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May 19, 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 />R - 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 />N -Other <br />R - Processing Waste <br />R - Roads <br />Y - Reclamation Success <br />Y - Revegetation <br />NA - Subsidence <br />Y - Slides and Other Damage <br />Y - Support Facilities On-site <br />Y - Signs and Markers <br />R - Support Facilities Not On-site <br />Y - Special Categories Of Mining <br />Y - Topsoil <br />COMMENTS <br />This was a complete inspection by Leigh Simmons of Colorado Division for Reclamation, Mining and <br />Safety, (the Division). The inspection was accompanied by John Terry of New Elk Coal Company, (NECC). The <br />weather was showery, heavy rain fell immediately before the inspection. <br />Access around the site was generally not a problem. <br />Permit Renewal 6 is in progress, more details are given under the heading GENERAL MINE PLAN <br />COMPLIANCE. <br />The status of the New Elk Mine is Active. It was previuosly stated that the status should be changed to <br />Temporary Cessation, but on reflection this does not seem to be necessary; there is still activity at the site and <br />NECC staff are expected to be involved in ongoing operations and reclamation for the forseeable future, even if <br />there is no immediate prospect of the mine returning to production. <br />The Cline Mining bankruptcy proceedings were ongoing. Papers were expected to be filed in Colorado to <br />finalise bankruptcy by the end of May. An administrative review process will follow. Meanwhile, NECC is in <br />active communication with two or three groups of potential investors. All are in the due diligence process; all have <br />signed non -disclosure agreements. <br />NECC were involved in negotiations with Colorado Parks and Wildlife concerning allowing public access <br />across the railroad easement, east of the mine permit boundary. No formal agreement had been made yet, but Mr <br />Head thought that an agreement was likely to be reached allowing access at "access point I", although permission <br />would also be needed from a private landowner in order to reach that point from the highway. Any agreement <br />would be limited to a 5 year term which would ensure that the railroad could be made available . The road already <br />exists. <br />Recent activity at the site includes the completion of the drainage hole drilled from the Bates mine to the <br />Allen mine. The first attempt struck solid coal but the second attempt found fractured coal and was deemed to <br />have been succesful. The entire project took about a month which included drilling time of a week and a half. The <br />drilling was managed by Agapito Associates, but NECC staff were also invloved. <br />Mr Terry expected to pump from the Allen mine to pond I in the next week or so, but did not expect to <br />raise the pond to level where it would discharge. Mr Terry also expects to clean sediment out of pond 7 this <br />Number of Partial Inspection this Fiscal Year: 7 <br />Number of Complete Inspections this Fiscal Year: 4 <br />Page 2 of 19 <br />