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JAN-05-2007 FRI 03:18 PM BLM COLO STATE OFFICE
<br />FAX N0. 303 239 3799 P, 04
<br />CO S i -~T~ OFFICE
<br />2G6 t!i7!f 3 ~ %II
<br />Part II. TERMS AND CONDITIONS
<br />Sec 1. (e) RENTAL RATE -Lessee shill pay lessor rentul
<br />annually and in advance for each acre or fraction thereof during
<br />the condnuanee of the lease at the rata of $3.00 for each lease
<br />year.
<br />(b) RENTAL CREDITS -Rental shall not be credited
<br />against either production or advance royalties for any year.
<br />Sea 1. (a} PRODUCTION ROYALTIES - The royalty shall
<br />be 8.0 percent of the value of the coal ae set forth in the
<br />roguladons. Royalties are due to Lessor the final day of the
<br />month succeeding the calendar month in which [he royalty
<br />obligation aeC[ves.
<br />N) ADVANCE ROYALTIES -Upon request by the
<br />Lessee, rite authorized officer may accept, for a toml of not morn
<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 iha value of a
<br />minimum number of tons determined in [he manner esmblished
<br />by rite advance royalty regulations in effect at the time theLessee
<br />requests approval to pay advance roynldes in lieu of continued
<br />operaion.
<br />I ~he stipulations eskblished in an LMU approval in affect 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 wh ich [his lease
<br />is a parr is dissolved, the lease shall then be subject to the 1ctLSc
<br />terms which would have been apphed if the lease had not been
<br />included in an LMU.
<br />Sec.6. DOCUMENTS, EVIDENCEANDINSPECTION - At
<br />such limes and in such form as Lessor may prescribe, Lcsscc
<br />shsll furnish 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 shalt keep open at all reasonable times for the inspection
<br />of eny duly authorized officer of Lessor, the leased premises and
<br />al! surface and underground improvements, works, machinery,
<br />ore smcttpiles, egnipmen[, and all books, accounts, maps, and
<br />records relative to operations, xmveys, or investigations nn or
<br />under [he leased lands.
<br />Ltssee shall allow lessor access to sod copying of documents
<br />reasonably necessary to verify Lessee compliance with krms sod
<br />wnditions of [he lease.
<br />Sea 3. BONDS - Lessee shall maintain in the proper office a
<br />lease bond in the amount of $329.000. The authorized officer
<br />may require an increase in this smount when addifionsl coverage
<br />is determined appropriate.
<br />Sec. 4. DII.IGENCE -This lease i s subject m the conditions of
<br />diligent development and continued operation, except that thane
<br />conditions are excused when operations wader the lease are
<br />interrupted by strikes, the elements, or casualties not attttbtnable
<br />to the Lessee. The lessor, in the public interes[, may suspend the
<br />condition of continued operation upon payment of advartce
<br />royalties in accordance with the regulations ht existence at the
<br />time of the suspension. Lessee shall submit an amended
<br />operation and reclamation plan pursuant m Section 7 of the Act
<br />(30 U.S.C- ?A7(c) within 3 years of rite date of modification or
<br />prior to approval m commence mining operations.
<br />Lessor reserves the power to assent to or order the suspension oP
<br />the krtns and conditions of this least: in accordance with, inter
<br />olio, Section 39 of the Mineral Erasing Act, 30 U.S.C. 209.
<br />Sea 5. LOCrTCAL MINING UNIT (EMIT) -The lands
<br />contained in the original lease ore included in Deser.9do Mine
<br />LMU, serial Wombat COC 57190 effecfive September 16,1985.
<br />Within 30 days nfrer the effective data of thislcasc modification,
<br />• lessee shall amend its Dcserado Mina LMU m include the 120
<br />acres added to coal lease C-8424 by this modification. The
<br />modified land shall be segregated into another Federal coal tease
<br />should the lessee fail to 61e such amendment.
<br />While this lease remains in effect, information obtained under
<br />this section shall be closed to inspection by the public in
<br />accordance with the Frtrdom of Information Action (5 U.S.C.
<br />552).
<br />Sec 7. DAMAGES TO PROPERTY AND CONDUCT OF
<br />OPERATIONS -Lessee shall comply at its own expense with
<br />all reasonable orders of the Secretary, respecting diligent
<br />operations, prevention of waste, and protection of other
<br />resources.
<br />Lessee shall not conduct exploration operations, other than
<br />casual use, without an approved exploration Plan. All
<br />exploration plsns prior to the crnnmencement of mining
<br />opemtions within an approved minin& Permit area shall be
<br />submitted m the authorized officer-
<br />Lessee shall carry on all operationx in ac Wrdance with approved
<br />methods and practices as provided in the opemdng regulations,
<br />having duo regard for the prevention of injury [o life, health, or
<br />property. end prevention of waste, damage or degradation any
<br />land. air, water, cultural, biological, visual and other rasourcts,
<br />including mineral deposits and formations of mineral deposits
<br />not leased hereunder, and to other land uses ar users. Lessee
<br />shall rake measures deemed necessary by lessor [o aecamplish
<br />theintentofthisleaseterm. Sucbmeasuresmayfnclude,hutnot
<br />limited to, modihcxGon ro proposed siting or design of facilities,
<br />tittung of operations, and specificaCions of interim and final
<br />reclamation procedures. Lessor rserves [o i[self the right to
<br />]ease, sell, or otherwise dispose of [he surface or other mineral
<br />
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