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(Page 4) MINE ID # OR PROSPECTING ID # M-1981-107 INSPECTION DATE 08/31/06 INSPECTOR'S INITIALS ESC The following problems (PB) and/or possible violations (PV) (and suggested corrective actions) were identified during this inspection. The problems should be corrected by the dates given, or they will become possible violations. The possible violations should be corrected by the dates given to reduce their severity when considered by the Mined Land Reclamation Board. The inspector noted on the previous page should be notified of all corrective actions taken. PROHLBNS/PO33IBLS VIOLATION3 AND CORRECTIVS ACTION3 DATE 1. , PROBLEM: Small surface water ponds were noted on site (Hotchkiss & PB or PV:PH Number 10 Annex), and the water is used to facilitate the TOPIC(S):HB mining operations. The OSE states that any runoff water stored 12/1/06 on site must be pumped back to the stream system within 46 hours, otherwise, the operator must replace depletions to the stream system for looses associated with dust control. CORRECTIVE ACTION: The operator will need to either remove the water from the pits ae noted by the OSE, or replace depletions to the stream system for losses associated with use and evaporation. Proof of compliance must be submitted in the form of photographs or documentation of compliance by the OSE on or before December 1, 2006. / PB Or PV:PH 2' / PROBLEM: TOPZC (S):NP The north portion of the Number 10 Annex pit is considered a 12/1/06 "Primary Activity Area" by the operator in the 2005 Annual Reclamation Report. However, when the permit was issued, this area was identified as "Tertiary Disturbed Area." CORRECTIVE ACTION: 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 on or before December 1, 2006.