2010-12-17_REVISION - C1981019 (129)

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Collom Area Geology Pre - Feasibility Report • 2.0 Surface Control and Coal Control The proposed CMA covers approximately 1,669 acres. The entire Collom exploration area covers more than 7,600 acres. KEC through two land holding companies (Kennecott Coal Company and Colowyo Coal Company) controls the Collom surface lands, see Figure 2.1. Within the proposed CMA, Colowyo controls approximately 598 acres of coal under leases from the US Bureau of Land Management (BLM) and the State of Colorado, as lease numbers C- 0123475 and 257 -S13 Jubb, respectively, see Figure 2.2. This leased coal also resides within the Colowyo Mine's currently approved Logical Mining Unit (LMU). The remaining 1,069 acres of coal within the proposed CMA belong to the US Bureau of Land Management (BLM). Colowyo filed a 1,230 acre "Lease by Application" (LBA) with the BLM in • November 2004. The tentative date for the Federal Lease sale is scheduled for June 28, 2006. While the sale of this Federal coal is on a competitive basis, no other companies have currently expressed interest in the lease area. In addition, no other companies elected to participate in the exploration license obtained in 2004. It should be noted, that until the Federal coal lease has been obtained, coal within these areas cannot be classified as "resources" or "reserves ", even though detailed geological, mine design and cost studies have been performed. Therefore, for the purpose of this report, highly qualified and investigated coal will be classified as "uncontrolled resources" and "uncontrolled reserves ". In addition, the latest CMA pit design extends beyond the extent of the current Collom LBA. Therefore, either the LBA configuration or pit geometry needs modification prior to the LBA lease sale to ensure the Colowyo controls all coal planned for mining. August 2005 Page 3 of 38