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(Page 2) MINE ID # OR PROSPECTING ID #: nn_t 9a~0 9 INSPECTION DATE: ig/~nd INSPECTOR=S INITIALS: a lw OBSERVATIONS This inspection conducted by Tony Waldron and Harry Posey of DMG along with Greg Lewicki of Reclamation Resources, Inc. The site is located just east of the town of Alma on an alluvial terrace of the North Fork of the Middle Fork of the South Platte River and has had historic placer mining conducted over a sizeable portion of the permitted area. The site presently has two operators conducting simultaneous activities on the site. The first one is a gold placer operation and the second one is a gravel operation. The gravel operation is set up along fhe northeastern end of the permif area with fhe pfacer just south and west of this location. The placer waste is periodically transported to the gravel screening/crushing area for further processing into gravel products. The main reason for this inspection was to examine the remains of the self contained gold processing facility that was destroyed in a fire. The main component of the gold placer operation was aself-contained processing facility that screened off the over-size material and processed the fines over a typical sluice trough containing a capture carpet that was periodically cleaned to remove the "heavies" or black sand concentrates which were then transported off-site for further processing and refining. The sluice tailings were pumped into a settling pond where the majority of the heavier material was settled out and the decant water was conveyed into another treatment pond where additional clarification occurred prior to the water discharging into a series of settlement basins that allow the water to infiltrate into the ground before any actual surface discharge occurs. The fire occurred on October 13, 2004 and the operator notified the Division via telephone on October 15, 2004 in accordance with the spill notification procedures. The plant was aTwo-story metal frame structure and a good portion of the structure was destroyed as the result of the fire. The area where the fuel tank and generator engines were located appeared to have burned the hottest and the aluminum fuel tank melted completely as did portions of the generator engine. As a result of the fuel tank melting, diesel fuel was released and total containment was lost due to the addition of water used in fighting the fire. The plant was situated in a low area and there is a culvert that drains this area and leads to pond A. The end of this culvert was capped when the fire started to prevent any discharge into The pond. It appeared that the water level in and immediately around the plant was approximately 2-3 feet deep. Since the diesel fuel and other lubricants are lighter than water they would have been floating on the surface and as the water drained away, probably through seepage into the surrounding coarse soils, this fuel IefT a demarcation ring wherever there was water present. The plant will obviously need to be salvaged and removed, however, at the time of the inspection there was an ongoing investigation that will need to be completed before salvage can begin. The main environmental concern is the potential loss of containment of any petroleum products that could then possibly leave the site. There was clearly a loss of containment from the fuel tanks spill prevention holding reservoir due to the addition of a significant amount of water. As the plant is removed, the surrounding soil will need To be tested to determine the extent of contamination. This soil will then need to be removed from the site or treated to remove the petroleum. The Colorado Department of Health and Environment will be the lead agency in following through with this clean-up, but DMG should be kept in the loop as this progresses. The placer operator had moved another portable plant onto the site and was continuing to process material. One problem that was identified with this plant was the wash water was being discharged into a small pond for primary treatment prior to being discharged into pond A. The problem was that almost no treatment was occurring in the primary pond and fairly sediment loaded water was entering into pond A. Eventually pond A will become cloudy and the water being discharged into the subsequent pond will be silty and so on until the treatment capacity of the pond series becomes compromised. The operator agreed to take some temporary measures to address the discharge of this water into pond A, however, a more permanent fix needs to be designed and installed if this plant is to continue to operate at this location. Therefore, this is being cited as a problem on page four of this report along with corrective actions.