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Additional Sheet <br />2012 Annual Report <br />Coal Creek Resources <br />M- 1988 -044 <br />Schmidt Construction Company <br />Anniversary Date: March 28 <br />Overview of Permit Year: During the 2011/2012 operating year all of the mining activity occurred in the <br />Upland Mining area and was stable with respect to areal extent. At the start of the 2012 production season, 2.15 <br />additional acres were stripped for mining. Demand for sand remains extremely low, but expansion was needed <br />to acquire more material due to depletion of the existing area. <br />Annual Report Maps: There is one annual report map which shows the upland mining areas. This map is an <br />extensive revision of previous maps. In 2011 new aerial imagery was acquired and this was used to identify the <br />locations of disturbed areas. Acreage changed slightly due to greater accuracy in delineating the affected lands, <br />but the big difference was the ability to much more accurately locate the affected lands. Thus, the boundaries of <br />some areas have changed. <br />Affected Lands: The maps and the annual report form contain the necessary information regarding the amount <br />of affected land and land not yet released. Numbers reported include the remaining unreleased land in the South <br />Lowland area. <br />Reclamation: No additional reclamation was performed in the last year. None is planned for the next year, but <br />some may still be completed by the next annual report. <br />It is roughly estimated that about 125 acres of reclaimed land will probably be ready for release later in <br />the Spring or early Summer of 2012. Although winter moisture was good and built up a good reserve in the <br />subsoils, topsoils have become quite dry during March 2012. Therefore, it is not known at this time how the <br />vegetation will react this year. That will be assessed in late April and early May. Hopefully, more moisture will <br />arrive. At present, the site shows little growth activity in reclaimed or natural land. It currently seems to be <br />slightly less activity than average, but projecting from the current condition would not be reliable. <br />Oil and Gas Activity: A considerable amount of oil and gas activity has occurred within the permit area in the <br />last year with the installation of two wells and some significant pipelines. In accordance with the oil and gas <br />technical revision approved in 2011, the land is being examined and mapped for a release request to be <br />submitted shortly after this annual report. No oil and gas activity is shown on the annual report map, but there <br />was no interference between the sand mining activity and oil and gas development except for oil and gas <br />development activity affecting land within the permit area under leases issues by the Colorado State Land <br />Board. A much more extensive lease was granted to Conoco /Phillips recently and this will likely increase <br />activity affecting yet more land within the permit area. Plans are being made to address this in a single revision <br />that will greatly reduce the need for piecemeal releases as the development progresses. The technical revision <br />was more of a stopgap measure to remove responsibility from Schmidt for legal disturbances made under other <br />Land Board leases. The future action will be a more comprehensive revision to the permit area to allow for a <br />lower rate of potential conflict between the two uses. <br />Work Anticipated in 2012/2013: As was the case last year, future mining is quite unpredictable and totally <br />dependent on the rate of economic recovery. At this time demand remains low, but there do appear to be some <br />hints that demand might increase some later this year, perhaps by summer. We'll see. <br />Schmidt Construction 2012 Annual Report M- 1988 -044 Coal Creek Resources Page 1 of 1 <br />