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January 12, 2016 C-1981-018/Deserado Mine CCW <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 - Availability of Records <br />N - Backfill & Grading <br />N - Excess Spoil and Dev. Waste <br />N - Explosives <br />N - Fish & Wildlife <br />R - Hydrologic Balance <br />N - Gen. Compliance With Mine Plan <br />N - Other <br />R - Processing Waste <br />R - Roads <br />N - Reclamation Success <br />N - Revegetation <br />N - Subsidence <br />N - Slides and Other Damage <br />R - Support Facilities On-site <br />R - Signs and Markers <br />N - Support Facilities Not On-site <br />N - Special Categories Of Mining <br />R - Topsoil <br />COMMENTS <br />This was a partial inspection of the Deserado Mine conducted on January 12, 2016. The inspection was conducted <br />by Clayton Wein of the Colorado Division of Reclamation, Mining and Safety. Scott Wanstedt of Blue Mountain <br />Energy, Inc. (BME) attended the inspection. The weather was mostly clear with patches of fog, and a temperature <br />of 5 degrees farenheight. Snow had accumulated to the depth of 4 to 8 inches throughout the mine site. <br />HYDROLOGIC BALANCE - Rule 4.05 <br />Drainage Control 4.05.1, 4.05.2, 4.05.3; Siltation Structures 4.05.5, 4.05.6; Discharge Structures 4.05.7, 4.05.10; <br />Diversions 4.05.4; Effluent Limits 4.05.2; Ground Water Monitoring 4.05.13; Surface Water Monitoring 4.05.13; <br />Drainage — Acid and Toxic Materials 4.05.8; Impoundments 4.05.6, 4.05.9; Stream Buffer Zones 4.05.18: <br />The Facility Area ponds DP -1 and PP -1 were inspected (Photo 1). Both ponds were completely frozen <br />and the embankments were covered in snow. The ditch leading into DP -1 had been recently cleared out and had <br />frozen water in it. There were no indications of instability at either of the ponds. <br />The Slot Storage ponds SS -1 and SS -2 were covered in snow. The ponds embankments showed no signs of <br />instability. The ponds were not discharging during the inspection. <br />The B Seam dewatering system was active at the time of the inspection (Photo 2). Only the first two cells of the <br />system had open water during the inspection. All of the other cells were completely frozen and their <br />embankments were covered in snow. The "Last Chance Pond" was impounding water at the time of the inspection <br />but not discharging. The "Last Chance Pond was frozen. No indications of instability were identified. <br />The D Seam dewatering system was active during the inspection. All three cells of the system were impounding <br />water. Water was being pumped into the first cell at a rate of 293 gallons per minute. The last cell of the system <br />was discharging water (Photo 3). All of the embankments were covered in snow, there were no indications of <br />instability. As noted in the previous aerial inspection report, there is a "small breach" in the RIPRAP spillway <br />between the first cell and the second cell. The breach was minor in size and all of the water that flowed through it <br />Number of Partial Inspection this Fiscal Year: 5 <br />Number of Complete Inspections this Fiscal Year: 2 <br />Page 2 of 8 <br />