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Paul Flack <br />Resource Based International <br />1194 Pontiac Street <br />Denver, CO 80220 <br />RE: AMENDED Approval of Administrative Exchange — New Elk Mine <br />Dear Mr. Flack: <br />ATTACHMENT D <br />DEPARTMENT OF NATURAL RESOURCES <br />DIVISIOX OF WATER RESOURCES <br />September 1, 2011 <br />Water Division 2 • Pueblo <br />310 E. Abriendo Ave., Suite B • Pueblo, CO 81004 • Phone: 719 -542 -3368 • Fax: 719- 544 -0800 <br />wv.ww.water.state.co.us <br />John W. Hickenlooper <br />Governor <br />Mike King <br />Executive Director <br />Dick Wolfe, P.E. <br />Director /State Engineer <br />Steven J Witte, P.E. <br />Division Engineer <br />This office received your letter dated August 29, 2011 and Danny Miller's letter dated August <br />16, 2011 proposing an amendment to the administrative exchange approved on March 10, 2011 <br />for the use of up to 250 acre -feet of leased water to cover depletions associated with the out - <br />of- priority diversion of water from the Purgatoire River. The existing approval allows New Elk <br />Mine ("NEM ") to divert water upstream from the Trinidad Reservoir at a location approximately <br />3 miles east of Stonewall, Colorado in Section 23, Township 33 South, Range 68 West, Las <br />Animas County for the purpose of coal washing operations. Water is pumped into a storage <br />tank at a maximum diversion rate of 1 cfs and used /re -used to extinction for coal washing <br />operations at NEM. All diversions are considered fully consumed and there will not be any <br />credit claimed for return flows. <br />A lease from the City of Trinidad ("Trinidad ") provides replacement water from an appropriate <br />account in Trinidad Reservoir that is released concurrently with out -of- priority diversions from <br />the river, to be administratively exchanged upstream to the point of diversion. During the <br />irrigation season, Hill Ranch water rights provide additional water for mining purposes. <br />The amendment proposes storage of leased and /or decreed water in an on -site storage pond <br />for subsequent mining use. Additionally, water storage in the pond is requested in order to <br />maintain the stability of the pond liner. <br />This amended administrative exchange shall be valid through March 31, 2012, under the <br />following conditions: <br />1. Prior to the start of every Trinidad water diversion from the Purgatoire at the NEM, the <br />District 19 Water Commissioner, Jeff Montoya, must be contacted (719- 680 -1052 or <br />Jeff.Montoya @state.co.us) in order to confirm that an exchange potential exists for <br />