<PAGE>

                                                                    EXHIBIT 10.8

Form 3400-12                                                FORM APPROVED
(August 2002)              UNITED STATES                  OMB NO. 1004-0073
                     DEPARTMENT OF THE INTERIOR       Expires: December 31, 2003
                      BUREAU OF LAND MANAGEMENT
                                                      Serial Number
                             COAL LEASE
                                                              WYW150210
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PART 1: LEASE RIGHTS GRANTED

This lease, entered into by and between the UNITED STATES OF AMERICA,
hereinafter called the lessor, through the Bureau of Land Management, and (Name
and Address)

                               BTU Western Resources, Inc.
                               c/o Peabody Energy Corporation
                               P.O. Box 1508
                               Gillette, WY 82717-1508

hereinafter called lessee, is effective (date) 03/01/2005, for a period of
20 years 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 and each 10-year period thereafter.

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

[X]   Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as amended,
      41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as the Act;

[ ]   Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61 Stat.
      913, 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. 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 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 following described lands in Campbell County:

                      T.42 N., R. 70 W., 6th P.M., Wyoming
                        See. 28: Lots 5-16;
                        Sec. 29: Lots 5-16;
                        Sec. 30: Lots 9-20;                      [STAMP]

                      T.42 N., R. 71W., 6th P.M., Wyoming
                        Sec. 25: Lots 5-15;
                        Sec. 26: Lots 7-10;
                        Sec. 35: Lots 1, 2, 7-10, 15, 16.

Containing 2,369.38 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.

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 $3.00 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 1/2 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 BLM 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 must maintain in the proper office a lease bond in the
amount of $59,836,000. The BLM may require an increase in this amount when
additional coverage is determined appropriate.

SEC. 4. DILIGENCE - This lease is subject to the conditions of diligent
development and continued operation, except that these conditions are 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. Lessee's failure to produce coal in commercial quantities at the end
of 10 years will terminate the lease. Lessee shall submit an amended operation
and reclamation plan pursuant to Section 7 of the Act not later than 3 years
after lease issuance.

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 a LMU approval in effect at the time of LMU
approval 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 be subject to the lease terms which would have
been applied if the lease had not been included in an LMU.

(Continued on page 2)

<PAGE>

                                                                       WYW150210
                                                                    Page 2 of 10

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 by BLM, the
leased premises and all surface and underground improvements, works, machinery,
ore stockpits, 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 Act (5 U.S.C. 552).

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

Lessee must 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 must be submitted to
the BLM.

Lessee must 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 to 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 must take
measures deemed necessary by lessor to accomplish the intent of this lease term.
Such measures may include, but are not limited to, modification to proposed
siting or design of facilities, timing of operations, and specification of
interim and final reclamation procedures. Lessor reserves to itself the right to
lease, sell, or otherwise dispose of the 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 must
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 INTEREST, AND EQUAL OPPORTUNITY - Lessee must: 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 lease 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 should 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 should maintain
segregated facilities.

SEC. 15. SPECIAL STIPULATIONS

                  See Attached Pages 5 through 10.

SEC. 9.(a) TRANSFERS

[X]   This lease may be transferred in whole or in part to any person.
      association or corporation qualified to hold such lease interest.

[ ]   This lease may be transferred in whole or in part to another public body
      or to a person who will mine the coal on behalf of, and for the use of,
      the public body or to a person who for the limited purpose of creating a
      security interest in favor of a lender agrees to be obligated to mine the
      coal on behalf of the public body.

[ ]   This lease may only be transferred in whole or in part to another small
      business qualified under 13 CFR 121.

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

(b) RELINQUISHMENT - 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 will be relieved of all future
obligations under the lease of the relinquished portion thereof, whichever is
applicable.

SEC. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such
time 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 BLM. Any such structures, machinery, equipment, tools, and
materials remaining on the leased lands beyond 180 days, or approved extension
thereof, will become the property of the lessor, but lessee may either remove
any or all such property or 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 must, 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 will be subject to cancellation by the lessor only by
judicial proceedings. This provision will 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 inure 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 Clean Water Act (33
U.S.C. 1252 el. seq.), the Clean Air Act (42 U.S.C. 4274 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.).


(Continued on Page 3)                                     (Form 3400-12, Page 2)
<PAGE>

                                                                       WYW150210
                                                                    Page 3 of 10
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Sec. 15. SPECIAL STIPULATIONS (Cont'd.)


--------------------------------------------------------------------------------
The Privacy Act of 1974 and the regulation in 43 CFR 2.48(d) provide that you be
furnished with the following information in connection with information required
by this application.

AUTHORITY: 30 U.S.C. 181-287 and 30 U.S.C. 351-359

PRINCIPAL PURPOSE: BLM will use the information you provide to process your
application and determine if you are eligible to hod a lease on BLM Land.

ROUTINE USES: BLM will only disclose the information according to the
regulations at 43 CFR 2.56(d).

EFFECT OF NOT PROVIDING INFORMATION: Disclosing the information is necessary to
receive a benefit. Not disclosing the information may result in BLM's rejecting
your request for a lease.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.) requires us to
inform you that:

This information is being collected to authorize and evaluate proposed
exploration and mining operations on public lands.

Response to the provisions of this lease form is mandatory for the types of
activities specified.

BLM would like you to know that you do not have to respond to this or any other
Federal agency-sponsored information collection unless it displays a currently
valid OMB control number.
--------------------------------------------------------------------------------

                             BURDEN HOURS STATEMENT

Public reporting burden for this form is estimated to average one hour per
response including the time for reading the instructions and provisions, and
completing and reviewing the form. Direct comments regarding the burden estimate
or any other aspect of this form to: U.S. Department of the Interior, Bureau of
Land Management (1004-0073), Bureau Information Collection Clearance Officer
(WO-630), Mail Stop 401 LS, Washington, D.C. 20240.
================================================================================

                                                THE UNITED STATES OF AMERICA


BTU Western Resources, Inc.                     By: /s/ ROBERT A. BENNETT
---------------------------                        -----------------------------
 (Company or Lessee Name)

   /s/ KEMAL WILLIAMSON                                 Robert A. Bennett
---------------------------                     --------------------------------
  (Signature of Lessee)                                      (BLM)

   President                                            State Director
---------------------------                     --------------------------------
          (Title)                                           (Title)

   1-14-05                                             February 18, 2005
---------------------------                     --------------------------------
          (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.
================================================================================
                                                          (Form 3400-12, Page 3)

<PAGE>
                                                                    Page 4 of 10


                         DEFERRED BONUS PAYMENT SCHEDULE
                      TO BE ATTACHED TO AND MADE A PART OF
                          FEDERAL COAL LEASE WYW150210


This lease is issued subject to the payment of $239,315,028.00 by the lessee as
a deferred bonus. Payment of the deferred bonus by the lessee shall be made as
follows:


Total amount of $299,143,785.00


One-fifth in the amount of $59,828,757.00 submitted on the date of sale. Balance
is due and payable in equal annual installments on the first four anniversary
dates of the lease:


One-fifth in the amount of $59,828,757.00 due on MAR 01 2006.


One-fifth in the amount of $59,828,757.00 due on MAR 01 2007.


One-fifth in the amount of $59,828,757.00 due on MAR 01 2008.


One-fifth in the amount of $59,828,757.00 due on MAR 01 2009.
<PAGE>
                                                                       WYW150210
                                                                    Page 5 of 10

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 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 undertaking any activities that may disturb
the surface of the leased lands, the lessee shall conduct a cultural resource
intensive field inventory in a manner specified by the Authorized Officer of the
BLM or of the surface managing agency, if different, on portions of the mine
plan area and adjacent areas, or exploration plan area, that may be adversely
affected by lease-related activities and which were not previously inventoried
at such a level of intensity. The inventory shall be conducted by a qualified
professional cultural resource specialist (i.e., archeologist, historian,
historical architect, as appropriate), approved by the Authorized Officer of the
surface managing agency (BLM, if the surface is privately owned), and a report
of the inventory and recommendations for protecting any cultural resources
identified shall be submitted to the Assistant Director of the Western Support
Center of the Office of Surface Mining, the Authorized Office of the BLM, if
activities are associated with coal exploration outside an approved mining
permit area (hereinafter called Authorized Officer), and the Authorized Officer
of the surface managing agency, if different. The lessee shall undertake
measures, in accordance with instructions from the Assistant Director, or
Authorized Officer, to protect cultural resources on the leased lands. The
lessee shall not commence the surface disturbing activities until permission to
proceed is given by the Assistant Director or Authorized Officer.

(2) The lessee shall protect all cultural properties that have been determined
eligible to the National Register of Historic Places within the lease area from
lease-related activities until the cultural resource mitigation measures can be
implemented as part of an approved mining and reclamation or exploration plan
unless modified by mutual agreement in consultation with the State Historic
Preservation Officer.

(3) The cost of conducting the inventory, preparing reports, and carrying out
mitigation measures shall be home by the lessee.

(4) If cultural resources are discovered during operations under this lease, the
lessee shall immediately bring them to the attention of the Assistant Director
or Authorized Officer, or the Authorized Officer of the surface managing agency,
if the Assistant Director is not available. The lessee shall not disturb such
resources except as may be subsequently authorized by the Assistant Director or
Authorized Director.

Within two (2) working days of notification, the Assistant Director or
Authorized Director will evaluate or have evaluated any cultural resources
discovered and will determine if any action may be required to protect or
<PAGE>


                                                                      WYW150210
                                                                    Page 6 of 10

SEC. 15. SPECIAL STIPULATIONS (Continued) -

preserve such discoveries. The cost of data recovery for cultural resources
discovered during lease operations shall be borne by the lessee unless otherwise
specified by the Authorized Officer of the BLM or of the surface managing
agency, if different.

(5) All cultural resources shall remain under the jurisdiction of the United
States until ownership is determined under applicable law.

(b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and
conspicuous, and/or of significant scientific value are discovered during mining
operations, the find will be reported to the Authorized Officer immediately.
Mining operations will be suspended within 250 feet of said find. An evaluation
of the paleontological discovery will be made by a BLM approved professional
paleontologist within five (5) working days, weather permitting, to determine
the appropriate action(s) to prevent the potential loss of any significant
paleontological value. Operations within 250 feet of such discovery will not be
resumed until written authorization to proceed is issued by the Authorized
Officer. The lessee will bear the cost of any required paleontological
appraisals, surface collection of fossils, or salvage of any large conspicuous
fossils of significant scientific interest discovered during the operations.

(c) THREATENED AND ENDANGERED SPECIES - The lease area may now or hereafter
contain plants, animals, or their habitats determined to be threatened or
endangered under the Endangered Species Act of 1973, as amended, 16 U.S.C. 1531
et seq., or that have other special status. The Authorized Officer may recommend
modifications to exploration and development proposals to further conservation
and management objectives or to avoid activity that will contribute to a need to
list such species or their habitat or to comply with any biological opinion
issued by the Fish and Wildlife Service for the proposed action. The Authorized
Officer will not approve any ground-disturbing activity that may affect any such
species or critical habitat until it completes its obligations under applicable
requirements of the Endangered Species Act. The Authorized Officer may require
modifications to, or disapprove a proposed activity that is likely to result in
jeopardy to the continued existence of a proposed or listed threatened or
endangered species, or result in the destruction or adverse modification of
designated or proposed critical habitat.

The lessee shall comply with instructions from the Authorized Officer of the
surface managing agency (BLM, if the surface is private) for ground disturbing
activities associated with coal exploration on federal coal leases prior to
approval of a mining and reclamation permit or outside an approved mining and
reclamation permit area. The lessee shall comply with instructions from the
Authorized Officer of the Office of Surface Mining Reclamation and Enforcement,
or his designated representative, for all ground-disturbing activities taking
place within an approved mining and reclamation permit area or associated with
such a permit.



<PAGE>

                                                                       WYW150210
                                                                    Page 7 of 10

SEC. 15. SPECIAL STIPULATIONS (Continued) -


(d) 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.

(e) OIL AND GAS/COAL RESOURCES - 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 resource recovery and
protection plans for coal operations and/or oil and gas operations on those
lands covered by Federal mineral leases so as to obtain maximum resource
recovery.

(f) RESOURCE RECOVERY AND PROTECTION - 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(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 of coal bed or
portion thereof is not to be mined or is rendered unmineable by the operation,
the operator/lessee shall submit appropriate justification to obtain approval by
the Authorized Officer to lease such reserves unmined. Upon approval by the
Authorized Officer, such coal beds 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 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 hereinafter 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 operator/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 MMS demand for such royalties, or by 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.


<PAGE>



                                                                       WYW150210
                                                                    Page 8 of 10

SEC. 15. SPECIAL STIPULATIONS (Continued) -

(g) 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 lease 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 the Public Lands of the
United Sates." The survey will be recorded in the appropriate county records,
with a copy sent to the Authorized Officer.

<PAGE>
                                                                    Page 9 of 10


NOTICE FOR LANDS OF THE NATIONAL FOREST SYSTEM
UNDER JURISDICTION OF DEPARTMENT OF AGRICULTURE


R2-FS-2820-13(92)                                          Serial No. WYW/150210
                                                                      ----------

The permittee/lessee must comply with all the rules and regulations of the
Secretary of Agriculture set forth at Title 36, Chapter II, of the Code of
Federal Regulations governing the use and management of the National Forest
System (NFS) when not inconsistent with the rights granted by the Secretary of
Interior in the permit. The Secretary of Agriculture's rules and regulations
must be complied with for (1) all use and occupancy of the NFS prior to
approval of an exploration plan by the Secretary of the Interior, (2) uses of
all existing improvements, such as forest development roads, within and outside
the area permitted by the Secretary of the Interior, and (3) use and occupancy
of the NFS not authorized by an exploration plan approved by the Secretary of
the Interior.

All matters related to this stipulation are to be addressed to:
     Forest Supervisor
     Medicine Bow-Routt National Forests & Thunder Basin National Grassland
     2468 Jackson Street
     Laramie, WY 82070
     807-745-2300
who is the authorized representative of the Secretary of Agriculture.

NOTICE

CULTURAL AND PALEONTOLOGICAL RESOURCES -- The FS is responsible for assuring
that the leased lands are examined to determine if cultural resources are
present and to specify mitigation measures. Prior to undertaking any
surface-disturbing activities on the lands covered by this lease, the lessee or
operator, unless notified to the contrary by the FS, shall:

     1.   Contact the FS to determine if a site specific cultural resource
          inventory is required. If a survey is required, then:

     2.   Engage the services of a cultural resource specialist acceptable to
          the FS to conduct a cultural resource inventory of the area of
          proposed surface disturbance. The operator may elect to inventory an
          area larger than the area of proposed disturbance to cover possible
          site relocation which may result from environmental or other
          considerations. An acceptable inventory report is to be submitted to
          the FS for review and approval at the time a surface disturbing plan
          of operation is submitted.


                                                                              23
<PAGE>


                                                                   Page 10 of 10


     3.   Implement mitigation measures required by the FS and BLM to preserve
          or avoid destruction of cultural resource values. Mitigation may
          include relocation of proposed facilities, testing, salvage, and
          recordation or other protective measures. All costs of the inventory
          and mitigation will be borne by the lessee or operator, and all data
          and materials salvaged will remain under the jurisdiction of the U.S.
          Government as appropriate.

The lessee or operator shall immediately bring to the attention of the FS and
BLM any cultural or paleontological resources or any other objects of scientific
interest discovered as a result of surface operations under this lease, and
shall leave such discoveries intact until directed to proceed by FS and BLM.

ENDANGERED OR THREATENED SPECIES - The FS is responsible for assuring that the
leased land is examined prior to undertaking any surface-disturbing activities
to determine effects upon any plant or animal species listed or proposed for
listing as endangered or threatened, or their habitats. The findings of this
examination may result in some restrictions to the operator's plans or even
disallow use and occupancy that would be in violation of the Endangered Species
Act of 1973 by detrimentally affecting endangered or threatened species or their
habitats.

The lessee/operator may, unless notified by the FS that the above examination is
not necessary, conduct the examinations on the leased lands at his discretion
and cost. These examinations must be done by or under the supervision of a
qualified resource specialist approved by the FS. An acceptable report must be
provided to the FS identifying the anticipated effects of a proposed action on
endangered or threatened species or their habitats.


/s/ KEMAL WILLIAMSON
----------------------------------------
Signature of Licensee/Permittee/Lessee