2015-10-26_INSPECTION - M2015033

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PERMIT #: M-2015-033 INSPECTOR'S INITIALS: PSH INSPECTION DATE: October 22, 2015 OBSERVATIONS This was a pre-operation inspection of the Parcel 122 — Resource Development Project site conducted by Peter Hays and Eric Scott with the Colorado Division of Reclamation, Mining and Safety (Division/DRMS). Mr. Brad Janes, Mr. Chris Varra and Mr. Garrett Varra with Varra Companies, Inc. (Varra) were present during the inspection. The 112c application package was received by the Division on July 28, 2015 and deemed complete for purposes of filing on September 8, 2015. The permit application decision date is December 7, 2015. The site is located east of Firestone, Colorado in Weld County and adjacent to the Heintzelman site operated by Varra. The required notice signs were posted at several locations along WCR 28. The permit boundaries were well defined by fences and roads on all sides of the site. The proposed Parcel 122 site will be 156.78 total acres with two areas of extraction, Tract A — West Basin and Tract B — East Basin. A total of 101.97 acres of land will be disturbed by the proposed mining activity. All mining activities will occur on land owned by Varra. The Tracts will be mined concurrently from north to south. The processing plant and stockpile area will be located between the tracts and south of the existing residence. Two 10 and 24 acre mineral reserve areas are located on the southern portion of the site. Mining disturbance will not occur in these areas unless the mining and reclamation plans are revised in the future. The Applicant has proposed offset distances of 125 feet from the residence, 10 feet from all other structures, property boundary, right-of-way or easement without a structure agreement. A mining offset of 25 feet will be used for wellheads and facilities. The wellheads will be backfilled to create a 100+ foot radius around the wellhead. The site bedrock depth varies from 15 to 60 feet deep with an average of 39 feet. The site will be mined as a dewatered open pit using standard mining equipment and methods. The interior mining highwalls will be excavated at a 1.25H:1V slope. The perimeter highwalls will be mined to a 3H:1V slope or shallower prior to the construction of the clay liner. The site reclamation will create two reservoir with an expected 90.87 acres in size. The expected life of mine is 25-30 years depending upon market conditions. The present land use is cropland and rangeland. The current vegetation consisted of rangeland grasses, forbs and trees and a crop of corn. Five oil and gas wells and the associated infrastructure are located on the site. All man-made structures and utilities, except an Anadarko pipeline and easement, appear to have been identified by the Applicant in the permit application. The Operator was provided contact information for Anadarko. The Applicant stated they would contact Anadarko to discuss the easement and gas line. Groundwater monitor is ongoing at the site. The monitoring well casings were observed during the inspection. Pre-operation inspection photographs are attached below. Page 2 of 8