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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1988-112 <br />INSPECTION DATE 5/22/07 INSPECTOR'S INITIALS WHE <br />OBSERVATIONS <br />This inspection occurred as part of the Division's review of Amendment No. 2 (AM-02). The decision <br />date for AM-02 has been extended by request from the Operator. Seven photos accompany this report. <br />The West Pit area was briefly inspected and discussed as an alternate location for the irrigation storage <br />pond proposed in AM-02. The alternate location would place the storage pond on top of the West Pit <br />backfill and would provide containment of the water pumped from the West Pit until needed for irrigation <br />purposes. When needed, the water would be piped directly to the center pivot irrigation equipment. <br />The Operator identified three existing groundwater wells located down gradient from the proposed <br />irrigation fields on Shalom Ranch where water quality data could be available to help establish baseline <br />conditions. <br />Reclamation work at the tailings pond continues to advance. The Operator discussed options for <br />permanently routing upland drainage around the tailings pond rather than attemptirig to convey upland <br />drainage across the surface of the reclaimed tailings. The Division clarified that upland drainage <br />structures forfinal reclamation of the tailings pond should be designed to safety convey runoff generated <br />from the PMP storm event. <br />The Division holds $7,400,000 financial warranty. The latest reclamation cost estimation prepared by the <br />Operator and submitted with AM-02 indicates that remaining reclamation tasks total $651,272. <br />Therefore, the existing financial warranty appears sufficient to ensure completion of reclamation. <br />No problems or possible violations were observed. <br />Responses to this inspection report should be directed to the Division of Reclamation, Mining and Safety, <br />701 Camino del Rio, Room 125, Durango, Colorado 81301, Attn: Wally Erickson, phone no. 970-247- <br />5469. <br />I & E Contact Address <br />NAME William Lyle <br />OPERATOR Battle Mountain Resources, Inc. <br />STREET P.O. Box 310 <br />CITY/STATE/ZIP San Luis. CO 81152 <br />cc: Tony Waldron, DMG <br />^ CE <br />^ BL <br />^ FS <br />^ HW <br />^ HMWMD (CH) <br />^ SE <br />^ WOCD (CH) <br />^ OTHER <br />