2012-06-08_GENERAL DOCUMENTS - C1981008

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Dave Berry June 8, 2012 Page 4 of 7 C S M B 8. Concurrently with the conveyance of title, effective February 2, 2012, 4/7, LLC executed an Assignment with an Effective Date that coincides with the date of the conveyance of title and which expressly referenced the Mining Lease. In that assignment, 4/7, LLC agreed to assume and discharge all obligations and liabilities of Lessor as shown in Exhibit F hereto. 9. In this early 2012 time frame, mining activity was open and obvious on the Property and nearby lands. The open pit is not far from the Property. A haul road traverses the Property and is in daily use to haul coal and materials from the open pit. A large retention pond (Pond 007) is obvious on the Property. The Property is also traversed by irrigation pipelines which carry water to other lands in reclamation. 10. Western Fuels- Colorado is in full compliance with the Mining Lease, having paid in full all royalties due under the Mining Lease and having satisfied or discharged all other obligations arising under the Mining Lease. Exhibit H attached reflects the payment of royalties from 1993 onward. Payment of production royalties commenced in 1994 and ended in 1998. 11. Western Fuels- Colorado took the assignment of the Mining Lease as stated above in April of 1992, and began mining activity on the Property beginning with the construction of Pond 007 in February of 1993. During this time, Mr. Guire was an employee of Western-Fuels Colorado. 12. Western Fuels- Colorado and its predecessors had paid a total of $105,000 in "advance royalties" pursuant to the Mining Lease by the year 1993. Mining of coal on the Property, and payment of "production royalties" as defined in the Mining Lease began in 1994. Western Fuels- Colorado made a total of $746,798.89 in royalty payments to Lessor over the course of the Mining Lease. See, Exhibit H. 13. Those royalty payments are well in excess of the purchase price value of the Property, and all production royalty payments were made after April 30, 1993, the date Mr. Guire claims the Mining Lease expired. 14. San Miguel Power Association, the predecessor of 4/7, LLC and the Lessor until February of 2012, accepted the above royalty payments and never disputed Western Fuels - Colorado's right of access or conduct under the Mining Lease in any way, shape or form. Indeed, until Mr. Guire's complaint, there was never a single dispute between Lessor and Lessee having to do with Lessee's right to access, mine, or reclaim the Property. 15. The Property contains a haul road that is vital to Western Fuels- Colorado's operations on lands that are being actively mined. Western Fuels - Colorado uses the haul road to move equipment and haul spoil materials removed from the active pit to other areas where active reclamation is underway. San Miguel Power Association never once disputed Western Fuels - Colorado's right to use the haul road, which has been continuous since the early 1990s. {00103813.1 }