2010-04-12_REPORT - M1980244 (3)

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Mr. Berhan Keffelew, DRMS April 9, 2010 Page 3 Reclamation accomplished during the preceding year: Approximately 24 acres of disturbance associated with the Cresson Project were reclaimed in 2009 as described above. New disturbances anticipated during the upcoming year. Continued development of the Main Cresson, East Cresson (including backfilling in the ECME and Wildhorse areas, and development of the WHEX area), associated haul roads, new Ironclad Access Road, sediment control measures, topsoil stockpiles, and other ancillary disturbances required to support these activities will continue in 2010. Mining in the Wildhorse area of the East Cresson has been completed and backfilling activities within Wildhorse Mining Area were initiated in 2009. Backfilling in the East Cresson (Altman and Wildhorse portions) will continue in 2010. Other construction activities associated with Amendment No. 9 (including Phase 5 of the VLF) have been initiated and will continue throughout 2010. Reclamation anticipated during the upcoming year. Approximately 10 to 20 acres of miscellaneous sites consisting of topsoil stockpiles, sediment ponds, and exploration disturbances are planned to be reclaimed this year. Financial Warranty: CC&V and DRMS have agreed on an additional warranty amount for Amendment No. 9. The warranty amount of $54,280,734 will be posted in phases, which is consistent with CRS 34-32-117(4)(b)(1). The first phase, or construction phase, required a warranty which amounted to $36,594,665. It was posted on December 23, 2008. The second phase in the amount of $17,686,069 will be posted once the Phase 5 VLF is constructed and certified in the year 2011. With the additional warranty, the revised estimated liability amount equals $98,994,665. Per 2CCR 407-1, 407-4, and Rules 1.15(1)(a), St. Paul Fire and Marine Surety Bond No. JZ7711, in the amount of $33,331,600.00, was submitted to DRMS on July 16, 2004. On December 23, 2008, DRMS accepted the submittal of a rider to the Scotiabank Irrevocable Letter of Credit No. to increase the amount to $40,700,000 for the Cresson Project. In addition, Liberty Mutual Surety Bond No. was increased to $7,922,271.21 on April 30, 2004. These financial instruments, providing a total financial warranty of $81,953,871.21, have been accepted by the DRMS and continue to demonstrate the sufficiency of the value of the Cresson Project Financial Warranty.