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January 15, 2014 C- 1981 - 018 /Deserado Mine <br />- RP-2/3 <br />- RP -4 <br />- RP -5 <br />-SS-1 <br />-SS-2 <br />- RR -1 <br />- RRS -1 <br />ZTT <br />The Raw Water Lagoon was inspected with no issues observed. The pumps were operating during the time of the <br />inspections. <br />The explosives SAE was inspected and no issues were observed. <br />The Haul Road Blister was inspected. The blister is surrounded by tall berms that are stable. All drainage is <br />directed from the berms to a rock check dam. The check dam was stable with no issues you noted. <br />The B vent shaft, water tank storage and radio tower SAE's were stable with no issues of erosion. <br />It was observed snow removed from the road by plows was being pushed into ditches. No issues were observed <br />but the mine must ensure excess dirt and road debris does not block or fill the ditches. <br />GENERAL MINE PLAN COMPLIANCE: <br />During the time of the inspection, BME was currently moving the longwall into the new panel. <br />PROCESSING WASTE /COAL MINE WASTE PILES — Rule 4.10 and 4.11 <br />Drainage Control; Surface Stabilization; Placement: <br />Refuse Pile 1 is reclaimed and snow covered. No problems were observed. <br />Both refuse piles 2/3/4 and 5A are stable with no issues noted. <br />Refuse continues to be stockpiled for the winter months on Refuse Pile 5A. Refuse will be spread and compacted <br />when weather allows for proper conditions. <br />ROADS — Rule 4.03 <br />Construction 4.03.1(3)/4.03.2(3) <br />Drainage 4.03.1(4)/4.03.2(4) <br />Surfacing and Maintenance4.03.1(5) and (6)/4.03.2(5) and (6) <br />Reclamation 4.03.1(7)/4.03.2(7): <br />Roads were well maintained and have been plowed for access throughout the mine site. No issues were noted. <br />Number of Partial Inspection this Fiscal Year: 5 <br />Number of Complete Inspections this Fiscal Year: 2 <br />Page 3 of 4 <br />