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(Page 2) MINE ID # OR PROSPECTING ID # M-1987-164 INSPECTION DATE Off 27f05 INSPECTOR'S INITIALS ESC OBSSRVATION3 This was an inspection of the Camilletti Pit, Permit No. M-1987-164, conducted by Erica Crosby of the Colorado Division of Minerals ~ Geology. Art Morrissey of Connell Resources, Inc. was present during the inspection. The site is located 1 ~ miles east of Hayden in Routt County, Colorado. A 9.9-acre 110 permit was issued to Connell Resources, Inc. on June 27, 1990. On September 28, 2000, the permit was converted to a 112 permit for a total permit area of 21 acres. The Division currently holds a financial warranty in the amount ~of $26,400.00. The postmining land use for the site is cropland and pastureland. A permit identification sign was noted at the entrance to the site. The existing fence marks the permit boundary area. No mining was taking place during the inspection. Snow cover varied from 0" to 18" in depth. The northern portion of the pit was reclaimed during the period of 1998 to 2000. Annual report maps indicate this area is 1 acre in size. Slopes are approximately 3h:ly and are well vegetated with perennial grasses. The operator sprays the reclaimed slopes and adjacent property with Tordon for noxious weeds such as Toadflax, Canadian Thistle, Houndstongue and Bull Thistle. Crusher fines have been placed on the northeast side of the permit area. The operator. is not sure if the fines will be reclaimed in place, or sold as product. If the fines are to be reclaimed, then the slopes will need to be reduced to 3h:ly. Mining is progressing towards the south. In 2004, approximately 5 acres were stripped of topsoil and overburden. The southern boundary of the pit will be mined from 2004 to 2006. Product stockpiles have been placed in the bottom of the pit. The 112 permit requires a topsoil replacement depth of an average of 6". The Division is unsure if enough topsoil exists on site to meet this requirement. The operator has disturbed approximately 21 acres to date. Assuming that 3 acres have been reclaimed or not affected by mining, approximately 14,520. CY of topsoil will be required over 18 acres u~turbance. During the inspection it was-unclear as to the topsoil available to reclai""in- a site in accordance with the permit. The Division observed one small topsoil pile ranging from 5-10 feet wide and 3 feet high on the south edge of the permit area. Assuming that the pile is along the entire southern slope of 820 feet, only 683 CY of topsoil is available to reclaim the site. A portion of that topsoil pile was falling into the pit. The operator stated that the remainder of the topsoil that was stripped from the pit was placed off site to fill a small depression at the request of the landowner. C.R.S. 34-32.5-116 (g) and Rule 3.1.9(3) requires that topsoil be stored in places and configuration to minimize erosion, be located in areas where disturbance by ongoing mining operations will be minimized, be removed and segregated from other spoil and preserved from wind and water erosion, remain free of contamination and remain in a useable condition for sustaining vegetation when restored during reclamation. The operator will need to demonstrate that 6" of topsoil is available to reclaim the site in accordance with the approved plan, or provide an alternative source of topsoil to reclaim the site in the form of a revision to the permit. In addition, the operator will need to salvage any Copsoil lost to the pit and prevent any additional loss of topsoil. Such demonstration or revision must be submitted on or before Juna 1, 2005. I & S Contact Address ^ CE NAME Mr. Art Morrissey ^ BL OPERATOR Connell Resources, ^ FS STREET P.O. Box 882590 ^ HW CITY/STATE/ZIP Steamboat Springs, Colorado 80488 ^ HMWMD (CH) ^ SE cc: Carl Mount; DMG (via a-mail) ^ WQCD (CH)