1992-11-02_GENERAL DOCUMENTS - C1981017 (2)

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October 29, 1992 Page 3 The adequacy of the security for reclamation depends to a large extent on the scope and timing, and the resulting cost, of the reclamation program. I understand that Diane Delaney is meeting with the MLRD this week to discuss amendments to the existing reclamation plan which would better address the timing and scope of reclamation activities. Diane can fill us in on any new developments at the November 5 meeting. Status of Sales Mike Ebert of Machinery & Equipment Co. reports that he has made about $250, 000 of sales, using the price list filed under seal with the Bankruptcy Court. We are about to close the sale of the 160 acre "pasture tract" for $180,000. In the meantime, there is a possible alternative to continuing a piecemeal liquidation of the estate. As some of you are aware, there has been an on again and off again discussion with a Utah concern, Northlake Industries. Northlake has expressed interest in purchasing the mine, through an apparent subsidiary, Redstone Development Company, in order to extract oil from coal using proprietary technology. Last August, Northlake conditioned such purchase on, among other things, acquisition of all leases (most of which have been terminated) , real estate (some of which has been sold) , equipment (some of which has been sold) , and transfer of mining permits (which have expired or have been revoked) . Resources ' position has been that a purchase must not be subject to any conditions which Resources is unable to satisfy. As of October 26, Northlake claims to have funding for a $6 million purchase of all of Resources' assets. I am unaware of any formal acknowledgement by Northlake that it will delete the above-described conditions, but John Reeves has the impression that it will. If the sale to Northlake somehow can be consummated, Northlake has said that it would provide necessary reclamation bonding with assume all the MLRD/OSM. I would like some discussion of this situation to see whether we should be considering suspension of the equipment liquidation program in favor of a sale to Northlake. Our contract with M&E permits Resources to terminate the contract upon the sale of the mine to a new operator as an operating facility; M&E is then entitled to payment of an upset fee equal to 13% of their costs.