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Paul Flack Resource Based International 1194 Pontiac St Denver, CO 80220 Dear Mr. Rack: Plan Operation DEPARTMENT OF NATURAL RESOURCES DIVISION OF WATER RESOURCES February 21, 2012 RE: New Elk Coal Company Emergency Substitute Water Supply Plan Sec. 23, Twp. 33S, Rng. 68W, 6 P.M. DRMS Permit No. C- 1981 -012 Water Division 2, Water District 19 SWSP Plan ID 5320 Approval Period: January 11, 2012 — April 10, 2012 We have completed review of your January 11, 2012 request pursuant to C.R.S. §37 -92- 308(7) on behalf of the New Elk Coal Company ( "NECC ") for an emergency substitute water supply plan ( "SWSP "). The required $300 fee for the SWSP has been received under receipt no. 3653590. Emergency plans may be approved pursuant to C.R.S. §37 -92- 308(7) in a situation affecting public health or safety where a substitute water supply plan needs to be implemented more quickly than the other procedures set forth in said section allow. According to the request, mining operations in the Apache Seam have resulted in the production of an unexpected volume of water that is currently considered an emergency safety hazard to the mine's infrastructure and workers within the mine. Therefore, this request has been filed to allow NECC to evacuate mine water from the Apache Seam ( "discharge water ") for the plan period of 90 days. New Elk Coal Company operates the New Elk Mine ( "NEM "), an underground metallurgic coking coal mine that is located approximately 25 miles west of Trinidad on land within the Maxwell Land Grant in Las Animas County, Colorado. Water produced from mining the Apache Seam was unanticipated and is currently considered to be an emergency safety hazard. The applicant wishes to pump and meter the discharge water into an onsite storage facility ( "Pond 001 "), which was initially designed and constructed by NECC as a settling pond pursuant to the mine's state discharge permit. At the time of the request, the applicant claimed there is approximately 4.5 acre -feet of fully consumable water in Pond 001 and the current discharge rate from the mine is 550 gallons per minute. At this rate, the applicant estimated that Pond 001 would reach its maximum capacity of 12 acre -feet no later than January 17, 2012, after which the pond will be operated as a flow- through structure whereby inflow rates will equal outflow rates to maintain a constant storage level. It is not anticipated that additional consumable water will be added to the pond during this 90 -day plan period. Office of the State Engineer 1313 Sherman Street, Suite 818 • Denver, CO 80203 • Phone: 303 - 866 -3581 • Fax: 303 - 866 -3589 www.water.state.co.us John W. Hickenlooper Governor Mike King Executive Director Dick Wolfe, P.E. Director /State Engineer RECEIVED FEB 2 2 ?IDi? Division of Reciarnatv. Mining & Safet,