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Exhibit Page 31 <br />4. Changes to drainage basins caused by operations on site: <br />There will be no significant changes in watershed boundaries caused by operations on site, and the only permanent <br />changes will be creation of closed drainage basins which will drain to the sediment basins on the new mesa top and <br />on the south (downhill) edge of the mining area. However, this will amount to less than 1 % of the drainage basin of <br />Lost Canyon Creek. Otherwise, final (post - reclamation) contours will maintain existing watershed boundaries. <br />Disturbances in vegetation, area exposed to erosion, and evaporation, will not cause any significant change in <br />drainage basin characteristics. <br />5. Aquifers and watersheds in this area: <br />The only recognized aquifers in the area are the alluvial aquifers associated with the Dolores River and its tributaries, <br />including Lost Canyon, all of which are well below the planned depth of mining. Based on depths of existing wells in <br />the area, there are no bedrock formations used as aquifers in the area and depth to be mined, so none which would <br />be affected by the mining. <br />The overburden, soil, and gravel are not considered aquifers in this area12. Based on the location and <br />depth of other known wells in the area, the mining activities proposed will have no reasonable potential for any <br />adverse impact. There will be no blasting at this site. <br />6. Prevention and mitigation actions: <br />The site is more than 800 feet away from any perennial stream; there are no identified natural wetlands on or within <br />600 feet of the site. Standard storm water pollution prevention and management actions, including erosion and <br />sedimentation control, will be implemented and maintained. See paragraph 11, below. There is no expectation of <br />either dewatering or process water use /discharge at this site. No net impact on river flow is anticipated. <br />7. Project water requirements: <br />Initially, water use for extracting and processing aggregates from Wallace Pit will be virtually zero. Based on other <br />past and current operations on Hay Camp Mesa, compliance with air quality permits (equipment and actual pit <br />operations (fugitive emissions)) do not require use of watering, water sprays, or addition of moisture. Initially, no <br />washing or processing of water is planned on site, but the landowner and operator may drill a water well in the future <br />to use both for extraction and processing operations, and for post - reclamation activities on -site (including better <br />livestock supply and possible homestead use). Colorado soil management and conservation rules will be <br />implemented to protect surface and ground water quality and improve watershed management. <br />8. Prohibited actions necessary to protect water systems: <br />None known at this time, other than compliance with best management practices, which forbid the discharge of <br />heavily sediment -laden waters and implementation of spill control and countermeasures actions to prevent discharge <br />of a spilled substance. <br />9. Wetlands information: <br />National Wetlands Inventory Map (on -line) identifies the two wetlands within the permit area. No impact is <br />anticipated.: There is a 0.1 -acre "freshwater pond" in Block E3, near the road, which is dry (2013) and has no <br />indication of wetland soils, vegetation, or presence of water except immediately after storm events. The 0.22 -acre <br />stock pond in Block R1 is identified as 'other" wetland and although water collects after storm events, it is normally <br />dry. Because of subsoil conditions, it was likely dry at the time of the inventory, so that it was not classified as a <br />freshwater pond. Both are manmade. As the majority of the data for wetlands inventory in Montezuma County was <br />gathered in 1992 during a wet period, these may have been ephemeral wetlands which have disappeared during the <br />last five years of drought in the region. As a series of sediment and detention basins will be constructed on the site, <br />any destruction of these wetlands due to mining will be mitigated by replacement with ephemeral ponds at 2:1 ratio. <br />However, if these areas are mined it will be done in year 25 or later (for Block R1) and year 36 or later (for Block E3). <br />Therefore, the operator commits to obtaining any required permits and providing mitigation prior to mining in those <br />areas and disturbing those inventoried wetlands. See permit information in Exhibit M. <br />10. Floodplain information: <br />12 Per conversations with Natural Resource Conservation District personnel. <br />