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Bowie Resources, LLC April 15, 2011 <br />Bowie No. 2 Mine <br />2010 Annual Hydrology Report <br />with monitoring beginning in the fall of 1999. Drill holes DH-57 and DH57a were <br />destroyed by longwall mining during 2001. DH-58 and 58a were eliminated by mining <br />during late 2003 so they will no longer be monitored. Drill holes DH-65, DH-66, <br />DH-67D, DH-67blw and DH-67abv were added in conjunction with the Ironpoint Federal <br />coal lease, with some monitoring beginning during the fall of 2000. DH-67D was <br />damaged during the year (2003) so no monitoring was performed. The DH-67 holes <br />were refurbished during 2004. DH-66 was eliminated by mining during early 2004 so it <br />is no longer monitored. <br />Drill holes DD-NM4X98-27, 28 and 29 were in-mine monitoring holes which were added <br />to the monitoring program during 2003. The three monitoring points were abandoned <br />when the mine activity retreated from the east mains in mid 2004. TC-01-01, 02 and <br />03 were added to the monitoring program during 2003. <br />Drill holes CW I-DH-58 and CW I-DH-60 were added to the monitoring program in 2010 <br />with the approval of permit revision 12 to cover the area west of Terror Creek. The <br />Applicant anticipates drilling DH 2010-1 during 2011. <br />Conclusion <br />The results of the hydrologic monitoring conducted during the 2010 season indicate <br />consistent chemical and physical properties when compared with the baseline values <br />provided in the permit application. Longwall mining is the focus of all mining operations <br />at Bowie No. 2 Mine. This mining method has not affected the local hydrology during <br />the current year. Water quality at all monitored sites remains good overall and no <br />chemical or physical impacts have been noted. None of the field or laboratory <br />parameter results indicate an adverse impact associated with the mining operations of <br />the Bowie No. 2 Mine on the local hydrology. <br />• <br />6