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(Page 2) MINE ID # OR PROSPECTING ID #: M-1978-116 INSPECTION DATE: 4/5/06 INSPECTOR'S INITIALS GRM OBSERVATIONS This inspection was conducted as part of the normal monitoring program established by the Colorado Division of Minerals and Geology. The SM-18 MINE is located east of Uravan, Colorado above highway 141, Cotter representatives Glen Williams and Dick White accompanied the inspector on site. Division staff members Chris Rowe, Rick Wenzel and Deb Gonima also were present. The mine identification sign and affected area boundary markers are in place and in compliance with Rule 3.1.12. T-posts denote the permitted area around the mine site and the signs are located at the entrance off the county road. The adit entrance is gated and locked at this time. The mine has been active in the past 6 months, but due to Cotter's mill feasibility studies, production was halted for the near future. All ore stockpiled at the site has been removed and the stockpile area is graded to prevent stormwater run off. A retention pond shows evidence ofproper collection of the runoff from this area. Overall, the site grading is such that it minimizes erosion and directs flow to sedimentation/retention ponds. Ifthe mine remains in an inactive state longer than this fall, the Division will require that the waste piles be smoothed out and re shaped. Currently the dump has multiple piles on the top that are unsightly and could cause a potential for sedimentation and erosion issue during the winter. The constructed stormwater diversion trench is noted as functioning as designed. The trench below the rip wrap area shows signs of rilling and gulling that need to be addressed. The operator needs to construct structures to slow the water flow such as hay bales or continue the rip wrap down to a point beyond the topsoil /waste piles to prE;vent or reduce the erosion potential. The erosion is minor currently, however the issue is noted as a concern. Ifthe problem is not corrected, the inspector may change the issue to a problem with definitive dates of correction during the next inspection. The fuel storage tank is in secondary containment. It is noted that recent precipitation has partially filled the structure. If the current wet trend continues, Cotter should drain offthe water. The inspector noted the fuel hose on the ground. It is highly suggested, that Cotter keep the hose secured by lock to prevent vandalism and a spill that could occur since it is so close to the county road. If it appears that the mine shut down is going to be for a prolonged period of time, the tank should be removed to a more secure location. The inspector notes that topsoil piles have been in place for close to one growing season. Cotter will have to seed the piles in the fall to protect the soils from erosion. No unrelated debris or trash is noted. The office, storage area and compressor house are secured and mai~itained. No problems are noted at this time. However, erosion control measures and fuel tank security are noted as issues of concern for future monitoring.