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Civil & Mining Engineering <br />Engineering Geology <br />Tunnel Engineering & Construction Management <br />Sub Terra, Inc. Rapid Excavation /Support Systems <br />Active/Abandoned Mine Subsidence <br />Quality Assurance / Quality Control <br />Safety Monitoring of Structures <br />Blast Optimization / Vibration Monitoring <br />Mine & Quarry Permitting <br />Material Science / Laboratory Testing <br />Wednesday, November 18, 2009 <br />Mr. Mike Ludlow <br />Peabody Energy Corporation <br />Sent via e-mail to MLudlow @peabodyenergy.com <br />Re: Initial Subsidence Evaluation for Continuous Miner Development at the Sage Creek Mine. <br />Dear Mr. Ludlow: <br />This letter report has been written to address Preliminary Adequacy Review Comment (PARC) No. <br />47 by the Division of Reclamation, Mining and Safety, Department of Natural Resources <br />transmitted to Peabody Energy Corporation on September 11, 2009. <br />Introduction <br />PARC No. 47 requires potential subsidence impacts from the Room and Pillar development at the <br />Sage Creek Mine to be evaluated according to Rule 2.05.6(6) — see Attachment A for full citation. <br />• SubTerra, Inc.'s Scope of Work was to evaluate the potential for subsidence from continuous miner <br />development of the headgate and tailgate entries (i.e., longwall development) taking into <br />consideration: <br />1. Potential for mine roof failure. <br />2. Potential for pillar failure. <br />3. Potential for pillar punching or mine floor heave. <br />4. Potential effects, on subsidence, of encountering unexpected faults. <br />5. Potential effects, on subsidence, of encountering inflows of gas or water. <br />The following paragraphs address these phenomena with regard to the requirements of Rule <br />2.05.6(6). <br />The enclosed and attached work products were prepared for Peabody Energy as input to their <br />preliminary planning and permitting for development of the Sage Creek Mine project and for no <br />other purpose. The work was performed under SubTerra, Inc.'s General Terms and Conditions <br />and in a manner consistent with the level of care and skill ordinarily exercised by other professional <br />contractors in similar circumstances at the time the Services were performed. No other warranty, <br />express or implied is made. <br />Location and Layout of the Proposed Development Work <br />Figures 1 and 2 show the location and layout of the proposed Sage Creek mine workings, <br />overburden contours and surface structures. Structures and Renewable Resource Lands include: <br />1. Grassy Creek, a perennial drainage. <br />2. Little Grassy Creek, an intermittent drainage. <br />• 3. County Road 27. <br />Post Office Box 520, 218 East North Bend Way, North Bend, WA 98045 -0520 <br />Phone (425) 888 -5425 Web Site: www.subterra.us Email: info @subterra.us Fax (425) 888 -2725 <br />