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Varna Companies, Inc. <br />Office of Special Projects <br />8120 Gage Street Frederick, Colorado 80516 Telephone (970) 353-8310 Fax(970)353-4047 <br />Monday 31 January 2011 <br />Jared Ebert, EPS <br />Colorado Division of Reclamation Mining & Safety <br />Office of Mined Land Reclamation (OMLR) <br />1313 Sherman St., #215 <br />Denver, Colorado 80203 <br />Subject: Status of all activities permitted under Varra Companies, Inc. & Sand <br />Land, Inc. respective of the OMLR correspondence of 30 April 2010, approach #4: <br />Approval from the Division of Water Resources acknowledging compliance of our <br />operations with Colorado water requirements. <br />Permitted Operations and Water Compliance Status: <br /># OMLR Permit Pro'ect Name Permitee Basin Status State Engineer Status <br />1 M-1989-128 Von Ohlen Varra Companies, Inc. Liner Completed OSE Approved 01-04-11 <br />2 M-1984-036 Dakolios Varra Companies, Inc. Liners Completed OSE Approved 01-04-11 <br /> OSE A roved 11-28-03 <br />3 M-1984-079 Firestone 112 Varra Companies, Inc. Liner Completed OSE Approved 06-20-03 <br />4 M-1980-002 Carr Varra Companies, Inc. No Exposure Not Required <br />5 M-1978-056 Durham Varra Companies, Inc. Exposure OSE Approved 12-13-10 <br />6 M-1999-006 Kurtz Sand Land, Inc. Exposure OSE Approved 12-13-10 <br />7 M-2009-018 Heintzelman Varra Companies, Inc. Exposure pending OSE Approved 12-13-10 <br />8 M-2010-049 Western Sugar Varra Companies, Inc. Ex osure pending OSE Approved 12-13-10 <br />9 M-1999-044 Seahorse Pond Varra Companies, Inc. Exposure Court Decreed <br /> Substitute Supply Plan <br /> Signed 05-21-97 <br />10 M-2001-113 Seahorse West Varra Companies, Inc. Exposure Substitute Supply Plan <br /> under OSE Review - <br /> amounts acceptable to <br /> OSE per correspondence <br /> of Cheryl Signs <br /> Engineering of 12-31-10 <br />Dear Jared: <br />Attached, find correspondence from the Colorado Division of Water Resources Office of <br />the State Engineer, or other supporting documents, as identified in the table, above; <br />verifying the water status of our combined operations are consistent with approach #4 <br />of OMLR correspondence of 30 April 2010. All referenced documents are attached. <br />• The Von Ohlen, Dakolios and Fireston-Pit 112 permits have completed basins and <br />approved liners.