
<br />prior to approval to commence mining operations.
<br />Lessor reserves the power to assent to or order the suspension of
<br />the terms and conditions of this lease in accordance with, inter
<br />alia, Section 39 of the Mineral Leasing Act, 30 U.S.C. 209.
<br />Sec. 5. LOGICAL MINIIVG UNIT (LMU) -The lands
<br />contained N the original lease are included in Deserado Mine
<br />LMU, serial number COC-57190 effective September 16,1985.
<br />Within 30 days after the effective date of this lease modification,
<br />lessee shall amend its Deserado Mine LMU to include the 840
<br />acres added to coal lease COC-8424 by this modification. The
<br />modified ]and shall be segregated into another Federal coal lease
<br />should the lessee fail to file such amendment.
<br />The stipulations established in an LMU approval in effect at the
<br />time of LMU approval or modification will supersede the
<br />relevant inconsistent terms of this lease so long as the lease
<br />remains committed to the LMU. If the LMU of which this lease
<br />is a part is dissolved, the lease shall then be subject to the lease
<br />terms which would have been applied if the lease had not been
<br />included in an LMU.
<br />Sec. 6. DOCUMENTS,EVIDENCEANDIIVSPECTION-At
<br />such times and in such form as Lessor may prescribe, Lessee
<br />shall famish detailed statements showing the amounts and quality
<br />of all products removed and sold from the lease, the proceeds
<br />therefrom, and the amount used for production purposes or
<br />unavoidably lost.
<br />Lessee shall keep open at all reasonable times for [he inspection
<br />of any duly authorized officer of Lessor, the leased premises and
<br />all surface and underground improvements, works, machinery,
<br />ore stockpiles, equipment, and all books, accounts, maps, and
<br />records relative to operations, surveys, or investigations on or
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