2012-06-01_GENERAL DOCUMENTS - C1981008 (2)

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Berry, David From: Jim Guire [jguire @gmail.com] Sent: Friday, June 01, 2012 12:27 AM To: Berry, David Subject: Warranty Deed and Quitclaim Deed from SMPA to 4/7 LLC Attachments: Recorded SWDeed 832060.pdf; Recorded QCD 832061.pdf David, w�P (rs' -p r' �' Per our telephone conversation this evening and at your request, attached are copies of all the mining lease agreements between San Miguel Power Association and Edna Coal Company, et al. The 1956 Mining lease doesn't really effect our parcel even though the legal description is described on the lease, since San Miguel Power Association didn't take ownership in the property until 1957. The 1992 Extension of the mining lease extended the term of the lease for one year with the new expiration date being April 30, 1993. Western Fuels did not receive their Mining Permit from the State of Colorado until May 26, 1993, almost a month after the lease had expired. I have also attached Tri States November /December 2008 Newbreaker. If you look at page 3 (page 5 of the pdf) under the heading of New Horizon Mine, you will see a picture of our pond 007 (see attached quitclaim on water rights conveyed to us) and looking north across our property. Under the photo, the heading states "Photo shows a parcel of land at New Horizon Mine that has been reclaimed and returned to landowners. Again, this was in 2008 Tri State thru Western Fuels has been wanting us to agree that there is a valid lease, that pond 007 is their pond and that their farming contractor is the one in control of the crops on our land. San Miguel Power Association's Attorney Mike Hockersmith had a telephone conversation with Tri State and Western Fuels (I discussed this with you a few weeks ago) in which they asked Mike his position of the mining lease. Mike said that SMPA had not position since any interest they may have had, had been assigned to us, at which point he was asked his opinion of the validity of the mining lease. He stated that his opinion was that it had expired. In Chris Kampers letter (Which they Claim Rule 408 - Confidential Settlement Communication Subject to Rule 408 and other evidentiary privileges) to us dated May 17, 2012, on page 3, Chris states the following in the last two paragraphs (which we take as a thinly veiled threat and an attempt to intimidate): "We are prepared to defend the validity of the lease vigorously in any forum." "We think it extremely unlikely that litigation would be fruitful for you or your carrier, in light of the language of the 1977 lease extension, the conduct of the parties under the language, and the fact that in the process of taking title to the Property you executed and authenticated an assignment in which 4/7, LLC expressly agreed to assume the obligations and liabilities of the Mining Lease. Any litigation would therefore subject 4/7, LLC to claims for attorney's fees and costs under the Colorado Frivolous and Groundless Claims Statute, CRS 13 -17 -101 es seq., and would subject your counsel to sanctions under C.R. C.P. Rule 11. We would seek both sanctions and any proceeding challenging the validity of the Mining Lease in the face of your express assumption of it, and the undeniable fact that you took title to the Property with actual notice of the Mining Lease." 1