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5) Describe Exploration Activities Proposed Exploration Activities: The primary methods of exploration and geologic and chemical data collection proposed in this application include exploration drilling, geophysical logging, and sampling, followed by reclamation of all exploration disturbances, as more specifically described in the following sections. The 2009 exploration program involves 15 exploration drillholes to further delineate and characterize geologic conditions, coal seam occurrence and quality, and overburden physical and chemical characteristics. The drillholes are designated as ccu034 through ccu048, with an additional numeric descriptor to be added to designate the year in which each drillhole is completed (e.g., 2009ccu040). This identification sequence is a continuation from the 2007 and 2008 exploration work permitted by Colorado Coal Resources, LLC (an affiliated company) for the Sage Creek project area. Each of the proposed 2009 drill-sites are shown on Map 1, and listed in Table 1. Depending on drilling conditions, core recovery, and data requirements, the potential exists that it may be necessary to off-set from an initial drillhole location (no more than 20 feet and within the same drill pad disturbance area) and "twin" the original drillhole for the purpose of further sampling or geologic/hydrologic testing. However, "twinning" of any hole will not occur prior to necessary approvals by CDRMS, and if necessary, BLM. Sage Creek plans to initiate exploration activities immediately upon receipt of required approvals, and continue as weather and ground conditions allow. Sage Creek also needs to evaluate surficial geology and slope stability for possible facilities placement and portal excavation within a defined block area of approximately 20 acres (shown on Map 1 A). Selected portions of this block area will be evaluated through shallow drilling. Given that drillhole placement and sampling will be defined by the results of both initial and ongoing site work, Sage Creek is proposing phased geotechnical investigations within the defined block area. No more than 30 holes will be drilled within the defined block area. The holes will range in depth from 50-150 feet (avg. 75ft). The shallow geotechnical holes shall continue the same numbering system but add a "geo" code at the end to designate the hole as drilled for geotechnical investigation (2009ccu049geo). Sage Creek Holdings anticipates drilling ccu038 and ccu043 during the winter months. Exploration sites ccu034, 035, 036, 037, 039 and 040 can be drilled at any time of the year (including the May 1 - July 1 grouse breeding and nesting season). Exploration activities at the remaining seven sites will occur after July 1, and in the case of ccu041, 042, 045 and 046 after September 1'. Geotechnical work will be completed outside the nesting season (July 1'` to October 31 "), away from lek and nesting sites (refer to wildlife Map 3), and in areas that are not identified as grouse habitat (adjacent to CCU036 - a site with no timing restrictions). It is anticipated that drilling activities will be completed by the end of 2009, although weather or other unanticipated delays may result in extension of the activities through fall of 2010. Sage Creek plans to schedule drilling operations on a 12-hour per day basis (approximately 7:00am to 7:00pm); however, Sage Creek requests permission to conduct operations on a 24-hour per day basis if unforeseen delays cause the project to fall behind schedule. In the event of winter drilling activities, Sage Creek will coordinate with the CDOW to keep specific gates locked to preclude public access, and to avoid areas of critical winter range. Sage Creek will also coordinate with the CROW to minimize potential impacts during the Columbian sharp-tailed grouse hunting season (September 1 to • September 21). Sage Creek Project - 2009 N01 04108109