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April 2, 2015 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 />N - 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 />R - Other <br />R - Processing Waste <br />Y -Roads <br />N - Reclamation Success <br />N - Revegetation <br />NA - Subsidence <br />N - Slides and Other Damage <br />N - Support Facilities On -site <br />Y - 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 by Leigh Simmons of Colorado Division for Reclamation, Mining and <br />Safety, (the Division). The inspection was accompanied by Ron Tokar of New Elk Coal Company, (NECC). The <br />weather was clear and windy, with a little snow remaining on the ground in shady spots and on northern aspects. <br />Several permitting actions are in progress, these are detailed under the heading GENERAL MINE PLAN <br />COMPLIANCE. <br />The status of the New Elk Mine is Active, but should be changed to Temporary Cessation. <br />The Cline Mining bankruptcy proceedings were progressing, although the deadline for completion had <br />been extended due to a technicality. Louis Head understood that Marret Asset Management intend to keep the <br />Cline structure in place post - bankruptcy, which is administratively simpler for NECC. <br />Potential investors and buyers were still being sought. One particular Chinese group who had been <br />expected to visit in March postponed their trip but were expected to visit in the future. <br />Recent activity had involved continued road maintenance and grading, following more snow and heavy <br />rain in the last week of March, Equipment had been prepared ready for use at Lorencito Canyon in April/May, and <br />for transporting development waste at the New Elk site. The electrical cables which had been laid along the roads <br />previously were largely coiled up and stored, although one cable remained, stretched along the haul road west of <br />the 4 -way intersection. <br />The plan submitted to MSHA to drill a 3" drain hole from near the face of the Bates mine 330' down to <br />the abandoned Allen mine workings had not yet received approval. Mr Head anticipated contracting with Agapito <br />Associates for the project which will use specialised drilling equipment to drill from within the Bates mine. The <br />hole will be completely cased with steel. <br />NECC had been in discussion with Colorado Parks and Wildlife about the possibility of granting public <br />access across the railroad bed in suitable places, east of the permit area. Mr Head was optimistic that a mutually <br />Number of Partial Inspection this Fiscal Year: 7 <br />Number of Complete Inspections this Fiscal Year: 3 <br />Page 2 of 6 <br />