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(Page 2) MINE ID # OR PROSPECTING ID # M-1999-042 INSPECTION DATE 7-18-2003 INSPECTOR'S INITIALS SSS OBSERVATIONS This was a routine monitoring inspection conducted as part of DMG's ongoing monitoring program for permitted mines in Colorado. Additionally, this inspection was conducted to evaluate current site conditions for use in updating the reclamation cost estimate for this site. The mine identification sign displayed the information for a previous mine permit that the operator held for this site. This sign must be updated to display the information required by Rule 3.1.12(1) of the Hard Rock/Metal Mining Rules and Regulations. This is noted as a problem with corrective actions noted on the last page of this report. No significant erosional features were noted on the affected areas of the site. No significant infestations of noxious or other problematic weeds were noted on site during this inspection. A partially full 55 gallon drum apparently containing waste oil was stored outside the shop without adequate spill containment. The operator was instructed to store the drum and any other hazardous materials kept on site, within adequate spill containment, or within the shop itself. This is noted as a problem with corrective actions noted on the last page of this report. The operator is transporting waste (non-saleable at this time) alabaster, from mine development to a location on the edge of the grove in the northeast corner of the lower storage area. The mine plan indicates that the grove area will not be disturbed, except for parking. It does not appear that any of the trees in this area have been adversely affected. The operator must store any additional waste material on areas designated for this purpose and have been stripped of topsoil. No additional material should be located in the grove area, and this material already stored there must be removed prior to November 7, 2003 and the disturbed area reseeded. Otherwise, the operator must secure an approved technical revision to the permit that addresses plans to utilize this area as a waste rock storage area and plans to reclaim this area. Costs for disposal of this material, within the workings of the mine, are included in the enclosed cost estimate and will remain so until this waste rock no longer requires disposal to enable site reclamation. This is noted as a problem with corrective actions noted on the last page of this report. The operator indicated that the waste alabaster material would be used as road construction fill to relocate the Forest Service road around the south perimeter of the site (reportedly at the Forest Service s request). Confirmation of the Forest Service concurrence with this road relocation should be submitted to DMG to prevent potential problems with these operations being perceived as off-site damage. The operator has accumulated quite a bit of salvage equipment, stone from other operations and junk that is stored on the lower storage area near the bath house. This material must to be removed from the site except for only items that will be used to support this operation. Costs for disposal of this material, within the workings of the mine, are included in the enclosed cost estimate and will remain so until this material no longer requires disposal to enable site reclamation. In an effort to ensure the financial warranty remains adequate to reclaim this site per the requirements of the approved reclamation plan, DMG has updated the reclamation cost estimate, adjusted to account for current site conditions (copy enclosed). Clearly, the site is currently under-bonded. Therefore, pursuant to Section 3432.5-117(4) of the Colorado Land Reclamation Act, adequate financial warranty must be submitted to DMG within 60 days of the mailing date of this report. Please review the enclosed figures as soon as possible and contact our office if any calculation ercors are noted. Responses to this inspection report should be directed to Steve Shuey at the Division of Minerals and Geology, Grand Junction Field Office, 101 South 3rd Street, Room 301, Grand Junction, Colorado 81501, phone number 970-243-6368. I & E Contact Address NAME OPERATOR STREET CITY/STATE/ZIP Robert Congdon Avalanche Creek Marble and Alabaster L.L.C. PO. Box 266 Glenwood Springs, Colorado 81602 cc: Carl Mount -DMG Denver Office ^ CE ^ BL FS - Sopris Ranger District ^ HW ^ HMWMD (CH) ^ SE ^ WOCD (CH) ~( OTHER -Tam Swint ACMA LLC