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PERMIT #: M- 2006 -031 <br />INSPECTOR'S INITIALS: MAC <br />INSPECTION DATE: October 23, 2013 <br />OBSERVATIONS <br />The inspection was conducted by Michael Cunningham of the Division of Reclamation, Mining and Safety <br />(Division). Scott West of Steel Rose I. Inc. was also present for the inspection. The Steel Rose 1 site is located <br />approximately 13 miles northwest of Lake George and 2 miles north of State Highway 24 on Forest Road 226. <br />The site is located in the Pike -San Isabel National Forest; no representative from the US Forest Service was <br />present for the inspection. The commodity of interest is gold; there is no onsite processing of material. The <br />site is permitted for 3.39 acres and the post- mining land use is rangeland. <br />The Division conducted an inspection on August 7, 2013 and found that boundary markers were incorrectly <br />placed and delineated a permit area of 5.08 acres. As a result, the Division cited a problem and the Operator <br />was required to place the boundary markers in their correct location. This inspection was conducted to verify <br />that the boundary markers had been placed in the correct location. The locations of the boundary markers <br />were surveyed using a Trimble GPS unit and the data was downloaded using GPS Pathfinder Office software. <br />The Division determined that the boundary markers have been placed in the correct location. As noted during <br />the previous inspection, the Operator has affected approximately 3.39 acres of land. The location of the <br />affected area relative to the permit boundary is depicted on the enclosed map. The Division has determined <br />that the Operator has affected approximately 1.04 acres outside of the permit boundary. <br />Based on the findings of this inspection, the Division has reason to believe the Operator is in violation of C.R.S. <br />34- 32- 116(7)(h) for failure to protect areas outside of the affected land from slides or other damage occurring <br />during the mining operation or reclamation. The possible violation will be scheduled for the December 11 -12, <br />2013 Mined Land Reclamation Board Hearing. Notice of such hearing will be sent under separate cover. <br />This concluded the inspection. <br />Page 2 of 3 <br />