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OXBOW MINING, LLC <br />May 25, 2012 <br />Mr. Brock Bowles <br />Environmental Protection Specialist <br />Colorado Division of Reclamation, Mining and Safety <br />1313 Sherman Street, Room 215 <br />Denver, Colorado 80203 <br />Re: Oxbow Mining LLC, Permit No. C- 1981 -022 <br />PR -07 Application for a Permit Revision. <br />Dear Mr. Bowles, <br />Background <br />PR -07 Proposal <br />• Page 1 <br />3737 Hwy 133 P.O. Box 535 Somerset. Colorado 81434 USA Tel (970)929 -5122 Fax <br />(970)929 -5177 <br />REGE1'I 0 <br />MAY 29 7n12 <br />, \c (-,iarnation, <br />Mining and Safety <br />The purpose of this letter is to request Permit Revision No. 07 to the Oxbow Mining LLC (OMLLC) <br />Permit No. C- 1981 -022. This PR provides for the modification of the approved Permit to provide for the <br />impending addition of the 725.9 acre COC -70615 Elk Creek East Federal coal lease area. Please see the <br />attached Map 2.05 -M2, Sheet 1 of 2, Elk Creek Mine, 5 -Year Mining Plan for details of the area. <br />The Division should recall that during the recent PR -06, Oxbow expanded the Permit area by 2,247.43 <br />acres. All of the expanded acres were Federal acres. The original PR -06 submittal also proposed to add <br />an additional 946.56 acres of Federal coal lease areas within the newly expanded Permit area footprint. <br />The coal lease acres included 1) the 156.77 acre Federal lease modification COC -61357 Tract 5 and 2) the <br />789.79 Acre Lease by Application (LBA) COC -70615 area. <br />Unfortunately, Federal mineral leasing activities are an uncertain endeavor with respect to process and the <br />ultimate timing of the final approvals. Because the COC -61357 Tract 5 modification was approved first, <br />PR -06 was later modified to exclude the COC -70615 Federal lease area. <br />The COC -70615 LBA process, which was submitted to the BLM in September 2006, has finally been <br />concluded with a competitive lease sale on May 15, 2012. Oxbow was the only bidder on the lease and <br />will be awarded the lease. The BLM is concluding their final processing and awarding of the lease and <br />the right of entry lease documentation will be awarded to Oxbow shortly. Upon receipt by Oxbow, a <br />copy of the lease documents will be forwarded to the Division as soon as possible. <br />The proposed 789.79 acre lease area was finalized by the BLM at 725.9 acres and contains an estimate of <br />3.96 million tons of coal. We anticipate there is enough coal only for one year of longwall mining plus <br />development work. The mining of the coal lease anticipates a number of methane drainage boreholes and <br />roads to be permitted with the Division at a later date. The layout of the methane drainage system will be <br />