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Mr. Tim Cazier
<br />April 8, 2013
<br />Page 13
<br />New disturbances anticipated during the upcoming year Continued development
<br />of the Main Cresson and East Cresson mine areas (including backfilling in the ECME
<br />and Wildhorse areas, and development of the WHEX area), development of the East
<br />Cresson Overburden Storage Area ( "ECOSA "), development of the SGVLF and High
<br />Grade Mill, associated haul roads, sediment control measures, topsoil stockpiles, and
<br />other ancillary disturbances required to support these activities will continue in 2013.
<br />Reclamation anticipated during the upcoming year: Approximately 20 acres of
<br />miscellaneous sites consisting of topsoil stockpiles, sediment ponds, and exploration
<br />disturbances are planned to be reclaimed this year.
<br />Reclamation /Closure Liability and Financial Warranty:
<br />CC &V and DRMS have agreed on an additional warranty amount for Amendment No.
<br />10 of $171,418,588. CC &V proposes to post a total of $173,000,000 for the Cresson
<br />Project. This will increase the previous warranty of $99,143,871.21 by an additional
<br />$73,856,128.79. CC &V will post the additional $73,856,128.79 in three (3) separate
<br />installments, as discussed and agreed upon by the Division. The first installment will be
<br />for approximately $31,000,000 and covers all components of the Cresson Project with
<br />the exception of the Squaw Gulch Valley Leach Facility ( "SGVLF "), which has yet to be
<br />constructed. The second installment will be in approximately 2015 in the amount of
<br />approximately $28,343,673 and will include the completed Phase 1 SGVLF. The final
<br />installment will be posted in approximately 2017 in the amount of approximately
<br />$14,512,455.79 and will be for the completed Phase 2 SGVLF, which is the last
<br />component to be completed for the Cresson Project under Amendment No. 10 to Permit
<br />No. M- 1980 -244. With that final installment, the total posting of $173,000,000 for the
<br />Cresson Project will be completed by CC &V.
<br />The total amount currently posted for the Cresson Project is $130,143,871.21.
<br />Per 2CCR 407 -1, 407 -4, and Rules 1.15(1)(a), Financial Warranty /Letter of Credit No.
<br /> from the Dresdner Bank AG, New York Branch, in the amount of
<br />$33,331,600.00 replaced the St. Paul Fire and Marine Surety Bond No. for the
<br />same amount. The new financial warranty was sent to DRMS on July 16, 2004 and the
<br />St Paul Fire and Marine bond was released on July 21, 2004.
<br />Liberty Mutual Surety Bond No. was increased to $38,922,271.21 effective
<br />December 17, 2012.
<br />On August 31, 2011, DRMS accepted the submittal of the Scotiabank Increase to
<br />Irrevocable Letter of Credit No. in the amount of $12,770,000.00 for a new
<br />available balance of $57,890,000.00 for the Cresson Project.
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