2009-01-20_PERMIT FILE - X200923100

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The coreholes may intercept the "J" and Twentymile Sandstones. In addition, the coreholes will most likely intercept the Lennox, Wadge and possibly Sage Creek coal units. It is not anticipated that the coreholes will be intercept the underlying Trout Creek Sandstone. Figure 1, General Stratigraphic Column - Routt County Area, shows the general stratigraphy for the Sage Creek area. Surface Topographv: The general topography of the area is characterized by relatively gentle north- northeast facing, moderately sloping, side slope benches and ridges, with steep south-southwest facing escarpments on the east and south end of the project area. Topographic relief in the proposed exploration area is approximately 6,500 feet to 7,200 feet. Geologic Setting: Coal bearing strata of the project area are part of the Iles and Williams Fork Formations of the Mesaverde Group. The coals of primary economic interest are designated as the Middle Coal Group, and include the Lennox, Wadge, Sage Creek and Wolf Creek coal seams. These units and their stratigraphi sequences are illustrated in Figure 1. The proposed exploration area is located in the southern extension of the Waskaki/Sand Wash Structural Basin. The basin is bordered on the east the Park Range Anticline and on the southwest by the Axial Basin Anticline. Stratigraphically, the Middle Coal Group was deposited between two regressive sandstone deposits. Surface expressions of these two sandstone units, the Twentymile Sandstone Member of the Williams Fork Formation, and the Trout Creek Sandstone Member of the Iles Formation appear as prominent cliff-forming units throughout the Williams Fork Mountains. The coal seams in the project area occur within a localized structural basin, with the axis both trending and plunging to the north. It is defined by the Tow Creek Anticline on the east, the Sage Creek Anticline on the west. The Fish Creek Anticline and Washakie Syncline trend northwest through the project area. Dips range from approximately 9° along the east flank of the Sage Creek Anticline, to 15 - 20° to the north. Faulting associated with the Tow Creek Anticline has been identified within the area by U.S. Geological Survey geologists. Other faulting in the area is likely, but not well understood, and better definition of the occurrence and extent of faulting is one of the primary objectives of the proposed exploration program. Surface Water Resources: The project area is bounded on the north and northwest by Sage Creek, and to the east and southeast by Grassy Creek, perennial tributaries to the Yampa River. The drainage areas that flow northwest toward Sage Creek are characterized by ephemeral flows, typically flowing only in response to spring snowmelt and summer precipitation. Subwatersheds that drain eastward to Grassy Creek include Scotchman's Gulch and Armand's Draw and are characterized by ephemeral or intermittent streamflows. The proposed exploration drilling will be conducted so as not to adversely impact any of the potentially affected drainages. SCC, as part of its Seneca 11 Mine and Yoast Mine operations, evaluated Grassy Creek, Scotchman's Gulch, Armand's Draw and Sage Creek for Alluvial Valley Floors (AVFs). The AVF evaluations were conducted in accordance with Colorado program AVF guidelines; the CDRMS determined there were no AVFs along Grassy Creek, Scotchman's Gulch and Armand's Draw within the exploration area. There are several small fields along Sage Creek that meet the AVF criteria, but they are all upstream of the project area. BLM, as part of the Coal Suitability Review for the Little Snake Resource Management Plan, evaluated lands with federal coal to determine if mining would interrupt, discontinue or preclude farming operations. The BLM did not identify any AVFs in the project area. Groundwater Resources: Groundwater occurrence within the project area is generally limited to the Trout Creek and Twentymile sandstone units and the shallow alluvial/colluvial aquifers associated with Sags C-kA*/ l - 2009 NO! 01/0909