2015-03-30_GENERAL DOCUMENTS - M1999006

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ii. The Operator is not prepared to argue the specific costs while it objects to the legality and efficacy of the OMLR actions that inspired them. iii. The costs, if we must pursue them, appear significantly elevated. j) The Division requests a meeting with Varra Companies, Inc. to discuss this issue prior to issuing the surety increase letter (telephone conference of 24 October 2014). i. Perhaps one of the most revealing encounters with the Office respective of the basis of its intent to force warranty on a deposit stockpile occurred when the Office, at our request, provided the five (5) known instances where this has been applied. We asked for every instance, initially receiving three permits, then two additional permits were provided when mentioned at the 13 January meeting at OMLR, Denver. Interestingly, every one of these were recently inspected in 2014 and found to need further attention from the Office, including additional financial warranty. ii. The five representative cases to justify this action were based on the following permitted operations: a) Permit M1992 -076 S -C Farms operated by Carder, Inc. b) Permit M1993 -059 Midwestern Farms operated by Eastern Colorado Aggregates, Inc. c) Permit M2004 -051 Wattenberg Lakes operated by Aggregate, Inc. d) Permit M1989 -120 Platte Valley operated by Aggregate, Inc. e) Permit M2006 -013 Potts Pit #2 operated by Eastern Colorado Aggregates, Inc. Varra Companies staff performed an extensive evaluation of each file of record available on -line at the Division of Reclamation Mining & Safety (DRMS). Several general observations were made: - With the exception of M2006 -013, four of the five permitted operations were using product (processed sand) as a plan of mitigation for exposed groundwater in order to maintain, either as a plan of extraction or as part of corrective action where the Office acted as the enforcement arm for the Colorado Office of the State Engineer (OSE), compliance with Colorado water law. - Permit 2006 -013 is a dry operation that does not encounter the ground water table. In this instance, a pile of screened `reject' material from on -site processing was identified by an OMLR inspector, and a cost of $77,653.98 to reclaim the pile was determined and included with the inspection report. The Operator accepted this claim and provided a rider to the existing $64,836.00 bond in the amount of $77,700.00. We can only assume the Operator had no commercial intent for the product rejected by the screen when sorting raw aggregate into commercially viable specifications. Another possibility might be it was simply more expedient for the Operator to simply follow a directive from the Office than that it was to counter it. - Without exception, each permit found its bond for operations escalating by inspection and subsequent recalculation by Office staff, and outside any oversight by the Board. Neither are these operations and Office actions generally known or observed by other Operators. - None of the permits or OMLR actions pertains to a commercially viable stockpile, its size, extent, elevation, or other related factors. Varra Companies, Inc. correspondence of 30 March 2015 to the Colorado Office of Mined Land Reclamation in 11 reply to the OMLR Inspection Report of 28 August 2014 — Kurtz Project — M- 1999 -006