Exhibit 10.4
Pond Creek Sub-lease
SUB-LEASE AGREEMENT
This Sub-Lease Agreement enter into this 20th day of October, 2003 by and
between Eastern Consolidated Energy, Inc. ("ECEI") whose address is 0000 X.
Xxxxxx Xx. Xxxxx 000, Xxxxx Xxxxxxx, Xxxxxxx 00000 and hereinafter referred to
as Sub-Lessor and Eastern Consolidated Mining, Inc. whose address is 0000 XX
000xx Xxx, Xxxxx Xxxxxxx, Xxxxxxx 00000 and hereinafter known as Sub-Lessee
and the parties hereby agree as follows:
WITNESSETH
Sub-Lessor is the holder of and is in control of a certain coal lease on the
Xxxx Seam and all other Seams of coal above drainage level said lease dated
March 12, 2002 along with an option to lease the Pond Creek Seam of coal being
below drainage on the same property with said option to lease dated February
8, 2002, with both the lease and option to lease being the property of the
Young Family Trust and known as the Xxxxxxx Coal Lease located at Xxxxxxxx,
Xxxxxx County, Kentucky.
RECITALS
WHEREAS, Sub-Lessor is presently mining and producing Coal from the Xxxx Seam
of coal on the above mention property.
WHEREAS, Sub-Lessor is desirous to develop and produce coal from the Pond
Creek Seam of coal laying approximately sixty five feet (65') below the Xxxx
Seam of coal presently being mined.
WHEREAS, In order to access the Pond Creek Seam of Coal a slope shaft will
need to be developed from the Xxxx Seam Level within the old workings of the
Xxxx Seam mine and running down to the Pond Creek Seam of coal to be mined and
extracted.
WHEREAS, A belt conveyer system will be required to be installed to operate
separately but simultaneously along a portion of the same main line belt
conveyer system route presently being utilized to transport the coal presently
being mined from the Xxxx Seam of coal in order to separate production from
the two seams of coal and transport the production into separate stock piles
located outside the mine entry.
WHEREAS, Sub-Lessor is desirous to Sub-Lease the Pond Creek Seam of coal for
the purpose of developing and mining the Pond Creek seam of coal to a prudent
and capable miner in exchange for an overriding royalty to be paid to
Sub-Lessor from Sub-Lessee.
WHEREAS, Sub-Lessee has the experience and financial capability to develop the
Pond Creek Seam of coal, furnish all mining equipment needed to mine the coal
and to mine and produce all minable and merchantable coal available to mine in
the Pond Creek Seam.
SUB-LEASE
WITNESSETH: Sub-Lessor hereby agrees to enter into a Sub-Lease agreement with
Sub-Lessee for the Pond Creek Seam of coal as mentioned in the Option to Lease
Agreement between the Young Family Trust and Eastern Consolidated Energy, Inc.
dated February 8, 2002.
WHEREAS, Sub-Lessor hereby agrees to provide the following:
1. To exercise its option to lease with the Young Family Trust dated February
8, 2002 converting its Option to Lease on the Pond Creek Seam into a Lease
Agreement.
2. To provide the permits required for the development and Mining of the
Pond Creek Seam of coal.
3. To provide access to the Pond Creek Seam through the existing mining entry
presently being utilized for the Xxxx Seam of coal.
4. Provide stock pile areas and loading areas adjacent to the mine on the
permitted area.
WHEREAS, Sub-Lessee hereby agrees to provide the following:
1. Sub Lessee hereby agrees to pay to Sub-Lessor an overriding royalty of
Three Dollars ($3.00) per ton on all coal mined and sold from the Pond Creek
Seam of coal described on the property mentioned above. This overriding
royalty shall be in addition to all royalty payments mentioned in the option
to lease agreement dated February 8, 2002.
2. Sub-Lessee hereby agrees to pay all royalties to the lessor (Young Family
Trust) and to abide by all terms and conditions as listed in the Option to
Lease Agreement dated February 8, 2002 and attached as exhibit "A".
3. Sub-Lessee hereby agrees to be responsible for all cost related to the
development and mining of the Pond Creek Seam of coal including but not
limited to:
A. Engineering the development of slopes and preparing a Development Mine Plan
B. Furnish all equipment, supplies and labor for the eevelopment and mining of
the coal.
C. Furnish all cost to refurbish old works area required to install slopes
down to the Pond Creek Seam of coal.
D. Furnish all insurance including xxxxxxx compensation and liability
insurance related to the development and mining provided by Sub-Lessee.
This Sub-Lease agreement shall be under the laws of the State of Kentucky and
shall be binding upon the parties their executors, heirs and assigns.
We hereby affix our signatures on this 20th day of October, 2003.
Sub-Lessor Sub-Lessee
Eastern Consolidated Energy, Inc. Eastern Consolidated Mining, Inc.
By:/s/Xxxxx Xxxx By:/s/X.X. Xxxxxxx
Xxxxx Xxxx, President X. X. Xxxxxxx, Secretary
