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June 24, 2014 C- 1981- 012/New Elk Mine LDS <br />Inspection Topic Summary <br />NOTE: Y= Inspected N =Not Inspected R= Comments Noted V= Violation Issued NA =Not Applicable <br />Y - Air Resource Protection <br />N - Availability of Records <br />Y - Backfill & Grading <br />R - Excess Spoil and Dev. Waste <br />NA - Explosives <br />Y - Fish & Wildlife <br />R - Hydrologic Balance <br />R - Gen. Compliance With Mine Plan <br />N -Other <br />R - Processing Waste <br />Y - Roads <br />N - Reclamation Success <br />R - Revegetation <br />N - Subsidence <br />N - Slides and Other Damage <br />Y - Support Facilities On -site <br />Y - Signs and Markers <br />N - Support Facilities Not On -site <br />Y - Special Categories Of Mining <br />Y - Topsoil <br />COMMENTS <br />This was a partial inspection by Leigh Simmons of Colorado Division for Reclamation, Mining and <br />Safety, (the Division). The inspection was accompanied by John Terry of New Elk Coal Company, (NECC). The <br />weather was fine. Several permitting actions are in progress, these are detailed under the heading GENERAL <br />MINE PLAN COMPLIANCE. All recent enforcement actions have been abated and terminated. <br />The status of the New Elk Mine was changed from Temporary Cessation to Active on May 13, 2014, in <br />anticipation of a small contract with a local customer which could be agreed in the near future. If the sales contract <br />were to be signed it would see NECC sell coal at the mine (i.e. the customer would take care of transportation). At <br />the time of the inspection approximately 6000 tons of raw coal had been produced over a period of 3 weeks and <br />was stockpiled. The ash content of the coal had been measured at 24% which was higher than desired by the <br />prospective customer and could necessitate washing the coal. Approximately 3000 tons of development waste had <br />been temporarily placed on the clean coal stockpile area. Mr Terry estimated that this constituted 30 -50 truckloads <br />of material to be transported to the RDA (pending approval of TR70). Alternatively, if it became necessary to <br />wash the raw coal, it's possible that the development waste could also be passed through the plant, and transported <br />to the RDA by conveyor. <br />The sign -in board showed that several new staff had recently been hired, taking the total to 27, plus <br />several contractors. Mike Valentine had left NECC to return to the City of Trinidad. Among those hired were <br />Charley King, who assists Vince Massarotti with environmental compliance tasks (Ron Tokar had been moved <br />back underground); Leonard Torres, who has surface maintenance duties; and Nick Mason, an intern from <br />Colorado School of Mines, who is working under John Terry for the summer. Louis Head said that NECC are still <br />trying to fill the senior technical services position left by Greg Smith, and are keen to find a candidate for the job <br />who is registered as a Professional Engineer in the state of Colorado. <br />EXCESS SPOIL and DEVELOPMENT WASTE — Rule 4.09 <br />Placement; Drainage Control; Surface Stabilization: <br />The Development Waste Pile (DWP) was stable and well vegetated. The steep slopes on the Development <br />Waste Disposal Area (DWDA 2) had been graded out and the ditches surrounding it were well shaped. An <br />Number of Partial Inspection this Fiscal Year: 8 <br />Number of Complete Inspections this Fiscal Year: 4 <br />Page 2 of 11 <br />