Exhibit 10.1

 

UNITED STATES

 

 

 

DEPARTMENT OF THE INTERIOR

 

 

 

BUREAU OF LAND MANAGEMENT

Serial No.

MTM 069782

 

 

 

 

 

MODIFIED COAL LEASE

Date of Lease:

July 1, 1965

 

 

PART I.

 

THIS MODIFIED COAL LEASE is entered into on July 1, 2010, by and between the
UNITED STATES OF AMERICA, hereinafter called the Lessor, through the Bureau of
Land Management, and

 

Spring Creek Coal LLC

P. O. Box 3009

Gillette, Wyoming 82717

 

hereinafter called Lessee.

 

This modified lease shall retain the effective date of July 1, 1965, of the
original COAL LEASE MTM 069782, and is effective for a period of 20 years
therefrom, and for so long thereafter as coal is produced in commercial
quantities from the leased lands, subject to readjustment of lease terms at the
end of the 20th lease year (July 1, 1985), and each 10-year period thereafter.

 

Sec. 1. This lease is issued pursuant and subject to the terms and provisions of
the:

 

x Mineral Lands Leasing Act of 1920, as amended, 41 Stat. 437, 30 U.S.C.
181-287, hereinafter referred to as the Act;

 

o Mineral Leasing Act for Acquired Lands of 1947, 61 Stat. 913, 30 U.S.C.
351-359;

 

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 provisions herein.

 

Sec. 2. Lessee as the holder of Coal Lease MTM 069782, issued effective July 1,
1965, was granted 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 lands described below as Tract 1.

 

The Lessor in consideration of fair market value, rents and royalties to be
paid, and the conditions and covenants to be observed as herein set forth,
hereby grants and 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 lands described below as Tract 9.

 

Tract 1:

T. 8 S., R. 39 E., Principal Meridian, Montana

 

Sec. 22: SE1/4SW1/4, E1/2SE1/4, SW1/4SE1/4

 

Sec. 23: S1/2NE1/4, S1/2

 

Sec. 24: SW1/4NW1/4, SW1/4, W1/2SE1/4, SE1/4SE1/4

 

Sec. 25: E1/2, E1/2W1/2, W1/2NW1/4, NW1/4SW1/4

 

Sec. 26: N1/2, NE1/4SE1/4

 

Sec. 27: N1/2NE1/4, NE1/4NW1/4

 

T. 8 S., R. 40 E., Principal Meridian, Montana

 

Sec. 30: Lots 1, 2, 3, 4, E1/2NW1/4, SE1/4SW1/4

 

Sec. 31: N1/2NE1/4, NE1/4NW1/4

 

 

2,346.760 acres, Big Horn County, Montana.

 

1

--------------------------------------------------------------------------------

 

Tract 2:

T. 8 S., R. 40 E., Principal Meridian Montana

 

Sec. 19: S1/2 of Lot 4

 

 

18.255 acres, Big Horn County, Montana

 

 

Tract 3:

T. 8 S., R. 39 E., Principal Meridian, Montana

 

Sec. 22: S1/2NW1/4SE1/4

 

 

20.000 acres, Big Horn County, Montana.

 

 

Tract 4:

T. 8 S., R. 39 E., Principal Meridian Montana

 

Sec. 22: S1/2SE1/4NW1/4SW1/4, S1/2SW1/4NE1/4SW1/4

 

 

10.000 acres, Big Horn County, Montana

 

 

Tract 5:

T. 8 S., R. 39 E., Principal Meridian, Montana

 

Sec. 22: S1/2SE1/4NE1/4SW1/4, N1/2SW1/4NE1/4SW1/4, N1/2SE1/4NW1/4SW1/4

 

 

15.000 acres, Big Horn County, Montana.

 

 

Tract 6:

T. 8 S., R. 39 E., Principal Meridian, Montana

 

Sec. 26: N1/2NW1/4SE1/4, N1/2NE1/4NE1/4SW1/4

 

Sec. 27: NE1/4SE1/4NE1/4, N1/2NW1/4SE1/4NE1/4

 

T. 8 S., R. 40 E., Principal Meridian, Montana

 

Sec. 30: N1/2N1/2NE1/4SW1/4, S1/2NE1/4NE1/4SW1/4, W1/2NW1/4NW1/4SE1/4

 

 

60.000 acres, Big Horn County, Montana

 

 

Tract 7:

T. 8 S., R. 40 E., Principal Meridian, Montana

 

Sec. 30: S1/2NE1/4SW1/4, S1/2NW1/4NE1/4SW1/4

 

 

25.000 acres Big Horn County, Montana

 

 

Tract 8:

T. 8 S., R. 39 E., Principal Meridian, Montana

 

Sec. 26: SE1/4NE1/4NE1/4SW1/4, NE1/4NW1/4NE1/4SW1/4

 

Sec. 27: SE1/4NW1/4SE1/4NE1/4, NE1/4NE1/4SW1/4NE1/4

 

 

10.000 acres Big Horn County, Montana

 

 

Tract 9:

T. 8 S., R. 40 E., Principal Meridian, Montana

 

Sec. 31: Lots 2, 3, 4, NW1/4NE1/4SW1/4, S1/2NE1/4SW1/4, SE1/4SW1/4

 

 

NW1/4SW1/4SE1/4, S1/2SW1/4SE1/4, SW1/4SE1/4SE1/4

 

T. 9 S., R. 40 E., Principal Meridian, Montana

 

Sec. 6: Lots 1, 2, 3, 4, SW1/4NE1/4, NW1/4SE1/4NE1/4,S1/2SE1/4NE1/4

 

 

N1/2SE1/4NW1/4, N1/2NE1/4SE1/4, NE1/4NW1/4SE1/4

 

 

498.11 Acres, Big Horn County, Montana

 

containing 3,003.125 acres, more or less, together with the right to construct
such works, buildings, plants, structures, equipment and appliances and the
right to use such 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.

 

2

--------------------------------------------------------------------------------

 

Part II. TERMS AND CONDITIONS

 

Sec. 1.(a) RENTAL RATE - Lessee shall pay Lessor rental annually and in advance
for each acre or fraction thereof during the continuance of the lease at the
rate of $3 for each lease year.

 

(b) RENTAL CREDITS - Rental shall not be credited against either production or
advance royalties for any year.

 

Sec. 2.(a) PRODUCTION ROYALTIES - The royalty shall be 12.5 percent of the value
of the coal as set forth in the regulations. Royalties are due to Lessor the
final day of the month succeeding the calendar month in which the royalty
obligation accrues.

 

(b) ADVANCE ROYALTIES - Upon request by the Lessee, the authorized officer may
accept, for a total of not more than 10 years, the payment of advance royalties
in lieu of continued operation, consistent with the regulations. The advance
royalty shall be based on a percent of the value of a minimum number of tons
determined in the manner established by the advance royalty regulations in
effect at the time the Lessee requests approval to pay advance royalties in lieu
of continued operation.

 

Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the
amount of $5,000.00. The authorized officer may require an increase in this
amount when additional coverage is determined appropriate.

 

Sec. 4. DILIGENCE — This lease achieved diligent development on September 1,
1982, and is subject to the conditions of continued operation. Continued
operation may be excused when operations under the lease are interrupted by
strikes, the elements, or casualties not attributable to the Lessee. The Lessor,
in the public interest, may suspend the condition of continued operation upon
payment of advance royalties in accordance with the regulations in existence at
the time of the suspension.

 

The Lessor reserves the power to assent to or order the suspension of the terms
and conditions of this lease in accordance with, inter alia, Section 39 of the
Mineral Leasing Act, 30 U.S.C. 209.

 

Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the Lessor of the
Lessee’s application or at the direction of the Lessor, this lease shall become
an LMU or part of an LMU, subject to the provisions set forth in the
regulations.

 

The stipulations established in an LMU approval in effect at the time of LMU
approval or modification will supersede the relevant inconsistent terms of this
lease so long as the lease remains committed to the LMU. If the LMU of which
this lease is a part is dissolved, the lease shall then be subject to the lease
terms which would have been applied if the lease had not been included in the
LMU.

 

Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At such times and in such form as
Lessor may prescribe, Lessee shall furnish detailed statements showing the
amounts and quality of all products removed and sold from the lease, the
proceeds therefrom, and the amount used for production purposes or unavoidably
lost.

 

Lessee shall keep open at all reasonable times for the inspection of any duly
authorized officer of Lessor, the leased premises and all surface and
underground improvements, works, machinery, ore stockpiles, equipment, and all
books, accounts, maps, and records relative to operations, surveys, or
investigations on or under the leased lands.

 

Lessee shall allow Lessor access to and copying of documents reasonably
necessary to verify Lessee compliance with terms and conditions of the lease.

 

While this lease remains in effect, information obtained under this section
shall be closed to inspection by the public in accordance with the Freedom of
Information Action (5 U.S.C. 552).

 

Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at
its own expense with all reasonable orders of the Secretary, respecting diligent
operations, prevention of waste, and protection of other resources.

 

Lessee shall not conduct exploration operations, other than casual use, without
an approved exploration plan. All exploration plans prior to the commencement of
mining operations within an approved mining permit area shall be submitted to
the authorized officer.

 

Lessee shall carry on all operations in accordance with approved methods and
practices as provided in the operating regulations, having due regard for the
prevention of injury to life, health, or property, and prevention of waste,
damage or degradation any land, air, water, cultural, biological, visual, and
other resources, including mineral deposits and formations of mineral deposits
not leased hereunder, and to other land uses or users. Lessee shall take
measures deemed necessary by Lessor to accomplish the intent of this lease term.
Such measures may include, but not limited to, modification to proposed siting
or design of facilities, timing of operations, and specifications of interim and
final reclamation procedures. Lessor reserves to itself the right to lease,
sell, or otherwise dispose of the

 

3

--------------------------------------------------------------------------------

 

surface or other mineral deposits in the lands and the right to continue
existing uses and to authorize future uses upon or in the leased lands,
including issuing leases for mineral deposits not covered hereunder and
approving easements or rights-of-way. Lessor shall condition such uses to
prevent unnecessary or unreasonable interference with rights of Lessee as may be
consistent with concepts of multiple use and multiple mineral development.

 

Sec. 8 PROTECTION OF DIVERSE INTERESTS, AND EQUAL OPPORTUNITY - Lessee shall:
pay when due all taxes legally assessed and levied under the laws of the State
or the United States; accord all employees complete freedom of purchase; pay all
wages at least twice each month in lawful money of the United States; maintain a
safe working environment in accordance with standard industry practices;
restrict the workday to not more than 8 hours in any one day for underground
workers, except in emergencies; and take measures necessary to protect the
health and safety of the public. No person under the age of 16 years shall be
employed in any mine below the surface. To the extent that laws of the State in
which the lands are situated are more restrictive than the provisions in this
paragraph, then the State laws apply.

 

Lessee will comply with all provisions of Executive Order No. 11246 of
September 24, 1965, as amended, and the rules, regulations, and relevant orders
of the Secretary of Labor. Neither Lessee nor Lessee’s subcontractors shall
maintain segregated facilities.

 

Sec. 9.(a) TRANSFERS - This lease may be transferred in whole or in part to any
person, association or corporation qualified to hold such lease interest.

 

Transfers of record title, working or royalty interest must be approved in
accordance with the regulations.

 

(b) RELINQUISHMENTS - The Lessee may relinquish in writing at any time all
rights under this lease or any portion thereof as provided in the regulations.
Upon Lessor’s acceptance of the relinquishment, Lessee shall be relieved of all
future obligations under the lease or the relinquished portion thereof,
whichever is applicable.

 

Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such
times as all portions of this lease are returned to Lessor, Lessee shall deliver
up to Lessor the land leased, underground timbering, and such other supports and
structures necessary for the preservation of the mine workings on the leased
premises or deposits and place all workings in condition for suspension or
abandonment. Within 180 days thereof, Lessee shall remove from the premises all
other structures, machinery, equipment, tools, and materials that it elects to
or as required by the authorized officer. Any such structures, machinery,
equipment, tools, and materials remaining on the leased lands beyond 180 days,
or approved extension thereof, shall become the property of the Lessor, but
Lessee shall either remove any or all such property or shall continue to be
liable for the cost of removal and disposal in the amount actually incurred by
the Lessor. If the surface is owned by third parties, Lessor shall waive the
requirement for removal, provided the third parties do not object to such
waiver. Lessee shall, prior to the termination of bond liability or at any other
time when required and in accordance with all applicable laws and regulations,
reclaim all lands the surface of which has been disturbed, dispose of all debris
or solid waste, repair the offsite and onsite damage caused by Lessee’s activity
or activities incidental thereto, and reclaim access roads or trails.

 

Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If Lessee fails to comply with
applicable laws, existing regulations, or the terms, conditions and stipulations
of this lease, and the noncompliance continues for 30 days after written notice
thereof, this lease shall be subject to cancellation by the Lessor only by
judicial proceedings. This provision shall not be construed to prevent the
exercise by Lessor of any other legal and equitable remedy, including waiver of
the default. Any such remedy or waiver shall not prevent later cancellation for
the same default occurring at any other time.

 

Sec. 12. HEIRS AND SUCCESSORS - IN-INTEREST - Each obligation of this lease
shall extend to and be binding upon, and every benefit hereof shall insure to,
the heirs, executors, administrators, successors, or assigns of the respective
parties hereto.

 

Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United
States from any and all claims arising out of the Lessee’s activities and
operations under this lease.

 

Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution
Control Act (33 U.S.C. 1151 - 1175); the Clean Air Act (42 U.S.C. 1857 et seq.),
and to all other applicable laws pertaining to exploration activities, mining
operations and reclamation, including the Surface Mining Control and Reclamation
Act of 1977 (30 U.S.C. 1201 et seq.)

 

Sec. 15. SPECIAL STIPULATIONS - In addition to observing the general obligations
and standards of performance set out in the current regulations, the lessee
shall comply with and be bound by the following stipulations. These stipulations
are also imposed upon the lessee’s agents and employees. The failure or refusal
of any of these persons to comply with these stipulations shall be deemed a
failure of the lessee to comply with the terms of the lease. The lessee shall
require his agents, contractors and subcontractors involved in activities
concerning this lease to include

 

4

--------------------------------------------------------------------------------

 

these stipulations in the contracts between and among them. These stipulations
may be revised or amended, in writing, by the mutual consent of the lessor and
the lessee at any time to adjust to changed conditions or to correct an
oversight.

 

(a) Cultural Resources - (1) Before the approval of a mining plan, the
authorized officer may require a survey of all or part of the leased land to
provide an inventory of any historical, cultural and archeological values. The
survey shall be conducted by a qualified professional cultural resource
specialist (i.e., archeologist, historian, historical architect, as
appropriate), approved by the authorized officer, and a report of the survey
shall be submitted to the authorized officer. The approval of an exploration or
mining plan or the continuation of lease operations may be conditioned on the
approval of the survey report and the approval of measures to protect the
historical, cultural and archeological values. The cost of any survey or
measures to protect such values discovered as a result of the survey shall be
borne by the lessee and items and features of historical, cultural, or
archeological value shall remain under the jurisdiction of the United States.

 

(2) If any items or features of historical, cultural, or archeological value are
discovered during lease operations, the lessee shall immediately notify the
mining supervisor and shall not disturb such items or features until the mining
supervisor issues instructions. If the lessee is order to take measures to
protect any items or features of historical, cultural, or archeological value
discovered during lease operations, the cost of the measures shall be borne by
the lessor and such items and features shall remain under the jurisdiction of
the United States.

 

(b) Public Land Survey Protection. The lessee will protect all survey monuments,
witness corners, reference monuments, and bearing trees against destruction,
obliteration, or damage during operations on the leased areas. If any monuments,
corners or accessories are destroyed, obliterated, or damaged by this operation,
the lessee will hire an appropriate county surveyor or registered land surveyor
to reestablish or restore the monuments, corners or accessories at the same
locations, using surveying procedures in accordance with the “Manual of
Surveying Instructions for the Survey of Public Lands of the United States.” The
survey will be recorded in the appropriate county records, with a copy sent to
the authorized officer.

 

(c) Paleontological Resources. If a paleontological resource is discovered
during surface coal mining operations, the lessee shall contact the authorized
officer as soon as possible. The operations on the lease shall be suspended
within 250 feet of said discovery. A paleontological resource as used herein
shall refer to vertebrate fossils. The BLM will evaluate the fossil find within
72 hours of notification, and determine the appropriate action(s) to prevent the
potential loss of any significant paleontological resource values. The
authorized officer will notify the lessee within 48 hours after completion of
the evaluation as to when surface mining operations can resume within 250 feet
of such discovery. The lessee will bear the cost of any required paleontological
resource appraisals, surface collection of fossils, or salvage of fossils of
significant interest discovered during the surface coal mining operations.

 

(d) Resource Recovery and Protection Plan. Notwithstanding the approval of a
resource recovery and protection plan (R2P2) by the BLM, lessor reserves the
right to seek damages against the operator/lessee in the event (i) the
operator/lessee fails to achieve maximum economic recovery (MER) <as defined at
43 CFR §3480.0-5.2(21)> of the recoverable coal reserves or (ii) the
operator/lessee is determined to have caused a wasting of recoverable coal
reserves. Damages shall be measured on the basis of the royalty that would have
been payable on the wasted or unrecovered coal.

 

The parties recognize that under an approved R2P2, conditions may require a
modification by the operator/lessee of that plan. In the event a coalbed or
portion thereof is not to be mined or is rendered unminable by the operation,
the operator shall submit appropriate justification to obtain approval by the
authorized officer to leave such reserves unmined. Upon approval by the
authorized officer, such coalbeds or portions thereof shall not be subject to
damages as described above. Further, nothing in this section shall prevent the
operator/lessee from exercising its right to relinquish all or a portion of the
lease as authorized by statute and regulation.

 

In the event the authorized officer determines that the R2P2 as approved will
not attain MER as the result of changed conditions, the authorized officer will
give proper notice to the operator/lessee as required under applicable
regulations. The authorized officer will order a modification if necessary,
identifying additional reserves to be mined in order to attain MER. Upon a final
administrative or judicial ruling upholding such an ordered modification, any
reserves left unmined (wasted) under that plan will be subject to damages as
described in the first paragraph under this section. Subject to the right to
appeal herein after set forth, payment of the value of the royalty on such
unmined recoverable coal reserves shall become due and payable upon
determination by the authorized officer that the coal reserves have been
rendered unmineable or at such time that the lessee has demonstrated an
unwillingness to extract the coal.

 

The BLM may enforce this provision either by issuing a written decision
requiring payment of the Minerals Management Service demand for such royalties,
or by

 

5

--------------------------------------------------------------------------------

 

issuing a notice of non-compliance. A decision or notice of non-compliance
issued by the lessor that payment is due under this stipulation is appealable as
allowed by law.

 

(e) MULTIPLE MINERAL DEVELOPMENT. Operations will not be approved which, in the
opinion of the authorized officer, would unreasonably interfere with the orderly
development and/or production from a valid existing mineral lease issued prior
to this one for the same lands.

 

The BLM realizes that coal mining operations conducted on Federal coal leases
issued within producing oil and gas fields may interfere with the economic
recovery of oil and gas; just as Federal oil and gas leases issued in a Federal
coal lease area may inhibit coal recovery. BLM retains the authority to alter
and/or modify the R2P2 for coal operations on those lands covered by Federal
mineral leases so as to obtain maximum resource recovery.

 

(f) UNSUITABILITY MITIGATION MEASURES. The lessee will comply with the
following: (i) The requirements of the agreement and any amendments thereto
between Spring Creek Coal Company and the Montana Department of Fish, Wildlife
and Parks (MDFWP) outlined in the letter dated January 7, 1992, from MDFWP to
the Bureau of Land Management, Miles City Field Office (attached as Exhibit A);
and (ii) The mitigation plan and any amendments thereto outlined in the letter
dated October 31, 1991, from Spring Creek Coal to the MDFWP (attached as
Exhibit B).

 

6

--------------------------------------------------------------------------------

 

 

The United States of America

 

 

 

 

Spring Creek Coal LLC

 

By

/s/ Phillip C. Perlewitz

Company or Lessee Name

 

 

 

 

 

/s/ M C Barrett

 

Phillip C. Perlewitz

(Signature of Lessee)

 

(Signing Officer)

 

 

 

Executive V.P. & CFO

 

Chief, Branch of Solid Minerals

(Title)

 

(Title)

 

 

 

14 June 2010

 

June 16, 2010

(Date)

 

(Date)

 

Title 18 U.S.C. Section 1001, makes it a crime for any person knowingly and
willfully to make to any department or agency of the United States any false,
fictitious or fraudulent statements or representations as to any matter within
its jurisdiction.

 

7

--------------------------------------------------------------------------------