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(Page 2) MINE ID # OR PROSPECTING ID # M-1980-246 INSPECTION DATE 8/23/05 INSPECTOR'S INITIALS RCO This partial inspection was performed by the Division as apre-operation inspection for the area proposed by the operator for adding to the permit under a land exchange amendment, and as a release inspection for the area requested for release, also as part of the land exchange of this 112c permit. The operator was contacted about the inspection, and the persons named on page one were present representing the operator during the inspection. The site was identified at the entrance gate by the required permit ID sign. The site was active at the time of the inspection, though only a few items of the activity were specifically inspected. The area where many barrels of various hydrocarbons had been stored has been cleaned up. There were only a few barrels now, and all were empty. The oil-contaminated soil has been removed. The majority of the non-mining related debris has been removed from the site. The diesel fuel tank, located down near the crusher, has been placed in a geotextile-lined earthen impoundment. These aspects of the operation all address past problem items, and they are now found to have been adequately corrected. AREA TO BE RELEASED The area to be released as part of this land exchange was inspected. Nomining-related impacts to that area were noted. The release request for that area will be approved by this office. The operator will be required to install permit boundary markers along the updated permit boundary however, and maintain them. This would be a good time to ensure that other markers (those not located along existing fencelines) are also visibly and durably installed. AREA TO BE ADDED The area to be added is equal to the acreage of the area to be released, and is located in the southern end of the permit area. The operator has not yet disturbed the new area, though mining has proceeded up to that boundary. The new area consists of a narrow ridge of deep gravels, and will be mined down to the elevation of the existing pit adjoining it on the south and east. There is a distinct dark topsoil layer, though cobbly in places, that must be carefully stripped for use in reclamation (it would have been easier and safer to strip the soil if mining had not crept to the boundary, but the soil will still have to be salvaged in whatever manner is possible). Native vegetation consists of pinon andjuniper, mountain mahogany and oakbrush, prickly pear cactus, blue grama, and minor amounts of other grasses and annuals. There is a small area containing musk thistle on the south end, which the operator must monitor and control. This is not a problem now, since it is only now being added to the permit, and there is a weed control plan for the permit. But if the weeds appear to have spread by the next inspection, it will become a problem. The current amendment for adding the new area will be approved by this office. The bond will be recalculated as part of the review and approval of the land exchange revisions. New figures will be mailed to the operator under separate cover, and the operator will have 60 days to provide any bond increase. Please note that until any bond increase is received and accepted, the land exchange will not become effective. After this land exchange becomes effective, the permit maps showing the updated boundary should be the only maps used. 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/STATE/ZIP Anthony Zellitti self 2001 CR 300 Durango. CO 81301 cc: Harry Posey, DMG ^ CE ^ BL ^ FS ^ HW ^ HMWMD (CH) ^ SE ^ WOCD (CH) ^ OTHER cc: Roy Hocker, Hocker Construction, PO Box 627, Ignacio, CO 81137