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February 1, 2013 <br />To: Leigh Simmo s <br />From: Janet Bi <br />Re: New Elk <br />CC: Dan Hernandez <br />2, MT6 Reclamation Cost Estimate Update SCANNED <br />The Division met with Gorham Energy Consultants, LLC (GEC), representing New Elk Coal Company, on <br />December 13, 2012 regarding the Midterm No. 6 review and Reclamation Cost Estimate. Mr. Gorham <br />provided a letter to the Division on December 19, 2012, specifying questions or concerns GEC had <br />identified regarding the reclamation cost estimate. The Division updated unit and equipment costs in the <br />Division's CIRCES estimating program on December 17, 2012. <br />This updated MT6 reclamation cost estimate (RCE) reflects the concerns identified in the December 13, <br />2012 meeting and subsequent December 19, 2012 letter from GEC. The updated MT6 RCE also reflects the <br />updated unit costs based on 2012 data. The total updated Reclamation Cost Estimate as of January 30, <br />2013 is $4,522,429.44. This value is composed of $3,570,892.73 for direct costs for reclamation of <br />disturbances and structures on the permitted mine site and approved disturbances in the permit, and <br />$$951,536.71 indirect costs. The Division currently holds bonds for the New Elk Mine in the amount of <br />$4,133,137.02 in a combination of letter of credit and cash bond instruments. Additional bond in the <br />amount of $389,292.42 is needed to assure that all currently permitted activities are included in the <br />reclamation liability bond. <br />The Division has attempted to respond to all of Mr. Gorham's identified concerns, as well as provide <br />additional information on tasks that required updating that were not specifically addressed by Mr. Gorham. <br />I have retained the numbering consistent with Mr. Gorham's letter, dated December 19, 2012. <br />#1: Indirect costs have been updated and corrected. <br />#2: Task 001 has been updated. <br />#3: Tasks 006, 007, 008 and 009 have been re- evaluated and recalculated based on current site conditions <br />and Table 18a in the PAP. Task 007 has been eliminated. <br />#4: Task 009 has been corrected to reflect "clean" coal stockpile. <br />#5: NECC questioned the volume of cover material to be replaced on the RDA. The Division calculated <br />required cover for the RDA based upon approved permit. Approved surface disturbance area boundary is <br />shown on Map 11 sheet 3 (green line). The Division used the surface disturbance area as the area to cover <br />(adjusting on the east side for the approved Refuse limit) the digitized approved disturbance area at the <br />RDA is 28 acres. 28 acres times 3.25 ft. cover material = 33,880 Icy, or 146,813 CCY 25% rock -75% earth. <br />Task 14a represents placing cover on the approved RDA disturbance area (approved final configuration). <br />Permit pages 2.05 -27 to 39, and Figure 6 (p. 2.05 -30) Show that the Division has approved construction of <br />