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Form 3400 -12
<br />(September 20 10) UNITED STATES FORMAPPROVEl)
<br />DEPARTMENT OF THE INTERIOR OMB 0 203
<br />Expires s J une e 30, , 20113
<br />BUREAU OF LAND MANAGEMENT Serial Number: COC -70615
<br />COAL LEASE
<br />PART 1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor, through the Bureau of Land Management (BLM), and
<br />Oxbow Mining, LLC
<br />3737 Highway 133
<br />Somerset, CO 81434
<br />hereinafter called lessee, is effective July 01, 2012 for a penod of 20 years and for so long thereafter as coal is produced in commercial quantities from the leased
<br />lands, subject to readjustment of lease terns at the end of the 20th lease year and each 10 -year period thereafter.
<br />Sec. 1. This lease is issued pursuant and subject to the terns and provisions of the:
<br />The Mineral Leasing Act of 1920, as amended, 30 U.S.C. 181 - 287, or
<br />The Mineral Leasing Act for Acquired Lands, 30 U.S.C. 351 — 359;
<br />and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in force, when not inconsistent with the express and specific
<br />provisions herein.
<br />Sec. 2. Lessor, in consideration of any bonuses, rents, and royalties to be paid, and the conditions and covenants to be observed as herein set forth, hereby grants and
<br />leases to lessee the exclusive right and privilege to drill for, mine, extract, remove, or otherwise process and dispose of the coal deposits in, upon, or under the
<br />following described lands:
<br />T. 13 S., R. 90 W., 6`h P.M.
<br />sec. 3, lots 8, 9, and 16;
<br />sec. 4, lots 5 to 16, inclusive;
<br />sec. 5, lots 12, 13, 20, and 24.
<br />containing 725.90 acres, more or less, together with the right to construct such works, buildings, plants, structures, equipment and appliances and the right to use such
<br />on -lease rights -of -way which may be necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions herein provided.
<br />PART 11. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE - Lessee must pay lessor rental annually and in
<br />advance for each acre or fraction thereof during the continuance of the lease at the
<br />rate of $3.00 for each lease year.
<br />(b) RENTAL CREDITS - Rental will not be credited against either production or
<br />advance royalties for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES - The royalty will be 8.0 percent of the
<br />value of the underground coal as set forth in the regulations. Royalties are due to
<br />lessor the final day of the month succeeding the calendar month in which the
<br />royalty obligation accrues.
<br />(b) ADVANCE ROYALTIES - Upon request by the lessee, the BLM may accept,
<br />for a total of not more than 20 years, the payment of advance royalties in lieu of
<br />continued operation, consistent with the regulations. The advance royalty will be
<br />based on a percent of the value of a minimum number of tons determined in the
<br />manner established by the advance royalty regulations in effect at the time the
<br />lessee requests approval to pay advance royalties in lieu of continued operation.
<br />Sec. 3. BONDS - Lessee must maintain in the proper office a lease bond in the
<br />amount of $1,171,000. The BLM may require an increase in this amount when
<br />additional coverage is determined appropriate.
<br />Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent
<br />development and continued operation, except that these conditions are excused
<br />(Continued on page 2)
<br />when operations under the lease are interrupted by strikes, the elements, or
<br />casualties not attributable to the lessee. The lessor, in the public interest, may
<br />suspend the condition of continued operation upon payment of advance
<br />royalties in accordance with the regulations in existence at the time of the
<br />suspension. Lessee's failure to produce coal in commercial quantities at the
<br />end of 10 years will terminate the lease. Lessee must submit an operation and
<br />reclamation plan for the BLM's approval pursuant to 30 U.S.C. 207(c) prior
<br />to conducting any development or mining operations or taking any other
<br />action on a leasehold which might cause a significant disturbance of the
<br />environment.
<br />The lessor reserves the power to assent to or order the suspension of the
<br />terms and conditions of this lease in accordance with, inter alia, Section 39 of
<br />the Mineral Leasing Act, 30 U.S.C. 209.
<br />5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of
<br />the lessee's application or at the direction of the lessor, this lease will become
<br />an LMU or part of an LMU, subject to the provisions set forth in the
<br />regulations.
<br />The stipulations established in an LMU approval in effect at the time of LMU
<br />approval will supersede the relevant inconsistent terms of this lease so long
<br />as the lease remains committed to the LMU. If the LMU of which this lease
<br />is a part is dissolved, the leas-- wdl then be subject to the lease terms which
<br />would have been applied if the lease had not been included in an LMI1.
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