2013-09-05_INSPECTION - M2009018

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PERMIT #: M- 2009 -018 INSPECTOR'S INITIALS: PSH INSPECTION DATE: August 29, 2013 OBSERVATIONS The Heintzelman Project was inspected by Peter Hays with the Division of Reclamation, Mining and Safety (Division) as part of the Division's monitoring inspection program. The site was previously inspected by the Division on April 15, 2009 for a pre - operational inspection during the permit application review. Mr. Chris Varra, Mr. Garrett Varra, Mr. Brad Jones and Mr. Brad Janes with Varra Companies, Inc. were present during the inspection. The site is permitted for 155.65 acres with a maximum allowed disturbance acreage of 80 acres at one time. The site is divided into 3 mining tracts (A, B and Q. The permit was revised by Amendment No. 1 (AM -01) in 2011. The amendment added 1.58 acres for a conveyor route to the Kurtz Project. The conveyor route was constructed in 2012 and was operational during the inspection. Mining activities were observed in Tract A. Mining has occurred along the perimeter of the northern section of the tract. The tract is dewatered to allow for excavation by excavator and trucks. The water is pumped to a settling pond in Tract B. The water discharges to a field to the south and then to the seep ditch separating Tracts A and B. The excavation depth was estimated at twenty (20) feet deep. The Operator intends to continue to mine the perimeter of Tract A until bedrock is reached before mining middle section of the Tract. The final depth is estimated to be forty -nine (49) feet. Topsoil and overburden stockpiles were observed in the southern section of Tract A. Evidence of topsoil and overburden stripping was observed ahead of mining activity. All mined material is transferred by conveyor to the Kurtz Project for processing. Tracts B and C have not been disturbed by mining activity and are being used for residential and agricultural purposes. The Kerr -McGee and Anadarko gas well and lines located in Tract A have been removed. The gas lines were relocated around the perimeter of Tract A and a new site for the gas well equipment was created in the northeast corner of Tract B. The original gas well peninsula in Tract A is no longer needed and the area will be mined through. The Division will require the Operator to revise the approved mine and reclamation plans to remove the peninsula and for the new well pad with the submittal of a technical revision or as part of a future amendment for the site. The Division holds a financial warranty in the amount of $239,266.00, which appeared adequate based on this inspection. The Operator has complied with the Colorado Division of Water Resources (DWR) requirement for long -term augmentation for exposed groundwater by committing shares to the DWR. The approved post- mining land use is general agriculture with unlined ponds. The Operator indicated they intend to create lined ponds by constructing clay liners around the proposed ponds. The change in post- mining land use will require an amendment to the reclamation permit be submitted and approved by the Division. The entrance sign and boundary markers were observed as required by Rule 3.1.12. The site is fenced on all sides and is delineated by WCR 17 to the west, WCR 26 to the south and WCR 28 to the north. No noxious weeds were observed during the inspection. Sediment control structures, straw waddles and silt fence, were observed during the inspection. Photographs taken during the inspection are attached. The state of the site was well represented in the 2013 Annual Report submitted by the Operator. Page 2 of 4