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April 23, 2015 C- 1981 - 018 /Deserado Mine ZTT <br />Inspection Topic Summary <br />NOTE: Y= Inspected N =Not Inspected R= Comments Noted V= Violation Issued NA Not Applicable <br />N - Air Resource Protection <br />N - Roads <br />N - Availability of Records <br />R - Reclamation Success <br />R - Backfill & Grading <br />Y - Revegetation <br />N - Excess Spoil and Dev. Waste <br />N - Subsidence <br />N - Explosives <br />N - Slides and Other Damage <br />N - Fish & Wildlife <br />Y - Support Facilities On -site <br />R - Hydrologic Balance <br />R - Signs and Markers <br />R - Gen. Compliance With Mine Plan <br />N - Support Facilities Not On -site <br />N - Other <br />N - Special Categories Of Mining <br />N - Processing Waste <br />R - Topsoil <br />COMMENTS <br />This was a partial and special focus oversight inspection of the Deserado Mine conducted by Zach Trujillo of <br />Colorado Division of Reclamation, Mining and Safety (DRMS) on April 23, 2015. Christine Belka and Tom <br />Medlin of the Office of Surface Mining Reclamation Enforcement (OSM) accompanied the inspection as well as <br />Scott Wanstedt of Blue Mountain Engergy, Inc.(BME) . The special focus topic for this inspection was degas <br />boreholes. The weather was cloudy and ground conditions were mostly dry. Intermittent rain was encountered <br />towards the later parts of the day. Temperatures for the day were around sixty five degrees fahrenheit. <br />A total of twenty degas borehole sites were inspected. Sites ranged in reclamation dates starting in the late 1990s <br />to currently active sites. Each site, depending on whether active or reclamied, was inspected for complianced <br />based upon the Deserado permit and the Rules and Regualtions. Deserado has a total of five active degas borehole <br />sites in the B -seam which are LWB13 -1 through LWB 13 -5. One active site was inspected that was remaining from <br />mining in the D -seam. All other pad sites inspected were in various stages of reclamation. The table included in <br />the Backfilling and Grading section lists all degas borehole pads inspected, their state (active or reclaimed) and <br />associated demonstration. <br />BACKFILL and GRADING — Rule 4.14 <br />Contemporaneous Reclamation 4.14.1; Approximate Original Contour 4.14.2; Highwall Elimination 4.14.1(2)(f); <br />Steep Slopes 4.14.2, 4.27; Handling of Acid and Toxic Materials 4.14.3; Stabilization of Rills and Gullies 4.14.6: <br />Majority of the degas borehole pads on site were inspected visually for backfill and grading compliance. Grading <br />in Deserado's permit for dill hole pads, including degas boreholes, is described with their sediment control <br />demonstrations (SEDCAD) found in Illustration 44 and in Section IILA.8. There are a total of three <br />demonstrations in Deserado's permit regarding drill sites. <br />1. Drill sites - gentle slopes: Regarding to backfill and grading, each site must be on 8% or lesser overall <br />grade and be cross ripped on contour creating substantial surface roughness. <br />2. Drill sites with good coverage: This demonstration is intended to address SAE requirements for dill sites <br />Number of Partial Inspection this Fiscal Year: 6 <br />Number of Complete Inspections this Fiscal Year: 3 <br />Page 2 of 9 <br />