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COLORADO <br />Division of Reclar a:tion, <br />,. Minim and safety <br />Department of Natural Resources <br />1313 Sherman Street, Roorn 215 <br />Denver, CO 80203 <br />April 13, 2016 <br />Al Weaver <br />Energy Fuels Coal, Inc. <br />P.O. Box 459 <br />Florence, CO 81226 <br />Re: Southfield Mine (Permit No. C-1981-014) <br />Bond Release Application No. 4 (SL -04) — Adequacy letter <br />Dear Mr. Weaver: <br />The application for SL -04 was deemed complete for the purposes of filing on February 1, 2016, and the <br />bond release inspection of the site was conducted on February 24 and 25, 2016. DRMS staff has reviewed <br />your bond release application and the results of the inspection to determine whether the items you have <br />submitted are adequate in terms of meeting the requirements of the Act and Regulations. Comments made <br />by landowners have also been considered. <br />The following adequacy issues were identified by DRMS staff and need to be addressed by Energy Fuels <br />(EFCI). Alternatively, EFCI should provide an explanation as to why each issue is not their <br />responsibility. <br />From general review of application <br />1. Regarding the seep and associated structure in the Magpie Diversion, please provide a status <br />update on the plan to address (possibly remove) this structure. <br />From bond release inspection and previous inspections <br />2. The Corley replacement well produces water with high levels of iron and manganese, per <br />laboratory results for a sample taken by EFCI. During the inspection, Dr. Corley illustrated this <br />with a sample that he said he had taken approximately four days earlier; the water in the bottle <br />contained a brown precipitate at the bottom. A water sample was also taken from the well during <br />the SL -04 inspection; this water became turbid after approximately an hour. Because this water is <br />apparently not potable, the Division questions if this well is a valid replacement for the former <br />well. Please provide a status update on this issue. <br />3. The entire length of the road to well MW -65 was inspected on foot. Some minor erosion was <br />seen in various places along the road, and this could potentially get worse over time. Near the <br />well (south end) significant erosion was seen. There is a rill 18 inches deep and 5 to 6 feet wide, <br />1313 Sherman S'tree't, Roorn 215, Denver, CO 80203 P 303,86 3567 F 303,832,8106 Ih't'tl:a:l/rnining.sta'te.co.0 s <br />John W. Hiokenlool:aer, Governor I Mike King, Executive Director I Virginia Brannon, Director <br />