2012-01-05_REVISION - C1991078 (2)

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MINE ENGINEERING CIVIL ENGINEERING MINE RECLAMATION CONST. MANAGEMENT Dear People: J. E. STOVER & ASSOCIATES, INC. 2352 NORTH 7 STREET, UNIT B GRAND JUNCTION, COLORADO 81501 PHONE: (970) 245 -4101, FAX 242 -7908 January 3, 2012 PHASE III BOND RELEASE LETTER Honeywood Coal Company operated the Hamilton Mine from March 1992 to July 1993. The coal sales contract was not renewed in 1993. Therefore, during the third and fourth quarters of 1993 the mine site was reclaimed. All equipment and facilities were removed from the mine site. The mine site was regraded to approximate original contour, topsoil was replaced on the regraded areas and the mine site was seeded and mulched. Reclamation efforts were completed in December 1993. Supplemental seeding was performed in 1995 and 1998. Sediment Pond A and the associated ditch were reclaimed in late 2010. Vegetation has become well established during the ensuing years. The Vegetation study conducted in July 2010 and August 2011 demonstrate revegetation success criteria, have been achieved for the last two consecutive years. Honeywood has established vegetation which supports the approved post mine land use of improved rangeland and wildlife habitat and meets the approved success standard for vegetative cover. Since the July 2010 survey was used in part for the Phase II bond release, and the August 2011 vegetation survey demonstrated similar results, the reclaimed mine site meets the approved success standard for cover and supports the approved postmining land use of rangeland and wildlife habitat. All reclamation work has been performed in accordance with plans approved by the Division of Reclamation Mining and Safety. A soil loss demonstration for the reclaimed area was incorporated into the permit with the approval of TR -10 and MR -11 in 2009. The calculations demonstrate that untreated drainage from the reclaimed area will contribute fewer suspended solids to streamflow or runoff outside the permit area than will untreated drainage from the natural surrounding area. The reduction in suspended solids determination is consistent with the permit document which states 'the surface coal mining operation is not expected to result in the contamination, diminution, or interruption of an underground or surface water'. Review of annual hydrologic reports demonstrate there is no evidence of groundwater contamination. Based on geology in the area, the surface mining operation was unlikely to affect groundwater as the potentiometric surface of the groundwater is approximately 100 feet below the lowest coal seam that could have been mined, and impermeable layers of shale totaling about 20 -feet thick exist between the lowest coal seam that could have been mined and the aquifer. One provision of the Division of Reclamation Mining and Safety's Rules is that the mine must be bonded for the estimated reclamation cost. Now that the reclamation work has been performed and vegetation has been established, Honeywood Coal Company has formally requested a phase III bond release from the Division of Reclamation Mining and Safety. Honeywood Coal Company has a bond of $65,915 and has requested 100 percent of that bond amount be released. In accordance with the Division's Rule 3.03.2(1), Honeywood Coal Company, is required to send written notice of its phase III bond release request to adjacent land owners, surface owners and various local governing bodies. The area for which phase III bond release is being requested is the Hamilton Mine site. The reclaimed mine site is located approximately 2.5 miles southeast of Naturita in portions of Section 33, Township 46 North, Rangel5 West, N.M.P.M. Montrose County, CO. Sincerely, . E. Stover, P.E. Consulting Engineer