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Site Development - Drill Pad Construction: The selected drill-sites are located on gentle slopes or <br />bench areas to minimize grading requirements. Maximum drill pad dimensions will be 100 x 100 <br />feet. However, Sage Creek anticipates minimizing the disturbance footprint to the smallest area <br />possible to facilitate reclamation success. Based on observations by Sage Creek and CDRMS <br />representatives in August 2008, in many instances, it may be appropriate to only disturb the <br />immediate area surrounding the proposed drill hole and the accompanying mud pits. <br />Construction will be conducted in accordance with Rule 2.02.2(2)(f) and 4.21.4(5). Prior to earth- <br />moving or excavations of any type, the A and B horizons will be salvaged and stored in an area that <br />will be undisturbed and not subject to excessive wind or water erosion. At sites that have been <br />previously disturbed by agricultural or mining activities, if there is no distinction between the A and <br />B horizons, the topsoil will be salvaged as a single unit (letter from CDRMS to Mr. Scott Cowman, <br />dated October 6, 2008). The underlying subsoil materials will, if necessary, be salvaged and stored in <br />an area separate from A and B horizon materials. After stripping and stockpiling the topsoil/subsoil <br />materials, minor grading will be completed to establish the drill pad and accommodate the drilling <br />and support equipment. Runoff and sediment contributions from the soil material stockpiles will be <br />controlled through placement of a silt fence or soil berm (approximately one foot in height) <br />downgradient from the stockpile(s). <br />Mud pits will be constructed within the graded pad area. Generally two or three pits are required, <br />with typical pit dimensions of 10 feet x 5 feet and 6 feet deep. The size of the required pits is <br />dependent on the anticipated drilling depths and conditions. Materials excavated from the pits will be <br />stockpiled on the margins of the pad area and used to backfill the pits after the drilling is completed. <br />All drilling fluids will be contained within the mud pits, and all drilling supplies will be contained <br />within the area of the drill pad. Any runoff and associated suspended sediment from the drill pad will <br />be controlled and contained by a perimeter soil berm or silt fence on the downgradient side(s) of the <br />drill pad. <br />Immediately upon cessation of operations, the subsoil will be replaced, with the surface left in a <br />roughened condition. The A and B horizons will then be replaced over the subsoil material (Rule <br />4.21.4(5). <br />Drilling. Operations: A rotary drill-rig, capable of rotary drilling and spot-coring, will be utilized for <br />general exploration work. The drill-rig will be a truck-mounted, rubber-tired unit, capable of <br />operating in rough terrain. Support equipment will include, but not be limited to, a water truck, pipe <br />truck and/or pipe trailer, rig-up truck, air compressor, core trailer, and two or three 4 x 4 pickups for <br />the drill-crew and company representatives. For each drillhole, a short section (typically 40-60 feet) <br />of threaded surface casing will be set to stabilize unconsolidated surface materials. Drillholes will be <br />a nominal 6.25 inches in diameter and will vary in depth from approximately 400 to 1,900 feet. The <br />anticipated total depth for each drillhole is identified in Table 2, Sage Creek Project - 2009 <br />Exploration Program Drillhole Specifications. It is anticipated that the Wadge coal seam and <br />associated roof and floor units will be cored in each drillhole. If other coal seams of interest are <br />penetrated (e.g., Lennox or Sage Creek) they may be cored, as well. Cores will be recovered, <br />examined and logged by a qualified geologist, and core samples may be sent-off for analysis of coal <br />and roof/floor chemistry and characteristics and rock-strength parameters. It is anticipated that the <br />majority of drillholes will extend approximately 70 feet below the Wadge coal seam; most likely <br />they will not extend into the Wolf Creek coal or underlying Trout Creek Sandstone. The primary <br />circulation medium will be water and drilling mud. In the event that subsurface conditions are <br />favorable, air or an air/foam medium may be utilized, as an alternative to mud. Water for drilling <br />will be obtained from stock ponds located on surface controlled by Sage Creek. Drilling contracts <br />will specify that only non-toxic, bio-degradable compounds and additives may be used for drilling <br />muds. <br />Sags Creek ProJrct-3009 NO1 <br />01/08/09 9