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1.0 INTRODUCTION <br />EXPLORATION PLAN AND APPLICATION FOR <br />FEDERAL COAL EXPLORATION LICENSE <br />Blue Mountain Energy, Inc. is submitting this exploration plan and application for a Federal Coal <br />Exploration License on certain unleased Federal Coal Lands in Rio Blanco County, Colorado. <br />The exploratory drilling and logging program described herein will evaluate the quantity and <br />quality of coal in an area that adjoins the Deserado Mine Logical Mining Unit. If present, coal <br />from this area could supplement existing coal reserves for Deseret Generation and <br />Transmission Cooperatives' coal -fired generating station near Bonanza, Utah. <br />Blue Mountain Energy would like to begin this exploration program in the summer of 2011. <br />Depending upon permits and driller availability, some activities could be extended into the fall of <br />2011 or postponed until the 2012 drilling season. <br />This plan has been prepared in accordance with federal regulation 43 CFR Part 3400 and <br />includes a brief description of geology, the existing environment, the proposed drilling program, <br />rehabilitation of disturbed land and an exploration schedule. <br />2.0 Property Location and Legal Description <br />The Deserado Mine is located in Rio Blanco County, Colorado, approximately fourteen miles <br />northeast of Rangely, Colorado. Access to the area from Rangely is via Colorado Highway 64 <br />and Rio Blanco County Road 65, the Deserado Mine Road. The Deserado Mine Logical Mining <br />Unit presently includes seven Federal Coal Leases (C- 023703, C- 0126669, C -8424, C -8425, <br />D- 047201, C- 44693, and C0051551) containing approximately 9,666 acres. Location of the <br />Deserado Mine LMU consisting of the seven Federal coal leases and the proposed Exploration <br />License area are shown in Figure 1 -1. <br />Exploration has been conducted on adjacent lands under prior Exploration Licenses C- 28176, <br />C- 41127, COC- 48969, and COC- 62949, all of which are now expired. Exploration was most <br />recently conducted nearby under Exploration License COC- 67737, which expired in December <br />of 2010. Some of these lands have since been leased by Blue Mountain Energy and are <br />