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Mr. Berhan Keffelew
<br />April 9, 2008
<br />Page 3
<br />New disturbances anticipated during the upcoming year. Continued development
<br />of the Main Cresson, East Cresson (including the ECME and Wildhorse areas) and
<br />South Cresson, and associated haulroads, sediment control measures, topsoil
<br />stockpiles, and other ancillary disturbances required to support these activities. Backfill
<br />of the East Cresson Mine will continue in 2008.
<br />An application for the Cresson Mine Life Extension Project is anticipated to be
<br />submitted during mid-April 2008. This project includes an extension of the Cresson
<br />Project mine life through 2016, with additional mining activities in the northern and
<br />western portions of the project boundary.
<br />Reclamation anticipated during the upcoming year: Approximately 10 to 20 acres
<br />of miscellaneous sites consisting of topsoil stockpiles, sediment ponds, exploration
<br />disturbances, and portions of the historic Independence Mine tailings are planned to be
<br />reclaimed this year.
<br />Financial Warranty:
<br />Per 2CCR 407-1, 407-4, and Rules 1.15(1)(a), Financial Warranty/Letter of Credit No.
<br />1625-04 from the Dresdner Bank AG, New York Branch, in the amount of
<br />$33,331,600.00 replaced the St. Paul Fire and Marine Surety Bond No. JZ7711 for the
<br />same amount. The new financial warranty was sent to DRMS on July 16, 2004 and the
<br />St Paul Fire and Marine bond was released on July 21, 2004. An additional letter of
<br />credit (Letter of Credit No. 91 1 1 1 /80085) effective Sept 15, 2004 from Scotiabank in the
<br />amount of $3,400,000 was accepted by DBMS on October 19, 2004. On March 15,
<br />2007 DBMS accepted the submittal of a rider to the Scotiabank Irrevocable Letter of
<br />Credit in the amount of $100,000, bringing the total amount to $3,500,000. On
<br />September 18, 2007, DBMS accepted the submittal of the amendment to the
<br />Scotiabank Irrevocable Letter of Credit No. 91111/80085, to increase the amount to
<br />$3,700,000 for the Cresson Project. In addition, Liberty Mutual Surety Bond No.
<br />22013294 was increased to $7,922,271.21 on April 30, 2004. These financial
<br />instruments, providing a total financial warranty of $44,953,871.21, have been accepted
<br />by the Division and continue to demonstrate the sufficiency of the value of the Cresson
<br />Project Financial Warranty.
<br />Per 2CCR 407-1, 407-4, and Rules 4.7(3), the insurance company's most recently
<br />available balance sheets are attached, demonstrating that the Surety Bonds do not
<br />exceed ten percent (10%) of the bank's capital surplus accounts.
<br />Designated Mining Operation:
<br />Per 2CCR 407-1, 407-4, and Rules 1.15(1)(c), monitoring information required as part
<br />of the approved permit application and Environmental Protection Plan is routinely
<br />submitted to the Division.
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