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August 11, 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 />R - 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 />NA -Other <br />R - Processing Waste <br />R - Roads <br />Y - Reclamation Success <br />R - Revegetation <br />NA - Subsidence <br />R - Slides and Other Damage <br />Y - Support Facilities On -site <br />Y - Signs and Markers <br />R - Support Facilities Not On -site <br />Y - Special Categories Of Mining <br />Y - Topsoil <br />COMMENTS <br />This was a complete 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. <br />The status of the New Elk Mine is Active. At the time of the inspection the mine was producing a small <br />amount of coal and shipping stockpiled coal at a rate of 4 -5 trucks per day for a test burn which could lead to a <br />regular contract. The potential customer has specific ash requirements ( -15 %). In an attempt to meet the <br />requirements NECC has been washing coal; detailed comments are made under the heading PROCESSING <br />WASTE. It remains to be seen whether NECC is able to tune the product to meet the customer's requirements, <br />since the ash content of raw coal is — 24 -25% ash and that of washed coal —11 %. <br />A couple of new members of staff had been hired, including Glen Donley (wash plant) and Molly ... (lab). <br />The senior technical services position remained vacant. <br />AVAILABILITY OF RECORDS — Rule 5.02.4(1): <br />The records were available for inspection in the office used by Ron Thompson in the Technical Services <br />building. Detailed comments are given at the end of this report. <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 Development Waste Disposal <br />Area (DWDA 2) appeared stable, although the large sump was still evident at the inlet to C13 and should be filled <br />in as time and conditions allow. <br />Development waste was also being stored in the approved Temporary Development Waste Disposal Area <br />(in the soil storage area) and on the Clean Coal Stockpile pad (with prior approval). NECC intend to move <br />development waste, at least from the two temporary storage areas, to the RDA; this is the subject of TR70. <br />Number of Partial Inspection this Fiscal Year: 1 <br />Number of Complete Inspections this Fiscal Year: 1 <br />Page 2 of 14 <br />