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(Page 2) MINE ID # OR PROSPECTING ID # M-1987-038 INSPECTION DATE 8I23I05 INSPECTOR'S INITIALS RCO This partial inspection was performed by the Division as a preoperation inspection of the area proposed to be added under a land exchange amendment, and as a release inspection of the area requested for release, also part of the land exchange for this 112c permit. The operator was contacted about the inspection. The operator's representatives named on page one were present during the pre-inspection meeting and during the inspection. The site was identified by the required permit ID sign posted at the entrance gate. The site was active at the time of the inspection. Mining activity was occurring at the north end of the permit area, at the northern boundary line. The former north pit slope has been removed and there is a vertical highwall and dewater ditch along there now. The north boundary has been clearly marked by a new fenceline, but this highwall is expected to only be temporary (until the land exchange revisions are approved, at which time excavation may proceed northward into the new area). AREA TO BE ADDED The area to be added is a 10.3-acre area located adjacent to the northern permit boundary. It currently contains a rundown farmstead (house and various other structures), on a partlywooded lot. It is level and dry, currently has road access from the county road, and no noxious weeds. The operator plans to remove the current structures, strip the deep topsoil for rewclamation and mine northward from the existing pit. The existing pit is being dewatered and mined to depth in two stages, and finally becomes a shallow pond where fully mined. In the new portion, the underlying shale is expected to become shallower, and it seems unlikely that the northern expansion will result in an extension of the pond. The Division of Water Resources has commented on this application, saying that expanding the pond surface will require the operator to acquire the water rights. The site will probably be reclaimed as a depressed grassy area near the edge of a pond. This office will comment on the details of the submitted application through the adequacy review letters, to be mailed under separate cover. In brief, however, issues thatwere discussed onsite as needing further attention include: more accurate mining and reclamation maps, description of slopes to be maintained during mining, method of mining, water management, etc. There is a small wetland that was found during a survey of the site. It lies in the lower area on the NW part of the site, and will not be disturbed during mining or reclamation. AREA TO BE RELEASED The area to be released is an area of equal acreage, and is located on the southwest corner of the existing permit area. It is still undisturbed by mining. It was observed to contain a number of livestock grazing there. The release request for that area will be approved. A bond calculation will be performed at the conclusion of the revision process, and the new figures will be sent to the operator. The operator will note that until any needed bond increase is submitted the land exchange revisions will not become effective and no disturbance may occur in the new area. No further items were observed during the inspection. Responses to this inspection report should be directed to the Division of Minerals and Geology, 701 Camino del Rio, Room 125, Durango, Colorado 81301, Attn: Bob Oswald; phone no. 970-247-5193. I & E Contact Address NAME OPERATOR STREET CITY/STATEIZIP Don Gosnev Gosnev and Sons. Inc. PO Box 367 Bavfield. CO 81122 cc: Harry Posey, DMG ^ CE ^ BL ^ FS ^ HW ^ HMWMD (CH) ^ SE ^ WOCD (CH) ^ OTHER cc: Matt Carnahan, PO Box 1951, Bayfield, CO 81122