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S <br />National King Coal, LLC Telephone: Fax: Email: <br />(970)3854528 (970)385-4638 nkc~NKCmine.wm <br />P.O. Box 2905 4424 County Road 120 <br />Durango, Colorado 81302 Hesperus, Colorado 81326 ~O ~ <br />July 8, 2002 <br />State of Colorado <br />Division of Minerals and Geology <br />11313 Sherman Street RECEBi/ED <br />Room 215 <br />Denver, Colorado 80203-2273 N~V ~ 2 2~~Z <br />Attention: Harry Ranney, Reclamation Specialist <br />Division of Minerals and Gealogv <br />Re: Second Quarter 2002 Surface Subsidence Inspection <br />Second Quarter 2002 Huntington Ditch Inspection <br />Dear Harry: <br />A complete inspection of the Crawford property was performed today by Dan Hernandez <br />and Harry Ranney of CDMG, Harry Siebert (private engineering consultant) and Trent <br />Peterson and Tom Bird of National King Coal. This inspection was in response to a <br />complaint to CDMG by the Crawford family concerning several subsidence cracks located <br />on their property. Following the inspection, it was determined that mining had <br />inadvertently occurred within 100 feet of the Crawford residence and a N.O. V. was issued. <br />Mining has been completed beneath the Dunn/LJte Mountain Ute Tribe Lease. OSM has <br />been checking, measuring, photographing and mapping these cracks on a quarterly basis. <br />These cracks look much like the cracks which are not under OSM jurisdiction. The most <br />recent OSM inspection revealed that the cracks repaired by NKC are still in good shape <br />and the other cracks are healing nicely. OSM is now willing to release the bond. <br />The other areas where pillars have been extracted are Sections No. 4 West, 7 South, 6 <br />South and 5 South/1 Left. The 7 South and 6 South area exhibits normal subsidence <br />tension cracks extending north from a point about 300 feet south of the Huntington Ditch. <br />This area of the ditch has been replaced with-a buried pipeline. Some cracks appear to <br />have crossed the pipeline with no apparent consequences. The landowner is monitoring the <br />situation closely. <br />Call if you have any questions. <br />Sincerely <br />om Bud <br />Manager, Coal Services <br />National King Coal, •LLC <br />