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July 24, 2014 C- 1981 - 018 /Deserado Mine ZTT <br />Inspection Topic Summary <br />NOTE: Y= Inspected N =Not Inspected R= Comments Noted V= Violation Issued NA =Not Applicable <br />N - Air Resource Protection <br />N - Availability of Records <br />N - Backfill & Grading <br />N - Excess Spoil and Dev. Waste <br />N - Explosives <br />N - Fish & Wildlife <br />R - Hydrologic Balance <br />N - Gen. Compliance With Mine Plan <br />N - Other <br />R - Processing Waste <br />N - Roads <br />R - Reclamation Success <br />N - Revegetation <br />N - Subsidence <br />N - Slides and Other Damage <br />N - Support Facilities On -site <br />R - Signs and Markers <br />N - Support Facilities Not On -site <br />N - Special Categories Of Mining <br />N - Topsoil <br />COMMENTS <br />This was a partial inspection of the Deserado Mine by Zach Trujillo of Colorado Division of Reclamation, Mining <br />and Safety (DRMS) conducted on July 24, 2014. Scott Wanstedt of Blue Mountain Engergy, Inc.(BME) <br />accompainied the inspection. The weather was cloudy with ground conditions dry. Temperatures for the day <br />during the inspection were around eighty degrees fahrenheit. <br />HYDROLOGIC BALANCE - Rule 4.05 <br />Drainage Control 4.05.1, 4.05.2, 4.05.3; Siltation Structures 4.05.5, 4.05.6; Discharge Structures 4.05.7, 4.05.10; <br />Diversions 4.05.4; Effluent Limits 4.05.2; Ground Water Monitoring 4.05.13; Surface Water Monitoring 4.05.13; <br />Drainage — Acid and Toxic Materials 4.05.8; Impoundments 4.05.6, 4.05.9; Stream Buffer Zones 4.05.18: <br />The Redwash Reservoir No. 3 was inspected. The reservoir is located on the eastern portion of the permit <br />boundary. The area is potentially to be subsided when BME plans to reenter the B -seam that was left due to the <br />mine fire. The reservoir consists of a primary earth embankment within the confines of a drainage area. Due to <br />past experience with subsidence, little to no effect to the Redwash Reservoir No. 3 is to be expected. <br />The refuse pile ponds were inspected. RP -2/3 held minimal water in the upper western cell. The upper eastern cell <br />and main pond were both dry. Embankments were stable and no erosion was observed. RP-4 was dry. <br />Embankments were vegetated and stable. Emergency spillway was well armored with riprap. RP -5 was also dry. <br />No issues noted. <br />The D -seam dewatering pond system was not pumping at the time of the inspection. Transplanted cat tails around <br />the water transfer points between ponds have established really well. Water was observed within all the six main <br />cells and partially through the wetlands area. The Last Chance Pond was dry. Scott Wanstedt stated that cleaning <br />of the first cell was to be cleaned this fall. No issues were observed with the D -seam dewatering pond system. <br />Ponds associated with the Slot Storage which include SS -1, SS -2, RR -1 and RRS -1, were dry at the time of the <br />Number of Partial Inspection this Fiscal Year: 1 <br />Number of Complete Inspections this Fiscal Year: 0 <br />Page 2 of 5 <br />