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Sometime after our conversation in our offices, we were employed by another out-of-state corporation, in a different area of Wyoming than your company is involved. This company accepted our recommendation that a physical inspection be made of the claims in which they are interested. To my knowledge, Mr. MacGuire is the only one equipped to do this and I approved him on behalf of our client to make such an inspection. When I called him, he asked me if our client was either Fremont Energy or WPPSS, for whom we were trying to employ Mr. MacGuire. I asked him why he asked the question and he advised me that he had heard and read in the media the story that Fremont Energy had made some kind of deal with WPPSS and that Fremont Energy was one of the companies. he had been watching. He also told me that he had checked the records on these claims in the county and had done some other investigating and that he was convinced that these claims were invalid. He has offered to exhibit to me his evidence if any client of mine might be interested. conveyed this offer to you and you advised me that your people did not want to do this. We have, therefore, some forewarning of the fact that the media release attracted Mr. MacGuire's attention and I must conclude that he definitely will be a problem in the instant dealings your company has with Fremont Energy. You also advised me that, with certain changes, the agreements have been signed between your company and Fremont Energy, notwithstanding our initial conversation, and I am sure you subsequently conveyed this information to the proper people within your company.

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I received from you a contract of employment, which I signed, and under which we agreed to undertake whatever title investigation and opinion, concerning validity of claims, Wyoming Statutes and laws, affecting your company's ability to do business within the State of Wyoming. We do not purport to prejudge the status of Fremont Energy's titles, as we have no specific information at this time. However, I again want to reiterate that we are expecting serious problems and before this transaction proceeds much further, it seems to me your company is going to have to quantify our advice and the risks involved.

One reaction your company may have to this letter may well be that you do not wish to employ a firm that undertakes representation with the reservations we have previously expressed. I would understand this. On the other hand, we do not propose, in our work for your company, to do anything

less than we have always done, that is, try to keep you fully advised as to our opinion, whether it is good news or bad. What I am saying, basically, is that we do not propose to go through another major piece of litigation trying to defend mining claims which have not at least substantially been located in accordance with the requirements of the mining laws. We have advised you what the result of such an undertaking will be in the United States District Court for Wyoming, because we have had this experience. I might add at this point that my guess is that the Conoco claims were in much better shape than we are going to find the claims of Fremont Energy. Again, I am not prejudging the situation. I do not wish to have this letter taken as trying to interfere in your dealings with Fremont Energy. However, you asked my opinion and there it is. We are perfectly willing to examine titles to the Fremont Energy claims and give you our honest opinion about whether they are valid. The quickest and easiest way to test the validity of these claims, in my opinion, would be for you, as the company's attorney, to require solid and unequivocal evidence that Fremont Energy has expended $1,800,000 each year by way of assessment work on these claims. If you do not find this to be the fact, then I can give you my opinion in short order. It will be that as to any claim upon which assessment work has not been done each year, a prima facie case of abandonment is shown and the claims must be promptly relocated from the beginning in order to maintain the title. It seems to me that the first order of business is the determination as to the assessment work. You may expend a lot of time, money and effort examining location certificates, assessment affidavits, as well as a physical inspection (which you advised me you had made while you were in Wyoming which, needless to say, raised some doubts in your mind), and still not reach the basic title question which we have raised.

This letter is written to you in confidence with the belief that this is why you employed this law firm. You may use it as you see fit, because as far as we are concerned, it is a confidential communication, as your local attorneys, to you, as the client. Anything short of the foregoing advice would be a disservice to you and I do not believe that this is an unduly pessimistic delineation of your possible problems.

We will be glad to discuss further any part of this

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This memorandum is in response to your memorandum of March 24, 1977 and attempts to answer questions posed by yourself on that date.

1

The first question posed is in regard to the effect of
failure to do the required $100 per year assessment work on
all claims. The law in Wyoming presently provides that
assessment work may be done in groups of claims when the
work in one claim is of value to adjoining claims. There-
fore, if one should do $1000 work of drilling or other
qualifying assessment work on Claim A and by the nature of
the geology and other relevant factors, this work is of
value to numerous adjoining claims; the amount of assessment
work may be apportioned to the other claims. In the part-
icular case of the Red Desert and the Fremont claims therein
which comprise approximately 18,000 claims consisting of 527
square miles, it is possible--if not likely--that some of
those claims would be invalid. The fact that some of the
claims are invalid has no relationship to other claims where
the assessment work has been validly done. By invalidating
one claim or one group of claims, it has no affect upon the
validity of other claims. In order to determine a claim
invalid, each claim must be proven invalid. There is no
"infectious invalidity" in this area of the law.

Of those claims which were found to be invalid or are believed to be invalid, the law allows a prospector to retain possession while he is working the claim, to include properly staking the claim or doing the assessment work.

It is Mr. Williams' belief that the Supply System should
deal with "the majors". The majors being larger exploration
organizations such as Exxon, Union Pacific (doing business
as Rocky Mountain Energy), Western Nuclear and similar
organizations. Mr. Williams does not necessarily believe
that Fremont--and specifically, Mr. Murphy--will be unable
to properly stake the claims, do the assessment work or hold
the title. However, Mr. Williams has litigated for and
against Mr. MacGuire and has an appreciation of the man.
Mr. MacGuire, for reasons not completely known to myself,
feels that Mr. Murphy--but more particularly, a Mr. Schauss

who is Chairman of the Board of Fremont Energy Corporation-has not treated him fairly in the past and would like an opportunity to get even. Mr. Williams anticipates, regardless of how well Fremont and the Supply System conduct their operation in the Red Desert, that Mr. MacGuire will be at best a nuisance. Mr. Williams, as his letter indicated, recently concluded litigation with MacGuire concerning certain claims held by Continental Oil Company, which Mr. MacGuire successfully proved in court that approximately two-thirds of the claims were invalid. Mr. Williams' point is that if an organization such as Continental Oil Company, attempting to do its assessment work conscientiously, was found wanting in court, he has grave reservations whether a much smaller organization such as Fremont will be successful against an overstaker such as Mr. MacGuire.

Mr. Williams has suggested to me in the past that it might be prudent to hire Mr. MacGuire to properly stake our claims. I am not aware of the actual cost for this exercise, but from Mr. Williams and others I have learned that Mr. MacGuire will charge approximately double of what it can be done for otherwise. The obvious benefit of hiring Mr. MacGuire is that it would preclude him from attacking the validity of our claims. He could not on one hand stake our claims and then later overstake the same claims and argue the invalidity of his own prior staking. This would be an untenable position. It has been made clear by Fremont Energy Corporation that they do not desire to have Mr. MacGuire retained for any purposes. I doubt, due to the animosity between the parties, that any working relationship could be achieved.

It is a criminal offense and an actionable civil wrong to falsely file a location certificate or affidavit of assessment work within the State of Wyoming. WCS Section 6-154.2 provides:

Offering False Mining Claims For Filing Every person
who offers any location certificate for a placer
mining claim or lode claim or affidavit of assessment
work to be filed in an office of a county clerk of this
State in behalf of himself or for any other person or
any person who procures others to do so, knowing that
the claim certificate or affidavit was not preceded by
a proper location of the claim physically upon the
ground by the establishment of a proper notice of claim
and the designation of the surface boundaries of the
claim by substantial posts or monuments as required by
the laws of the State, shall be punished by imprison-
ment in the state penitentiary for not more than five
years or by a fine of not more than $5,000, or by both.

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