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UNITED STATES
<br />DEPARTMENT OF THE INTERIOR
<br />BUREAU OF LAND MANAGEMENT
<br />COAL LEASE READJIISTMENT
<br />iiiiiiiiiiiiiiiihi
<br />999
<br />Serial Number 29125
<br />'~C a~E1Ve~uQse Date fJ o•:ember 1. 19 c'1
<br />QU~ ~ s 2~~
<br />,l+s(Dn Dt Minerals & GeObgy
<br />PART 1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor, Ch rough
<br />the Bureau of Land Management, and
<br />National King Coal, LLC
<br />P.O. Box 2905
<br />Durango, Colorado 81301
<br />hereinafter called lessee, is readjusted, effective November 1, 2001, for a period of 10 years and for
<br />so long thereafter as coal is produced in comnercial quantities from the leased lands, subject to
<br />readjustment of lease terms at the end of each 10-year lease period.
<br />Sec. 1. This lease readjustment is issued pursuant and subject to the terms and provisions of the Mineral
<br />Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 191-287,
<br />hereinafter referred to as the Act;
<br />and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in
<br />force, when not inconsistent with the express and specific provisions herein.
<br />Sec. 2. Lessor, in consideration of any rents, and royalties to be paid, and the conditions and covenants
<br />to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill
<br />for, mine, extract, remove, or otherwise process and dispose of the coal deposits in, upon, or under the
<br />following described lands:
<br />T. 34 N., R.11 W., N.M. P.M.
<br />sec 5, S'hSW'hNW'b, and E'fiW'/SW'/a;
<br />sec. 6, E'fiE'hNE~/..
<br />T. 35 N., R. 11 W., N.M.P.M.
<br />sec. 31, EYaSE'/.;
<br />sec. 32, SW`/.,
<br />containing 340 acres, more or less, together with the right to construct such works, buildings, plants,
<br />structures, equipment and appliances and the right to use such on-lease rights-of-way which may be
<br />necessary and convenient in the exercise of the rights and privileges granted, subject to the conditions
<br />herein provided.
<br />PART II. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor
<br />rental annually and in advance for each acre or
<br />fraction thereof during the continuance of the
<br />lease at the rate of $3.00 for each lease year.
<br />(bl RENTAL CREDITS - Rental shall not be credited
<br />against either production or advance royalties
<br />for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES - The royalty
<br />shall be 9.D percent of the value of the coal as
<br />set forth in the regulations. Royalties are due
<br />to lessor the final day of the month succeeding
<br />the calendar month in which the royalty
<br />obligation accrues.
<br />(b) ADVANCE ROYALTIES - Upon request by the
<br />lessee, the authorized officer may accept, for a
<br />total of not more than 10 years, the payment of
<br />advance royalties in lieu of continued operation,
<br />consistent with the regulations. The advance
<br />royalty shall be based on a percent of the value
<br />of a minimum number of tons determined in the
<br />manner established by the advance royalty
<br />regulations in effect at the time the lessee
<br />requests approval to pay advance royalties in
<br />lieu of continued operation.
<br />Sec. 3. BONDS - Lessee shall maintain in the
<br />proper office a lease bond in the amount of
<br />$5,000. The authorized officer may require an
<br />increase in this amount when additional coverage
<br />is determined appropriate.
<br />Sec. 4. DILIGENCE - The lease achieved diligent
<br />development on July 26, 1962, and is subject to
<br />the conditions of continued operation. Continued
<br />operations may be excused when operations under
<br />the lease are interrupted by strikes, the
<br />elements, or casualties not attributable [o the
<br />lessee. The lessor in the public interest, may
<br />suspend the condition of continued operation upon
<br />payment of advance royalties in accordance with
<br />the regulations in existence at the time of the
<br />suspension. Lessee's failure to produce coal rn
<br />commercial quantities at the end of 10 years
<br />shall terminate the lease, pursuanc tc ~_-: i-n
<br />of the Act. If not submitted already ,~ lessee
<br />shall submit an operation and reclamation plan
<br />pursuant to Section 7 of the Act no later than 3
<br />years after the effective date of this lease
<br />readjustment.
<br />The lessor reserves the power to assent to or
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