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(Page 2) MINE ID # OR PROSPECTING ID # M-1977-208 INSPECTION DATE 02/22/07 INSPECTOR'S INITIALS ESC This was an inspection of the Lyons Quarry conducted by Erica Crosby of the Division of Reclamation, Mining and Safety. Monica Sowders of CEMEX, Inc. and Alan Notary of Brown and Caldwell were present during the inspection. The purpose of the inspection was to inspect and discuss the current status of the C-Pit and address the concerns noted in the citizen complaint inspection submitted by the St. Vrain Valley Community Watchdogs. The citizen complaint letter received by the Division on January 29, 2007 requested an investigation into the poor quality of water in the C-Pit of the Lyons mine site. The Division has been aware of this situation for a number of years, therefore an investigation is not necessary. Rather the Division updated the St. Vrain Valley community Watchdogs on the history of water in the C-Pit and the current statue of the site in a letter dated March 3, 2007. The source of the water entering the C-Pit comes from direct precipitation, seepage from an upland irrigation ditch located west and south of the pit, and water that is applied to the cement kiln duet (CKD) several times a day to minimize wind blown dispersal. Spray water picks up soluble constituents from the CKD: these include mostly lime (from limestone), chloride (from clays), and sulfate (from gypsum that is added to the process). This solute washes over and through the CKD and into the pond. Due to operational changes, the pool of water in the C-Pit has significantly increased over the years such that a portion of the CKD is underwater. The pool of water in the C-Pit covered up to 7 acres in size at one point and consisted of 100 acre-feet of water. Over the years, CEMEX has reduced the water pool to approximately 3.5 acres by concentrating the CKD disposal in various portions of the pit, backfilling, reuse of the water and through evaporation. Under Technical Revision 04 ("TR-04"), CEMEX revised the water monitoring plan. The monitoring plan includes quarterly sampling of C-Pit and the detection wells for dissolved selenium, dissolved thallium, pH, total dissolved solids, sulfates and chlorides. CEMEX proposed to reduce pH and selenium levels in C-Pit by continuing to pump the water out until the pond reached its minimum depth and steady-state size based on the limitations of the submersible pump. The pumping lowered the water level by approximately four feet until it had to be terminated in August 2005 due to continuing problems with precipitated solids clogging the system and impacting plant operation. Technical Revision 06 ("TR-06") was submitted to the Division in January of 2006 requesting that water from C-Pit be pumped continuously into the spray tower of the cement plant at a higher flow rate while lowering the pH of the water. Technical Revision 07 ("TR-07") was submitted to the Division in March of 2006 to addreae a conceptual design and cost estimate for a biological water treatment system to remove selenium from water that has accumulated in the C-Pit. The reclamation bond was increased in additional $735,000.00 to addreae treatment of the water in the C-Pit to ensure reclamation of the pit. In accordance with the approved revisions noted above, CEMEX has until May 17, 2007 to remove or cover the waters in the C-Pit. Based on conversations with CEMEX, it appears that pumping water out of the C-Pit to be used in the spray tower is problematic. Therefore, CEMEX proposes to backfill the pit with shale spoil material from the Lyons quarry and waste shale from the Dowe Flats Quarry. CEMEX estimates approximately 250,0,00- 400,000 cubic yards of material will be necessary to backfill the pit to no longer expose water. CEMEX will monitor the presence of water in the pit and keep fill below levels where existing ponded water could migrate into the surrounding unconsolidated material. CEMEX was actively hauling shale material from stockpiles at the Lyons Quarry and the Dowe Flats Quarry into the C-Pit. The piles at the Lyons Quarry are located east and south of A- Pit and are 1/4 mile and 7/10 mile in travel distance, respectively. The size of the material in the Lyons piles varies from boulders to flaky rocks. The material ie angular and appears to have a high void ratio. Material hauled in from the Dowe Flats Quarry has been blasted and has been crushed to 5" minus. The material is coarse and has been stockpiled in the pit for disposal in the C-Pit. CEMEX will need to ensure that the CKD is covered at all times during the backfilling project and not be subject to wind erosion.