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1 <br />Exploration License No. COC -74911 <br />Drilling and Related Activities: <br />As much as possible drilling will be conducted with minimal site preparation, since the drill rig can be <br />set -up and leveled using self - contained hydraulic jacks. Where site preparation is necessary due to the need to <br />utilize drilling fluids, a pad having maximum dimensions of approximately 180 feet by 120 feet will be <br />established (approx. 0.5 acre disturbance per site). Pad preparation will involve the use of a tracked dozer <br />approximately D6 sized or a utility type backhoe to establish a level drill site and dig a mud pit should the need <br />require it. If topsoil exists, up to 12" will be salvaged and stored in a stockpile along one or more sides of the pad <br />and marked with a "topsoil" sign(s). <br />Drill holes will be drilled using 8' inch rotary hole to a depth of up to 200ft. depending upon ground <br />conditions. This hole will be cased with a resulting hole diameter of 6'/, inches the remainder of the rotary <br />drilling will be with a 6'/ inch drill to the desired depth above the coal seam where a 3 inch core drill will <br />recover portions of the material above and below the coal seam, and the coal seam. See Table 1 for the <br />approximate rotary and core depths and total hole depth. <br />In order to avoid potential sample contamination, drill holes will be completed to the extent possible with <br />air, air -foam, or water as the circulation medium. If we have difficulty keeping drillholes open and sample <br />contamination minimized, it may be necessary to use drilling muds to maintain circulation and drillhole integrity. <br />In that event polymer muds that are free of metallic compounds will be utilized. It is estimated that approximately <br />5,000 gallons of water will be used for each drillhole under normal drilling conditions. <br />Drill mud pit(s) for the containment of drilling fluids and cuttings will be excavated with a backhoe <br />within the pad area. The pit will be approximately 20 feet in length, 8 feet in width and 8 feet deep (47.4 cubic <br />yards each). This material may be used to assist in preparing a drillpad. <br />All drilling and related operations will be conducted by experienced exploration drillers in such a way as <br />to minimize potential environmental impacts, and will be supervised by a qualified geologist. During drilling <br />operations, water levels and flows in the drill holes (if any) will be closely monitored in order to characterize <br />hydrologic conditions in the seams intersected. Samples of immediate roof and floor rock materials and of each <br />coal seam intersected will be logged and may be collected during drilling for subsequent analysis. Drillholes will <br />be logged by the geologist as drilling occurs and will be e- logged to provide appropriate information for the <br />geologist to use in developing a geologic model of the exploration area. Transportation of these crews will be by <br />one or two pickups per shift. One for the crew and one for the geologist. <br />During drilling, Oxbow will control dust from drilling and related activities, divert and control both <br />natural runoff from disturbed areas and fluid loss from drilling, and will clean -up any trash or debris. If air is <br />utilized as the circulation medium, dust from drilling will be controlled by a flexible shroud at the drill collar. <br />Drill cuttings and portable pits or excavated mud pits will effectively contain drilling fluids as discussed above. <br />Hole Completion: <br />Oxbow may complete several of these exploration holes as water monitoring wells, in preparation for <br />base line monitoring required for permit submission. identification of specific drillholes to be completed as water <br />monitoring wells will occur once initial meetings with the Colorado division of Reclamation, Mining and Safety <br />(CDRMS) has occurred and we have received their direction on locations for monitoring wells. Drill holes <br />selected to be completed as monitoring wells will be completed in accordance with the guidelines agreed to by <br />the BLM and CDRMS for monitoring wells. Once monitoring is no longer required, these wells will be reclaimed <br />as described below under site reclamation. The projected hole depths are provided on Table 1. <br />April 10, 2012 7 <br />