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PERMIT#:M-1987-072 <br /> INSPECTOR'S INITIALS:MAC <br /> INSPECTION DATE: September 22,2014 <br /> OBSERVATIONS <br /> The inspection was conducted by Michael Cunningham of the Division of Reclamation, Mining and Safety <br /> (Division) and Stephanie Carter of the Bureau of Land Management (BLM). Mr. Thomas Musch,the Operator <br /> was also present for the inspection. The Lee No. 2 Placer is located in Gilpin County, approximately 3 miles <br /> southeast of Central City, Colorado. The site is permitted for 1 acre and the post-mining land use is <br /> pastureland.The permit area is situated on the lower Russell Gulch, within a 40 acre claim issued by the <br /> Bureau of Land Management (BLM). <br /> The Lee No. 2 Placer mine operates on an intermittent basis.The site was not active at the time of the <br /> inspection and the Operator did not have any equipment on site.The Operator resides in a mobile home <br /> which is located near the site entrance.The approved Mining Plan allows the Operator to remove material <br /> from the creek bed.The material is then passed through a trommel and sluice box. The Operator has <br /> constructed several check dams across Russell Gulch. The check dams capture and prevent sediment from <br /> migrating past areas where placer mining is occurring. The disturbance associated with the mining operation is <br /> minimal and is primarily contained within the channel of Russell Gulch, which was flowing at the time of the <br /> inspection. The Division did not note any significant changes to the site since the last inspection. <br /> The Division observed disturbance outside of the northern permit boundary. The disturbance consisted of <br /> minor excavations into the embankment on the east side of Russell Gulch.The Division noted this disturbance <br /> during the last inspection conducted on August 22, 2013. The level of disturbance has increased and the <br /> Division estimates that 20 cubic yards of material has been removed from this area. According to Mr. Musch, <br /> the area of Russell Gulch where the Lee No. 2 Placer is located is frequently accessed by the public for <br /> prospecting activities and illegal dumping. <br /> Mr. Musch informed the Division that the Lee#2 Claim (CIVIC 286452) has been transferred into his name.The <br /> Division discussed transferring the 110(2) Hard Rock Reclamation Permit into his name through a Succession <br /> of Operators. A copy of the Succession of Operators Application form has been enclosed with this report. <br /> The Division currently holds a financial warranty in the amount of$1,200.00. Presently the reclamation tasks <br /> include removing the check dams on Russell Gulch and seeding the minor areas of disturbance.The Operator <br /> has done an excellent job in minimizing the amount of disturbance at the site and in performing concurrent <br /> reclamation. At this time,the financial warranty is adequate to complete reclamation. However, any <br /> additional disturbance to the site could result in a financial warranty increase. <br /> This concluded the inspection. <br /> Page 2 of 3 <br />