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July 14, 2010 X-2010-232-00/New Elk Mine 2010 Exploration Program KAG <br />the coal exploration post a performance bond prior to initiation of exploration according to the <br />requirements set forth in 3.05." The Division accepted a cash bond in the amount of $110,481.08 on July <br />9, 2010. <br />Therefore, the applicant would be approved to start activities as proposed under the NOI on Monday, July <br />12, 2010. Drilling began on the first location (NE-5-10) along the railroad grade east of the New Elk mine <br />on Tuesday afternoon, July 13, 2010, according to Ron Thompson of New Elk Coal Company. Activities <br />were observed during our routine inspections on Wednesday, July 14, 2010, as shown in the photograph. <br />Number of Partial Inspection this Fiscal Year: 0 <br />Number of Complete Inspections this Fiscal Year: 0 <br />Page 4 of 5