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AVWCOLORADO <br />Division of Reclamation, <br />Mining and Safety <br />Department of Natural Resources <br />1313 Sherman Street, Room 215 <br />Denver, CO 80203 <br />October 22, 2018 <br />Scott Wanstedt <br />Blue Mountain Energy, Inc. <br />3607 County Rd. 65 <br />Rangely, CO 81648 <br />RE: Deserado Mine, Permit No. C-1981-018 <br />2111 Quarter 2018 Sediment Pond Inspection Report and 2°d Quarter 2018 <br />County Road 65 Subsidence Monitoring Report <br />Dear Scott, <br />The Division of Reclamation, Mining and Safety (the Division) has reviewed the <br />Sediment Pond Inspection Report and the County Road 65 Subsidence Monitoring <br />Report for the 2'a Quarter of 2018. The reports were received on July 19th, 2018. The <br />Division finds the reports to be in compliance with the following Rules: <br />111 Ouarter 2018 Sediment Pond Inspection Report <br />4.05.9(17) — All Impoundments are inspected quarterly, by a qualified person designated <br />by the operator, for the appearance of structural weakness and other hazardous <br />conditions. The reports are retained with Scott Wanstedt at the Deserado Mine Office, <br />and copies of the reports are submitted to the Division on a quarterly basis. <br />4.05.9(15)(a) — Burrows on the embankments of the RP -2/3 Pond were filled in. The <br />discharge channel from the SDH -3M pond to the SDH -3L pond has been eroded. The <br />water being pumped into the SDH -3L pond is directly from a pipe and the channel from <br />SDH -3M is no longer used. The SDH -3L pond on its own is sufficient to treat the water. <br />Seepage at the BD2-5 Pond is being watched closely. The structure is not thought to be <br />unstable; however, if the pond embankment fails, then the material and water would be <br />captured by the BD2-3 Pond. The seepage has been noted in previous quarterly reports <br />sent to the Division. <br />4.05.9(15)(b) — The existing required monitoring procedures were met. <br />4.05.9(15)(c) - The amount of water impounded in the ponds was documented in the <br />report. <br />1313 Sherman Street, Room 215, Denver, CO 80203 P 303.866.3567 F 303.832.8106 http://mining.state.co.us <br />John W. Hickenlooper, Governor I Robert W. Randall, Executive Director I Virginia Brannon, Director <br />