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L rm[ l 4 <br />0 <br />Davis Graham &Stubbs LLP <br />March 2, 2010 <br />Via E-Mail and U.S. Mail <br />Mr. Byrum C. Lee, Jr. <br />Lee & Associates, L.L.C. <br />1444 Blake Street <br />Denver, CO 80202 <br />R ??010 <br />W14 'CLOR'" <br />Re: Exploration Drill Holes <br />Dear Byrum: <br />I am writing to inform you that Sage Creek Holdings, LLC ("Sage Creek") intends to <br />drill three coal exploration holes on Cross Mountain's surface estate in Sections 21 and 22, TSN, <br />R87W, 6`h P.M. Routt County, Colorado. The holes are identified on the attached map as <br />ccu053, ccu056, and ccu057. The coordinates are: <br />ccu053 Northing 1,385,656 Easting 2,541,680 <br />ccu056 Northing 1,385,476 Easting 2,546,281 <br />ccu057 Northing 1,383,480 Easting 2,542,810 <br />Sage Creek intends to drill the prospecting holes in early spring and late summer/early <br />fall 2010. The maximum area that might be disturbed for each hole is 0.25 acres, however, Sage <br />Creek expects the disturbed land to be significantly less (about 0.10 acres per hole). Sage Creek <br />will use existing roads and will not construct any new roads. The only disturbed areas will be <br />the immediate area surrounding the drill hole where the drill rig sets up and the mud pits. <br />Topsoil will be stored and used to reclaim the disturbed areas. The reclaimed areas will be <br />reseeded with either a dryland pasture mixture or rangeland mixture depending on the surface <br />vegetation. Sage Creek expects to complete each prospecting hole in 7 to 10 working days. <br />Sage Creek is not aware of any conflicting surface uses in the drill hole areas. However, please <br />let us know if there are any conflicting surface uses. <br />The coal in the areas identified was reserved to the United States pursuant to the Coal <br />Lands Act of 1910. That statute permits a licensee to conduct prospecting activities for the <br />reserved coal. On September 1, 2008, the Bureau of Land Management (`BLM") issued a coal <br />exploration license to Sage Creek's predecessor in interest, Colorado Coal Resources, LLC, for <br />the lands at issue. I have attached a copy of the exploration license for your convenience as well <br />as the assignment of the exploration license from Colorado Coal Resources, LLC to Sage Creek. <br />As described in the exploration license, Sage Creek has posted a compliance bond with BLM for <br />957962.1 Charles A. Breer. 303 892 7329. chadie.breer(godgslaw.com <br />x.X • Denver. t olofado 8070.E • t03 89:' 9400 • fax ,-o 893 1379 <br />www.dgslaw.com