2012-02-01_REPORT - M1983194 (2)

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1 2.2 Leasehold Status The original four sodium leases were renewed by the BLM, in 2011 for a period of ten years. Annual rental and minimum royalty payments were submitted to the Mineral Management Service. 3.0 Project Status 3.1 Confidential 2011 Project Activities (See Figure 3: Plant and Well Location Map) NSI produced 132,801 tons of sodium bicarbonate in 2011 using cavities 7H, 10H and 11H. There were no significant production outages experienced during 2011. Routine boil outs were performed in 2011. Various short shut -downs were required for equipment repair and /or replacement. 3.1.1 Items of Significance 1. Three wells were plugged and abandoned, the 5H-1V, 5H, and 6H. 2. The BG -6 (2010 -26- 198 -6C), DS -5 (2010-26-198-1C), and the WSW -2 (2010 -26- 198 -2C) wells were brought online in December 2010 and January 2011 3. Amendment -03 (AM -03) to the DRMS permit M1983 -194 was submitted to increase the permitted affected acreage from 76 to 8,223 acres to allow for project expansion. As of December 31, 2011, AM -03 was still under review by the DRMS. 4. The DRMS determined that NSI's operation should be changed to a Designated Mining Operation (DMO). NSI submitted required documents in 2011 with additional documents to be submitted in 2012. 5. The EPA UIC Class III Area permit (0032169- 00000) application for the Deep Vertical Production Well (DVPW) was approved by the EPA and the well was drilled and completed during the fourth quarter of 2011. 6. The EPA approved the permit application for the 12H production well pair. 7. A new, low NOx, boiler was installed and brought on line. 8. Recontouring was done on multiple pads, and work toward final reclamation was done on three pads. 9. The 10H injection well was down a significant amount of time due to complications that arose during pullback of the production tubing. As of December 31, 2011, the well was still off line. Daub & Associates, Inc. 4 NSI Annual Report 2010