1993-02-24_GENERAL DOCUMENTS - C1981017

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Stephen W. Seifert February 24 , 1993 Page 2 On February 19, Tietjen sent a letter and enclosures to Delaney, all of which is enclosed. The "cash equivalency" of what a surety bond issued by International Casualty Underwriters, Inc. depends in large part on the credibility of that entity. We have learned nothing to date which would suggest that we should accept these bonds. Among other things, I note that the address of International Casualty listed on the signature page of the surety form provided to the Mined Land Reclamation Division is the same as the address of Alta-Bates, 838 West Clover Meadow Drive, Murray, Utah. We have found no mention of International Casualty in any insurance directories. International Casualty is not on the list of approved sureties published by the U.S. Department of Treasury, and therefore the MLRD will not accept it as surety. I further note that the surety bond which supposedly represents a cash equivalent for the purchase price lists Alta-Bates rather than Resources as the obligee. Accordingly, Resources has advised Redstone that the deposit does not constitute an acceptable cash equivalent, so as to trigger the Effective Date of the sale agreement which would cause us to seek Bankruptcy Court approval. Boswell has stated that he will either work things out with Alta-Bates or utilize an alternative source of financing in California. My guess is that Boswell is well-intentioned but lacks a credible source of financing; I have doubts about whether Alta-Bates is even well- intentioned. You will recall that Resources suspended the M&E contract in accordance with a provision of the M&E contract that permits Resources to suspend the contract for up to 90 days if a sale contract is signed to sell the mine to a new operator. Given the doubtful nature of Redstone's financing, we are reluctant to continue the suspension of the contract much longer. Mike Ebert of M&E advises that while the suspension has created no great problems to date, he ordinarily would expect sales activity to pick up in the Spring. In particular, he believes he has a purchaser of the unit train load-out facility for $400, 000, which Resources believes would be a very good price. In the very near future, we anticipate one of three possibilities: (i) Redstone obtains credible financing which will permit it to escrow cash and will cause us to proceed with the sale agreement; (ii) Resources terminates the Redstone contract for failure to provide the required cash escrow; or (iii)