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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1992-045 <br />INSPECTION DATE 08/25/06 <br />INSPECTOR'S INITIALS ESC <br />This was an inspection of the Lily Mines conducted by Erica Crosby of the Colorado Division <br />of Reclamation, Mining and Safety. Bob Holloway and Raul Frias of Monarch Mountain Marble <br />Company, LLC and Bill Tezak of Super X were present during the inspection. <br />The purpose of the inspection was to meet with the operator to discuss reclamation tasks may <br />be conducted on site in light of the April 6, 2006 Mined Land Reclamation Board Order. The <br />operator submitted a letter to the Division on September 28, 2006 requesting that certain <br />reclamation tasks be completed this year. The Division responded to that request in writing <br />on October 4, 2006, and is discussed in further detail below; <br />1. Backfill the unpermitted road on US Lime property This area ie not included in the <br />112 Conversion Application (CN-O1) because it is owned by US Lime, and the operator <br />does not have legal right to enter the area. The operator opted to reclaim this <br />area rather than incorporate it into the CN-O1 application. This reclamation <br />activity is allowed under the Board Order since it would decrease the reclamation <br />liability on site. The area has been backfilled to grade with the waste piles <br />located on site, mulched and reseeded. <br />2. Grade in new road to upper mine workings This activity is not allowed since this <br />would most likely increase the reclamation liability on site. The Division informed <br />the operator on site that no new roads may be constructed on site until the CN-O1 <br />application is approved by the Division. In addition, the operator will need to <br />consult with the USFS regarding the final location of the road through the property <br />since is serves as public access to federal lands. This issue will need to be <br />resolved during adequacy of CN-O1. <br />3. Channel Taylor Gulch with additional rip rap to insure separation between disturbed <br />area and the gulch This task is allowed and required under the temporary <br />stabilization plan. However, the operator was reminded that the final plan on <br />drainage stabilization has not been approved by the Division since it was a <br />component of CN-01. The drainage channel north of the road crossing has been <br />stabilized with rock screened from the waste piles stored on site. The rock is <br />essentially waste marble and is angular and durable in nature. Questions arose <br />regarding armoring where the road crosses Taylor Gulch. This issue is currently <br />under review under CN-O1 regarding the design specifications for thin crossing. In <br />addition, the operator should consult with the USFS regarding this crossing since <br />the road serves as public access to federal lands. <br />4. Re-work grade on lower mine pad to ensure drainage runs into the pit This task is <br />allowed and required under the temporary stabilization plan. However, during the <br />inspection this reclamation task has not been initiated. Again, this issue is <br />currently under review under the CN-O1 application for final approval. <br />5. Re-do the silt fence previously installed to eliminate DMG concerns regarding <br />previous failure This task is allowed and required under the temporary <br />stabilization plan. A second set of silt fences were installed immediately down <br />gradient of the original silt fence that is nearly full of sediment. The operator <br />will need to insure that the silt fence is property keyed in to the ground. In the <br />small drainage awalea, small rock check dams have been installed to slow down runoff <br />and trap sediment. Silt fences in these swalea should be removed since they are not <br />properly keyed in place and serve no purpose. <br />6. Hauling stock piled rock from the pit area (mined in previous years) down to the <br />lower pad (disturbed area included in the mine plan) This task is not be allowed <br />unless the operator takes stockpiled material that was already mined and haul it <br />down to the plant site and this activity decreases the reclamation liability at the <br />site (if it increases the reclamation liability it is not allowed and if there is a <br />question on who owns the material it would not be allowed on legal right of entry <br />questions). In addition, only the stockpiled material located in the original 110 <br />