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Fomt 3400-I?
<br />(January 1995) UNITED STATES
<br />DEPARTi1~IENT OF THE INTERIOR
<br />• BUREAU OF L.-1tiD ~lA~iAGE~tEVT
<br />CQAL LEASE
<br />FOR.~t APPROVED
<br />ObtB NO. 100.1-0073
<br />Expires: Tune 30. 1997
<br />aenat vumoa
<br />COC 61208
<br />PART I. LE4SE RIGHTS GRANTED
<br />This lease, entered into by and between thr L V[TED STATE$ OF AMERICA. hereinafter called lessor, through the Bureau of Land Managemene, an
<br />i.Namt and Address)
<br />Bowie Resources LTD
<br />P.O. Box 483
<br />Paonia, CO 81428
<br />hereinafter called lessee, is effective (date/Sep 1 , 2000, for a period of 20 years and for so long thereafter as coal is produced in commerci:
<br />quantities from the Ieased lands, subject to readjustment oC lease terms at the end of the 20th lease year and each 10-year period thereafter.
<br />Sec. 1. This lease is issued pursuant and subject W the terms and provisions o(the:
<br />® Mineral Cando Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 181.237, hereinafter referred to as the Act;
<br />~ Mineral Leasing Act for Acquired Londe, Act o[ August 7, 1947, 61 Star. 913, 30 U.S.C. 351.359;
<br />and w the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the expres
<br />and specific provisions herein.
<br />Sec. 2. Leeeor, inconsideration of any bonuses, rents, and royalties to be paid, and the conditions and covenants to be observed as herein set font
<br />hereby grants and leases to lessee the exclusive right and privilege to drill for, mine, extract, remove, or otherwise process and dispose of the coo
<br />deposits in, upon, or under the following described lands:
<br />T. 12 S.. R. 91 W.. 6th P.M.
<br />sec.
<br />14 t
<br />sec.
<br />• T. 13 S.,
<br />sec.
<br />sec.
<br />sec.
<br />sec.
<br />sec.
<br />sec.
<br />sec.
<br />33, lots 1 to 3, inclusive, 6 to 11, inclusive,
<br />0 16, inclusive, SF'n.,NW'+{, and S~NEZ;
<br />34, lots 1 to 16, inclusive, and S~N~
<br />R. 91 W., 6th P.M.
<br />2, SW~NW~, NW'~SW%, and E~$WZ;
<br />3, lots 1 to 4, inclusive, S'~Nt-f, and N~S~;
<br />4, lots 1 to 4, inclusive, S'~Nt-~, and St-f;
<br />5 , SEt+cSW-~„ and 5.245E3L;
<br />8, NE~t;
<br />9, NW's and N'~SWt-y;
<br />11, NEt-cN'v'3:
<br />containiag3210. 82 acres, more or lees, together with the right to construct such works, buildings, plants, stivctures, egtupment and appliance:
<br />and the ri ght to use such on-lease rights-of•way which may be necessary and convenient is the exercise of the righw and privileges granted, subject c.
<br />the conditions herein provided.
<br />PART 11. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE -Lessee shall pay lessor rental annually and
<br />in advance fat each acre or fraction thereof during the continuance of
<br />the lease at the rate of i 3.00 for each lease year.
<br />(b) RENTAL CREDITS -Rental shall not be credited against either
<br />production or advance royalties for any year.
<br />Set. 2. (a) PRODUCTION ROYALTIES -The royalty Shall be 8 per-
<br />cent ofthe value of the coal asset Earth in the regulations. Royalties are
<br />due co lessor the final day oCthe month succeedingche calendar month
<br />in which [he royalty obligation accrues.
<br />(b) ADVANCE ROYALTIES -Upon request by the lessee, the authorized
<br />officer may accept, for a total of not more than LOyears, the payment of
<br />advance royalties :n lieu of continued operation, tonstscenc with the
<br />regulations. The advance royalty shall be based on a pe-cent of the
<br />e of a min,mum number o[ tons dote-Wined in [lie manner
<br />119ned by the advance royaley regulations in effect tie the rime the
<br />._ a requests approval to pay advance royalties in lieu of continued
<br />operation.
<br />Sec. 3. BONDS -Lessee shall maintain in the proper offices lease bond
<br />in the amount of $3 , 4 31 , 000 . The authorized officer m ay require an
<br />increase in thts amoune when additional coverage is determined
<br />appropriate.
<br />Sec, 4. DILIGENCE -This lease is subject to the condidons of diligen~
<br />development and continued operation,excepc chat these conditions ors
<br />excused when operations under the lease are interrupted by stokes, th,
<br />elements, or casualties not attributable to the leeaee. The lessor, in ch,
<br />pub{ie interest,moy suspend [he condition afcontinued operation upor
<br />paYnrent of advance royals:es in accordance with the regulations ir.
<br />existentt at the time of [he suspension. Lessee's failure to produce coo:
<br />in commercial quantities ac the end of 10 years shall terminate :h~
<br />lease. Lessee shall submit an operation and roc! am scion plan pursuant
<br />to Section 7 of the Acc not lacer than 3 years after lease issuance.
<br />The lessor reserves the power to assent to or order the suspension oCth~
<br />terms and conditions of this lease in accordance wish, inter olio
<br />Section 39 of the Mineral Leming Acc, 30 U.S.C. 209.
<br />Sec, 5. LOGICAL MINING UNIT (LMUI -Either upon approval Sy the
<br />lessor of roe losers'; appiica ran or ac tie drrecCoa of chr :rssor. th:_
<br />lease shall become as LS(C or pan of an L`1L', subject to the provis ie r,c
<br />sec forth in the regulations.
<br />Thr;cipulationsostablished :n an LMU approval in effete ac the timeo:
<br />L~1U approve! will supersede the relevant inconsistent terms of this
<br />lease so long as the (ease remains committed co the L`~1 L'. If the L\tU o:
<br />which :his lease is a pare is dissolved, the lease shall then 6e sublets cc
<br />the lease terms ~.vhich would ha•+e been applied if the lease had not born
<br />included in an LMU.
<br />% ~'/6 9 //) /o 0
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