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(Page 2) MINE ID # OR PROSPECTING ID # M-1987-064 INSPECTION DATE 9/2/04 INSPECTOR'S INITIALS_RCO OBSERVATIONS This pre-operation inspection was performed by the Division as part of its review of the current amendment (AM-01) for this 112c permit. The operator was contacted about scheduling the inspection. The operator's representative nametl on page one was present during the inspection. Also present were Mike Fitzgerald of Ecosphere Environmental Services and Robert Bowie of La Plata County Planning. The in-stream mining areas and the processing area, which are lands already permitted, were not inspected. The main areas inspected were the east bank of the Animas River, most of which is currently within the permit, and the some of the existing gravel bars, seasonally used to access the in-stream mining areas. Of primary interest was the east bank and the riprap emplaced there. Bank height varied from about 6 to 10 feet above present water level. Slope gradients of non-riprapped and/or non-affected banks generally ranged from 1:1 to 2:1, depending largely on its aggregate composition, degree and type of vegetative cover, and its location (i.e., whether material was being eroded or deposited). Young willows, mature willow thickets, and young narrow-leaf cottonwoods lined many of the banks and margins of the gravel bars. A dominant gravel bar extends nearly throughout the length of the permitted reach of the river, near the east bank. It is almost continuous, effectively creating a gravel dike and secondary river channel. The main gravel mining area lies to the west of the bar. The bar has been utilized by the operator's equipment to access the various portions ofthe in-stream gravel mining areas, and is maintained for this purpose (bladed and driven on). There are a couple locations where the river has naturally breached the bar/dike and some river flow approaches the east bank. One such location is where the operator has installed embedded concrete blocks to help protect the bank. The operator should address whether the reclamation plan requires that the gravel bar, upon abandonment of the in-stream mining phase, be graded and/or breached. This detail may be addressed in the Army Corps of Engineers (ACOE) permit. The operator has provided a diagram of the several locations of existing riprap. These locations were all verified during this inspection. The riprap consists of one of the following types: boulders (1'-3' diam.) placed on 2:1 graded slope; concrete blocks (2.5'x3.5'x8') embedded in the bank just above the water line, and the speces between filled with pitrun; the same type blocks, similarly embedded but cabled together and filled between; concrete blocks (3'x3'x8') tiered in 4 or 5 levels, with bottom tier set below the water line, blocks tightly spaced, tiers stepped steeper than 1:1. The riprapped lengths of river bank were longer toward the northern end within the permitted area, and appeared to be a potentially more erodible portion. Some of the riprap has been observed along this bank during previous inspections, and seems 4o be sufficient to handle "normal" peak flows during spring runoff events. Other parts of the riprapped bank appear newly installed. The operator has stated that these newer features were installed at the behest of the ACOE. This office would like to see copy of the ACOE riprap design specifications and/or installation approval document, prior to the decision on this amendment. La Plata County Planning Dept. was represented on this inspection. That office also appears to have reclamation or land use/development obligations being imposed on this operator. It is hoped that the requirements imposed on Sandco by both the county and DMG conform sufficientlyto not require additional revision of this permit. If such revisions are needed, the operator should promptly inform DMG and begin incorporating them into this amendment. There were no problems noted at this time. Upon receipt of adequate materials for addressing the items in this inspection report and outstanding items in the amendment application, this office will begin calculating the bond amount. No further items were observed during the inspection. Responses to this inspection report should be directed to the Division of Minerals and Geology, 701 Camino del Rio, Room 125, Durango, Colorado 81301, Attn: Bob Oswald; phone no.970-247-5193. Cont