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(Page 2) MINE ID # OR PROSPECTING ID # M-1981-107 INSPECTION DATE 08/31/06 INSPECTOR'S INITIALS ESC OSSSRVATIONS This was an inspection of the Buster Quarries conducted by Erica Crosby of the Colorado Division of Reclamation, Mining and Safety. Bernard Buster of ELB Stone, inc. was present during the inspection. Weather conditions on site were clear and warm. Ground conditions were dry. The Buster Quarries are located approximately 4.5 miles north of Lyons in Larimer County, Colorado. In 2001, a number of permits were combined into Permit M-1981-107 including M- 1982-028, M-1984-081, M-1993-037 and M-1998-072 for a total of 173 acres. The Division currently holds a reclamation bond in the amount of $132,600.00. Mining ie taking place in 7 distinct areas as noted below: Hotchkiss Area- The operator was actively quarrying in the Hotchkiss Pit. The activity consisted of miners using hand tools along the face of the highwalls. The Mine Safety and Health Administration (MSHA) has imposed a highwall height limitation of 6 feet. The pit is approximately SO feet deep, however the stair stepping of the 6 foot highwalls creates a moderate slope. Rubble piles are stored in various locations that will eventually be pushed back into the pit. The northern potion of the quarry is used as a storage area due to the unacceptable quality of the rock. A small pond is located in the pit that is fed by surface water runoff. The operator stated that the water is pumped out and used for duet suppression along the roads. The operator should be reminded that during the Amendment Application (AM-03), the Office of the State Engineer (OSE) stated that any runoff water stored on site must be pumped back to the stream system within 48 hours. Otherwise, the operator must replace depletions to the stream system for losses associated with duet control. See attached OSE letter for clarification. Because surface water runoff was stored in the pit and used for the mining operation, the Division considers this a problem that will need to be addressed by the operator. The operator will need to either remove the water or replace depletions to the stream system for losses associated with use and evaporation. See page 4 for further detail and corrective action due dates. North East Point- According to the operator, mining was initiated in this area 3 years ago but was abandoned due to the poor quality of rock. A small stockpile approximately 2,000 CY is located on the north east side of the cut. Permit boundary marker 72-16 was observed. If the operator does not intend to mine this area, then the site should be reclaimed in accordance with the approved reclamation plan. Number 10 Annex- The operator was actively quarrying in the Number 10 Annex Pit. The pit is approximately 40-50 feet deep. As depicted on the 2005 Annual Report Map, a portion of the pit is considered a "Primary Activity Area." However, when the permit was issued, this area was identified as "Tertiary Disturbed Area." See attached maps and permit text for clarification. in summary, a tertiary disturbance was described in the AM-03 application as the following: 1. non-production areas, litter and debris, and disturbance associated with weed control, 2. the disturbance will be minimal and remediable with hand tools, 3. the disturbance will be localized with the majority of the area being completely undisturbed, and 4. all areas within the permit boundaries not included in other disturbed or reclaimed areas. Because this area is now considered a primary disturbed area rather than a tertiary area, it will need to be reflected in the permit in the form of a revision to the permit and also so that adequate reclamation bond can be calculated. See page 4 for further detail and corrective action due dates. Number 10- This area is a flat spot that is used to store crushed material. A portion of the area is being mined, but contains a lot of overburden material. The overburden material will make an excellent source of topsoil, and will need to be salvaged by the operator.