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(Page 2) MINE ID # OR PROSPECTING ID #: M-1 gR~-n~3 INSPECTION DATE: m/n5/ns INSPECTOR=S INITIALS: TAS OBSERVATIONS 1. A site inspection of the Walstrum Quarry was conducted in response to a citizen complaint received on December 16, 2004 from the Douglas Mountain Residents' Association (DMRA). Please see attached complaint letter. The DMRA complaint letter alleges that none of the regulations associated with the operation of this facility have been enforced by the State of Colorado. Present during the inspection was Albert Frei ]r, and Tom Reynolds of Albert Frei & Sons; Steve O'Brian, representing the operator; and Carl Mount and Tom Schreiner representing the Division. 2. The Walstrum Quarry is permitted for a total of 292.07 acres, with a maximum disturbance at any one time of 50 acres. The mine plan specifies conventional quarrying techniques with development of 40' high x 40' wide benches and overall slope configuration of 1:1. The post-mining land use is industrial/commercial. The operator has posted a financial warranty of $741,500. Based on the disturbances noted during the inspection, this inspector finds the existing financial warranty to be adequate to complete the reclamation plan. 3. A blast was conducted on one of the lower benches in the southeastern portion of the quarry and was observed during the inspection. The dust created from the blast dispersed within a few minutes. There did not appear to be any residual dust from the blast outride the quarry proper. Mr. Frei indicated that the prevailing winds at the quarry move in a North- Northeast orientation. The blast was conducted under the supervision of Tom Reynolds. Mr. Reynolds reviewed the details of the operator's blasting records and blasting plan, including maximum allowable charge per hole (280 Ibs of powder). Mr. Reynolds verified that the maximum allowable peak overpressure (130 decibels) and maximum allowable peak particle velocity (0.05 inches per second) have not been exceeded since seismographic monitoring has been conducted at the quarry. Mr. Reynolds also noted that the quarry is inspected on a regular basis by the explosives inspector for the State of Colorado, Division of Oil & Public Safety. The last site inspection conducted by the DOPS was conducted on December 7, 2004 by Mr. Jim Leons. 4. Although the plant, crusher, and processing facilities were not operating at the time of inspection, a discussion was held regarding the operator's dust control practices at the quarry. Mr. Frei indicated that the following measures are employed: 1) misting nozzles on all crushers, 2) spray nozzles at two (2) transfer points on the conveyor system, 3) watering on an as needed basis via a 6,000 gallon water truck on all roads, quarry benches, stockpiles, and shot rock areas. Mr. Frei indicated that, on hot and windy days during the peak of the summer, disturbed areas have been watered up to 15 times per day. Mr. Frei further elaborated that they are approved for use of up to 20 acre-feet of water per year for quarry activities. In 2004, approximately 16 acre-feet of water were used for dust suppression. Air quality emissions at the quarry are regulated by the Colorado Department of Health, Air Quality Control Division. It is the Division's understanding that the operator is in compliance with requirements of the Air Quality Control Division. 5. Quarry disturbances noted were consistent with the disturbances noted in the operator's Annual Report received on June 25, 2004, Highwall disturbances were similar to the disturbances detailed in the Division's past inspection on September 10, 2004 and were also in conformance with the approved mine plan, as specified in Amendment No. 8, approved by the Division on August 27, 2002. Digital photographs of the quarry disturbance are attached to this report. 6. Division of Minerals & Geology inspector noted there was no secondary containment system in place at the fuel storage area and the motor oil storage area. Fuel and motor oil was being stored in metal containers, as is typical for mining operations. There was no evidence of a leak or spill at either storage area. Mr. Frei indicated that waste oil is not stored on site as it is outsourced fer recycling. The Division considers the absence of secondary containment measures at the fuel and motor oil storage areas to be a problem that will require Corrective Actions. The Division will require that the operator correct this problem via a Technical Revision to address primary and secondary containment measures for all diesel fuel, motor oil, hydraulic fluid, antifreeze, waste oil, and toxic materials stared on site, if any. Please see Page 4 for Corrective Actions. A digital photograph of the stored items is attached to this report. 7. A site entrance sign and permit boundary markers have been posted as required by Rule 3.1.12. All disturbances were noted to be within the permitted area.