2015-03-23_INSPECTION - C1981012

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March 16, 2015 C- 1981- 012/New Elk Mine LDS Inspection Topic Summary NOTE: Y= Inspected N =Not Inspected R= Comments Noted V= Violation Issued NA Not Applicable Y - Air Resource Protection R - Roads R - Availability of Records Y - Reclamation Success Y - Backfill & Grading Y - Revegetation R - Excess Spoil and Dev. Waste NA - Subsidence NA - Explosives Y - Slides and Other Damage Y - Fish & Wildlife Y - Support Facilities On -site R - Hydrologic Balance Y - Signs and Markers R - Gen. Compliance With Mine Plan R - Support Facilities Not On -site R - Other Y - Special Categories Of Mining R - Processing Waste Y - Topsoil COMMENTS This was a complete inspection by Leigh Simmons of Colorado Division for Reclamation, Mining and Safety, (the Division). The inspection was accompanied by John Terry of New Elk Coal Company, (NECC). The weather was overcast, with some snow remaining on the ground in shady spots and on northern aspects. Access was generally not a problem, although the road to the water tanks was still not easily passable. Several permitting actions are in progress, these are detailed under the heading GENERAL MINE PLAN COMPLIANCE. The status of the New Elk Mine is Active, but should be changed to Temporary Cessation. The Cline Mining bankruptcy proceedings were progressing as expected. Recent activity at the site has centered on maintaining the roads through the poor weather, as well as "tidying up" equipment and machinery. A plan had been submitted to MSHA to drill a 3" drain hole from near the face of the Bates mine 330' down to the abandoned Allen mine workings to allow water to drain without the need for an additional pump. There is a — 15' box to aim for, which allows for the hole to be a little more than a degree from its intended direction. If /when this plan is approved it will likely become the top priority project. Mr Terry expected to pump from the Allen mine to pond 1 soon, but would prefer to wait until the drainage hole has been drilled to ensure that the opportunity for gases to build up in the Allen mine ahead of the drilling is minimized. Mr Terry plans to pump so that pond 1 fills up to, but not over, the discharge point. A discussion is ongoing with the the district water commissioner about potentially putting a valve on the outlet of pond 1. The embankment of highway 12 has deteriorated and the eroison appears to have led to cracking of the road surface, a discussion is ongoing as to the responsibility for maintenance and repair. Mr Terry also expects to clean sediment out of pond 7 this season. A small stockpile of clean coal remained on the clean coal pad; it is understood that this will be transported to the cement plant at some point in the future. AVAILABILITY OF RECORDS — Rule 5.02.4(1): Work had been done to get the records into order, but the job was not complete. Detailed comments are made at the end of this report. Number of Partial Inspection this Fiscal Year: 6 Number of Complete Inspections this Fiscal Year: 3 Page 2 of 15