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PERMIT#:M-1987-028 <br /> INSPECTOR'S INITIALS: DMC <br /> INSPECTION DATE:July 11,2013 <br /> OBSERVATIONS <br /> This inspection was conducted as part of the Division of Reclamation, Mining and Safety's (Division) normal <br /> monitoring program. Eric Leigh, representing the Operator, was present during this inspection. Photographs are <br /> included with this report in order to illustrate some of the conditions observed. <br /> The Lily Mines site is located approximately fifteen miles west of Poncha Springs and accessed from FR 228. <br /> The site is a 112c operation that includes a total of 97 permitted acres. The Division currently holds a financial <br /> warranty amount of$282,000.00 for this site. The Division has reviewed the reclamation costs, in order to ensure <br /> the financial warranty reflects the actual current cost of fulfilling the requirements of the Reclamation Plan, and <br /> determined that the current financial warranty amount is adequate. <br /> Adequate mine identification signage was noted at the entrance to the site. <br /> The affected area boundary markers were not observed, however, the disturbance at the site appears to be well <br /> within the permit area. <br /> Mining was occurring during this inspection,with the highwall advancing to the north. Waste rock is being placed <br /> up against the lower highwall area. Product stockpiles and crushing equipment were located on the lower bench. <br /> The reclaimed slope in the south permit area adjacent to Taylor Gulch is becoming well vegetated and appears <br /> stable. Rills or gullies were not observed on the slope. <br /> The rip-rap areas of Taylor Gulch below FR 228 appear stable. <br /> Stormwater management berms are in place and appear effective. <br /> A condition of the permit requires the operator to include a report describing geotechnical conditions related to <br /> construction of the highwalls with their annual report each year. A review of the permit file found that this <br /> condition has not been complied with. This is an outstanding problem noted in previous inspection reports as <br /> well. <br /> No other problems or violations were noted during this inspection. <br /> Responses to this inspection report should be directed to Dustin Czapla at the Division of Reclamation, Mining <br /> and Safety, Grand Junction Field Office, 101 South 3`d Street,Room 301,Grand Junction,Colorado 81501,phone <br /> number(970) 243-6299. <br /> Page 2 of 5 <br />