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July 26, 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 />R - Fish & Wildlife <br />R - Hydrologic Balance <br />N - Gen. Compliance With Mine Plan <br />N - Other <br />R - Processing Waste <br />R - Roads <br />R - Reclamation Success <br />R - Revegetation <br />N - Subsidence <br />N - Slides and Other Damage <br />Y - Support Facilities On-site <br />Y - Signs and Markers <br />N - Support Facilities Not On-site <br />N - Special Categories Of Mining <br />N - Topsoil <br />COMMENTS <br />This was a partial inspection of the Deserado Mine conducted on the 26th of July, 2016. The inspection was <br />conducted by Clayton Wein of the Colorado Division of Reclamation, Mining and Safety. Scott Wanstedt of Blue <br />Mountain Energy, Inc. (BME) was present at the inspection. The weather was clear and the temperature was <br />approximately 95 degrees farenheight. The ground conditions were dry. <br />FISH and WILDLIFE El Rule 4.18: <br />During the inspection of the Raw Water Lagoon, a nest was spotted with three Osprey in it. There was a <br />fourth spotted on a nearby pole. There appeared to be at least one young Osprey in the nest (Photo 1). <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 />Several of the ponds on the mine site were inspected: <br />The Facilities Area ponds DP -1 (Photo 2) and PP -2 were inspected. DP -1 was impounding water at the time of the <br />inspection. The pond was not at full capacity and the level of the impounded water was below the primary <br />spillway. The primary spillway and emergency spillway were free of debris and in good condition. The <br />embankment of DP -1 is well vegetated and stable. There are cattails in DP -1 to help filter the water. Pond PP -2 <br />was holding water, but was not discharging. The spillways were in good condition and free of debris. There were <br />no indications of erosion on the embankments of PP -2. <br />The Slot Storage ponds SS -1 and SS -2 were stable and in good condition. The ponds were not impounding water. <br />The embankments of the ponds are well vegetated. <br />Recent repairs had been made to the first pond of the B -Seam Dewatering System (Photo 3). Noted in the May, <br />Number of Partial Inspection this Fiscal Year: 1 <br />Number of Complete Inspections this Fiscal Year: 0 <br />Page 2 of 8 <br />