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Tony Waldron <br />May 23, 2011 <br />Page 2 <br />Technical Revision <br />As a result of DRMS site visits, inspections and conversations, GCG submitted a TR on June 30, 2010. <br />The TR included updated as built drawings, details about additional equipment at the facility, and <br />spreadsheets providing information to update the reclamation bond calculation. <br />That last point, updating the reclamation bond calculation, led GCC to review more closely the <br />requirements of the existing reclamation plan. In the process of reviewing the reclamation plan, GCC <br />closely scrutinized the disproportionately large amount of the bond set aside for the manufacturing <br />facility, which in turn led GCC to investigate why reclamation of the manufacturing facility was a <br />requirement <br />"Post Mining" Land Use <br />GCC understands that the basic answer to why the manufacturing facility is included in the reclamation <br />bond is twofold: (1) the manufacturing facility is included in the 112 permit boundary, and (2) DRMS had <br />the understanding that the land use designation for the site was agricultural. As to the second point, <br />the mining regulations require all disturbed land to be reclaimed to its intended use. Hence, DRMS <br />previously took the position that everything within the permit boundary was required to be reclaimed to <br />use for agriculture. <br />GCC and DRMS have in the last few months met with Pueblo County to explore the actual land use <br />designation for the site and to discuss the Special Use Permit (SUP) for the manufacturing facility. <br />Through those discussions, Pueblo County has agreed to send a legal memorandum to DRMS <br />explaining that the SUP is a perpetual land use entitlement at the site for cement manufacturing. In <br />short, the memo will address point number two raised above, and resolve that there is no requirement <br />or expectation that GCC will reclaim the manufacturing site to agricultural use, as the site is <br />permanently entitled for use as a cement manufacturing facility (even after the useful life of the mine <br />has been exhausted). We understand that this memorandum will satisfy DRMS that the manufacturing <br />facility is not required to be included in the reclamation bond. We expect that the memorandum from <br />Pueblo County will be sent to DRMS within the next week. <br />Permit Amendment <br />GCC is currently undertaking a review of the 112 permit with the intent to amend certain aspects of the <br />permit While the land use question will be resolved by Pueblo County's interpretation of the SUP, the <br />question remains whether the manufacturing facility should ever have been included within the permit <br />boundary, and whether it should be removed in the process of amending the permit. One likely <br />amendment to the 112 permit will be the inclusion of additional acreage in the mining plan. A second <br />necessary amendment is the manufacturing facility reclamation plan, and GCC will seek to remove all <br />aspects of the 112 permit which deal with reclamation of the manufacturing facility. An open question <br />remains whether the manufacturing facility should be removed from the permit boundary entirely, and <br />before submitting the application to amend the 112 permit GCC will seek additional meetings with you <br />and your staff to discuss this point. <br />Reclamation Bond <br />During this process, DRMS continues to hold a valuable reclamation bond from GCC. On August 20, <br />2003, GCC agreed to post $2.5 Million bond in a cash escrow account. As agreed at that time, an