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National King Coal, LLC Telephone: Fax: Email: <br />(970)385-4528 (970)385-4638 nkc(~NKCmine.com <br />P.O. Box 2905 4424 County Road 120 1-~o~ <br />Durango, Colorado 81302 Hesperus, Colorado 81326 L~ n ~O ~ <br />August 22, 2004 <br />State of Colorado <br />Division of Minerals and Geology ~~~ <br />11313 Sherman Street, Room 215 P3fAR i 4 2005 <br />Denver, Colorado 80203-2273 <br />Attention: Tom Kaldenbach, Reclamation Specialist f1fWR1AIhU7~h311t~~q;q-gli3Q@nJgq~/ <br />Re: Third Quarter 2004 Surface Subsidence Inspection <br />Third Quarter 2004 Huntington Ditch Inspection <br />Dear Tom: <br />During August, 2004, previously located subsidence related cracks on the Crawford Property were <br />inspected. <br />A crack which developed over the southeast end of Sections 1 Right and 2 Right was fdled during the fall <br />of 2002 using a backhoe and fill dirt. These cracks to the southeast of the Mazc Crawford house show no <br />signs of further separation. Vegetation is beginning to re-establish in the areas disturbed by the repair <br />process. One small group of cracks was noted over Section 3 Southwest and they appear to be "healing" <br />well; probably aided by the occurrence of recent rains. No other cracks or subsidence related features <br />were noted during this inspection. Mazc Crawford suggested checking again in the spring before <br />contemplating any repairs. This area is remote and cracks are expected to repair themselves without <br />intervention. <br />The Huntington Ditch area was inspected for damage at areas where underground mining have occurred. <br />No evidence of new subsidence was observed. Old subsidence cracks were difficult or impossible to <br />locate above several areas where pillars have been extracted including Sections No. 1 Right through No. 6 <br />Right, 4 West, 7 South, 6 South and 5 South/1 Left. The 7 South and 6 South area previously exhibited <br />normal subsidence tension cracks extending north from a point about 300 feet south of the Huntington <br />Ditch. This area of the ditch has been replaced with a buried pipeline. Some cracks had crossed the <br />pipeline with no apparent consequences. Most subsidence cracks have "healed" well and generally have <br />virtually disappeared. <br />Please call if you have any questions. <br />Sin , <br />Tom Bird <br />Manager, Coal Services <br />National King Coal, LLC <br />