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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1977-020 <br />INSPECTION DATE 2-18-2004 INSPECTOR'S INITIALS SSS <br />OBSERVATIONS <br />This inspection was conducted at the operator's request, to identify and agree on correction plans for non-compliance issues at <br />this site and to clarify some details that have been misrepresented in the Amendment No. 3 application currently pending. <br />WEST LAKE <br />The west end of the west lake has not been excavated as shown on the AM3 pre-mining map. This map must showaccurate <br />current conditions. Also, some of the other slopes of this lake appear to be at grades that are different than those depicted on <br />this map. Please ensure this map is accurate. <br />EAST LAKE (BLACK PROPERTY) <br />Excavation has proceeded in the past 1.5 years without following the mining plan that was revised by United Companies 1.5 <br />years ago. The mining plan was revised to correct non-compliance issues that were identified at that time, resulting from <br />United Companies failure to follow the mine plan that was in place when they became the successor operator of Pit No. 1. The <br />operator must be aware that potential for violation situations will be high if they continue to operate with total disregard for the <br />approved mining plans set forth in the reclamation permit. <br />C <br />Excavation has encroached closer than 200 feet to permanent man-made structures forwhich a damage waiveragreement or <br />an engineering demonstration of stability has not been submitted, as required by Rule 6.4.19 of the Construction Material Rules <br />and Regulations. The approved permit also contains a commitment by the operator to submit such documentation prior to <br />excavating closer than 200 feet to these structures. This excavation of the buffer areas has occurred on the south end of the <br />pit, near the railroad structures and on the northeast corner of the pit near the A. Wright structures. The operator must <br />adequately backfill these areas of excavation encroachment and prove, through accepted engineering demonstrations, that <br />those pit slopes are adequately stabilized to prevent damage to the subject structures. These highwall stabilization measures <br />must take into account and minimize impacts to groundwater hydrology such as a shadow effect or a mounding effect from <br />installation of an impermeable or low permeability barrier. This highwall stabilization and stability demonstration must be <br />completed within 60 days of the date of this inspection. <br />Excavation has also proceeded to completely remove a portion of the separator strip of material that was to remain in place <br />between the East Lake and the North Lake (Laughery property). This issue will be addressed through the AM3 application <br />process. The operator discussed halting any more excavation of the separator. <br />The sight berm around the Black property has been increased in size, resulting in oversteepened slopes and poor revegetation <br />success. The slopes of this berm need to be reduced to a grade of 3H:1 V, fertilized per the soil analysis from 1.5 years ago, <br />mulched and seeded. This berm has been bare much too long and a concerted effort must be made to revegetate and <br />stabilize it. <br />NORTH LAKE (LAUGHERY PROPERTY <br />AM-2 contains a commitment from the operator to submit engineered plans that address measures to be taken to ensure <br />geotechnical stability of the buffer between the north lake and the Gunnison River. This commitment has been disregarded as <br />excavation has proceeded well into the north lake and no such engineering plan has been submitted to DMG. The operator <br />proposed leaving a larger buffer between the river and the pit, which would be acceptable in areas where vegetation is well <br />established and substantial enough to stabilize the buffer. However, inspection of the northeast corner of this parcel shows <br />little vegetation and highly erodible, vertical and undercut riverbank, strewn with items (appliances, branches, logs) that were <br />deposited in washed out areas in an attempt to stabilize them. Stabilization of this portion of the river bank must be <br />appropriately addressed and implemented before excavation progresses any further toward the northeast corner of this pit. <br />This issue is being addressed through the AM-3 permitting process. <br />