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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Depanmern of Natural Resources 1313 Sherman sl.. Room 215 Denver, Colorado 80203 Phone: 13031 866-3567 FAX: 13031 832-8106 June 9, 1997 Mr. Charles G. Kinney, Esq. 5826 Presley Way Oakland, CA 94618 RE: File No. M-94-11 5, Orion Pit Application Dear Mr. Kinney: RESOURCES Roy Romer Governor Lames 5. LochheaE Eaecume D~recbr michael B Long Divis~o~ Di,euor This letter is in response to your May 29, 1 997 correspondence to Ms. Laverne Lemay of our Denver Office regarding the above referenced file. After a careful review of the Division's files for the Orion Pit and Mars Pit applications, it is evident that Ms. Lemay made no incorrect statements in her May 14, 1 997 correspondence regarding documents received by the Division. Further, the applicant for the Orion Pit has not complied with all requirements specified in the Minerals Act and Rules. The application was incomplete as of the date of Ms. Lemay's May 14, 1997 correspondence, and as such the application has not yet been reviewed for technical adequacy. The Division has not issued a decision recommendation on the application and, therefore, submittal of a financial warranty by the applicant is premature. In the event the application is approved, the applicant must submit a financial warranty instrument that complies with the requirements of the Act and Rules before a permit can be issued. The bond instrument received by our office on April 29, 1 997 does not meet the requirements of the Act and Rules. For example, a review of the requirements of Rule 4.7 of the current version of the Minerals Rules indicates that the Letter of Credit submitted to our Office is deficient in the following respects: 1) It is not executed on the bank's letterhead using the language provided by the Office; 21 It does not have an automatic renewal clause; 31 It does not provide that, in the case of non-renewal, the bank must notify the Office and the Operator, by Certified Mail, at least ninety 190) days prior to the expiration date of the Letter of Credit; and 4) It does not provide documentation in the form of a balance sheet certified by a Certified Public Accountant demonstrating that the Letter of Credit does not exceed ten percent 110%) of the bank's capital surplus accounts. In addition, the Letter of Credit contains other language included by the bank that is not contained in the Division's approved bond forms and which sets forth various conditions of payment which may not be acceptable to the Board. In regard to the assertion that Exhibit R information for the Orion Pit was provided to.our Office in January, 1995, the Division has reviewed both the Orion Pit and Mars Pit files and can find no Orion Pit correspondence from the applicant dated January 18, 1 995, or any other documents which match the Exhibit R information provided to our Office on June 3, 1997. It is clear from this review that the Exhibit R information was not received by either the Denver or Durango Offices during the time period indicated in your correspondence. Therefore, the Division maintains that the application was still incomplete as of the date of Ms. Lemay's May 14, 19971etter, and as a result the automatic approval provisions of the Rules do not apply. 0016