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(Page 21 <br />MINE ID J1 OR PROSPECTING ID # M-77-284 <br />INSPECTION DATE 2/21/97 INSPECTOR'S INITIALS WHE <br />OBSERVATIONS <br />This partial inspection was conducted by Wally Erickson from the DMG Durango office, 484 Turner <br />Drive, Building F, Suite 101, Durango, CO 81301, phone (970) 247-5193. Robert Schwind <br />accompanied the DMG inspector throughout the inspection. The Mineral Joe (:laims permit area <br />is located approximately 10 miles west of Naturita, on the north flank of Monogram Mesa and <br />southern portion of Paradox Valley, at approximately 6000' elevation, in portions of the SW 1 /4 of <br />the NE 1 /4 of Section 21 and in portions of the W 1 /2 of the E 1 /2 of Section 22, both in T46N, <br />R17W, NMPM, Montrose County. Mineral Joe permit is approved for 9.5 acres affected area. <br />DMG holds Corporate Surety Bond #U2155968 with United Pacific Insurance Coirpany as financial <br />warranty, in the amount of 512,000. <br />All Rules referenced within this report are taken from the Hard Rock/Metal Mining Rules and <br />Regulations of the Colorado Mined Land Reclamation Board, effective 5/77, amended 10/95. All <br />sections of the Act referenced within this report are taken from the Colorado Mined Land <br />Reclamation Act, 34-32-101 ET SEO, C.R.S., 1973 as amended, revised 7/93. If the operator does <br />not possess a current copy of the Act, Rules and Regulations, one may be requested for 58.00. <br />RECORDS -Original permit was issued on 6/16/78 to Kelmine Corporation for X3.5 acres affected <br />area. On 3/15/84, DMG approved the operation for Temporary Cessation (TC) status. On <br />10/19/93, DMG approved transfer of permit and succession of operator (;~0-01) for Cotter <br />Corporation as successor operator. On 1 /21 /94, DMG approved Technical Revision 01 (TR-011, <br />revising the status of the operation from TC to intermittently active. DMG records do not indicate <br />additional revisions or modifications to the permit. <br />SIGNS & MARKERS -Mine identification sign, required by Rule 3.1.1211), and safety signs were <br />posted at the mine entrance. Public access is controlled by locked gate. Mine access road was <br />well maintained. Affected area perimeter markers, required by Rule 3.1.12121, were not inspected. <br />MINE PLAN -Mine Plan states that the 9.5 acres affected area consist of the following 5 areas: <br />Area A - 2.5 acres, located in the SW 1 /4 of the NE 1 /4 of Section 21, contains mine incline for <br />exhaust air outlet. <br />Area B - 3 acres, located in the SW 1 /4 of the NE 1 /4 of Section 22, contains mine access <br />through Duggan Adit, waste rock stockpile, and loadout area for ore. Duggan Adit is <br />approximately 3,235' long and contains rail car track for ore transport ~:o surface loadout <br />facility. <br />Area C - 1 acre, located in the NW 1 /4 of the SE 1 /4 of Section 22, contains a trailer. <br />Area D - 1 acre, located in the NW 1 /4 of the SE 1 /4 of Section 22, contains exhaust ventilation <br />fan. <br />Area E - 2 acres of interconnecting roads, roads pre-existing and permanent. <br />During the time of this inspection, only Area B and its access road was inspected. Area B affected <br />area appeared to be less than 3 acres. Portal was open, rail lines extended from portal to ore crib. <br />Several ore cars were present. Ore crib and loading area appeared to be cleared of ore. Waste rock <br />