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PERMIT#: M-1990-041 <br /> INSPECTOR'S INITIALS: MAC <br /> INSPECTION DATE: May 27,2016 <br /> OBSERVATIONS <br /> The inspection was conducted by Michael Cunningham and Wally Erickson of the Division of Reclamation, <br /> Mining and Safety (Division). Central City Consolidated Mining did not have a representative present for the <br /> inspection. The Bates-Hunter Mine is located between the towns of Central City and Blackhawk alongside <br /> State Highway 279. The mine site occupies approximately 1 acre and is situated at an elevation of 8,300 ft. <br /> The Golden Gilpin Mill is located about a half a mile up Highway 119 from its intersection with State Highway <br /> 279. The mill facility occupies the remaining 2.5 acres of the 3.5 acre permit boundary. The post-mining land <br /> use is industrial/commercial. <br /> The Bates-Hunter Mine completed the first five-year term of Temporary Cessation on March 8, 2016. The <br /> Operator has not applied for a second five-year term of Temporary Cessation. Therefore, the Division <br /> considers the site to be active. The inspection was conducted to ensure the financial warranty is adequate to <br /> cover the current cost of fulfilling the Reclamation Plan as required by Hard Rock Rule 4.2.1(1). <br /> Acid And Toxic Materials: <br /> Based on information in the approved Mining and Reclamation Plans and observations noted during the site <br /> inspection, the Bates-Hunter Mine and Golden Gilpin Mill may be a Designated Mining Operation (DMO) as <br /> defined by Hard Rock Rule 1.1(14). The following criteria is used to determine if a site is a DMO: <br /> a) designated chemicals used in metallurgical processing are present-on site; or <br /> b) toxic or acid-forming materials will be exposed or disturbed as a result of mining; or <br /> c) acid mine drainage occurs or has the potential to occur due to mining or reclamation activities; or <br /> d) uranium is developed or extracted, either by in situ leaching mining methods or by conventional <br /> underground or open mining techniques <br /> e) designated mining operations exclude operations that do not use toxic or acidic chemicals in processing for <br /> purposes of extractive metallurgy and will not cause acid mine drainage. Any designated mining operation <br /> may seek exemptions from this status pursuant to Rule 7. <br /> The approved Reclamation Permit states the ore body associated with the Bates-Hunter Mine contains pyrite, <br /> a sulfide mineral which generates acid when it is subject to oxidation. In addition, the Golden Gilpin Mill site <br /> contains tailings which generate acid drainage. The stabilization of the tailings containment area, south of the <br /> mill building, was part of a joint partnership between the Environmental Protection Agency and the Colorado <br /> Department of Public Health and Environment. The tailings stabilization project focused on isolating the <br /> tailings from the North Fork of Clear Creek in an effort to prevent acid mine drainage from entering the <br /> waterway. Finally, the Division does have a complete inventory of all chemicals and reagents which are being <br /> stored at the mine and mill. In absence of a detailed inventory of chemicals and reagents being stored at the <br /> site, the Division cannot be certain that Designated Chemicals are not present at either the mine or mill. The <br /> Division cited a problem in regard to this issue during the inspection conducted on April 26, 2016.The <br /> Operator has until July 22, 2016, to either remove all chemicals and reagents from the site or to provide the <br /> Division with a complete inventory of the chemicals and reagents which are stored at the mine and mill. <br /> Pursuant to Hard Rock Rule 7.2.2, the Operator will be notified under separate cover if the Division determines <br /> the Bates-Hunter Mine and Golden Gilpin Mill meet the definition of a DMO. <br /> Page 2 of 12 <br />