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(Page 2) MINE ID # OR PROSPECTING ID # M-2001-001 INSPECTION DATE 10/5/04 INSPECTOR'S INITIALS WHE OBSERVATIONS This inspection occurred in response to a complaint submitted by Ms. Pat Kantor, on behalf of Citizens for Accountability and Responsibility (GEAR). The complaint, received by email on September 7, 2004, alleges an absence of vegetative cover for stockpiled material and proliferation of noxious weeds. Copy of the complaint is enclosed. Four photos, taken during the inspection, accompany this report. The Line Camp Pit is approved for 22.6 acres affected area. Affected lands will be reclaimed to support developed water resources and pastureland post-mining land use. DMG holds $92,000 financial warranty. Mining activities had commenced in the southern end of the permit area and is advancing north, as described in the approved Shine plan. Approximately 70% of the permit area appeared to have been affected. The operator has not installed the dewatering pipe and has not commenced dewatering the pit. Water was impounded within the southern portions of the pit. Elevation of the exposed groundwater was approximately 6 feet below the elevation of the original ground surface. Topsoil stockpiles S3 and S4 bordered the active pit along the south, southwest and southeast. Overburden stockpiles S5 and S6 bordered the active pit along the west and east sides. The material stockpiles did not form a continuous embankment around the pit. Two gaps in the material stockpiles were located at the southeast corner of the permit area. The gaps were approximately 20 feet wide at the base. Native vegetation and soils, indicating the original ground surface, were evident across the base of the gaps. Vegetative cover for the stockpiled topsoil appeared sparse and weedy. However, the topsoil stockpiles appeared stable, no evidence of significant erosion was observed. Pursuant to Rule 3.1.9(1) and permit conditions, the operator must establish an appropriate vegetative cover to protect the stockpiled topsoil. Previous efforts to establish a vegetative cover for the stockpiled topsoil included hydro seeding in August 2001 and broadcast seeding in September 2003. Apparently, revegetation efforts for the stockpiles have been adversely affected by drought conditions. Regardless, the operator must establish an appropriate vegetative cover or revise the permit to address stabilization of stockpiled topsoil with alternate methods. During the inspection, the operator indicated that another attempt to vegetate the berms will occur this fall by applying a seed mix of slender wheatgrass (2.75), annual rye (10.00), mountain brome (8.50), winter wheat (3.20), sainfoin (2.50), and alfalfa (0.40), totaling 25.35 pounds of pure live seed per acre, or approximately 81 seeds per square foot. Permit documents indicate that the site had been invaded by weeds, including noxious weeds, prior to the permit. Pursuant to Rule 3.1.10(6), the operator is required to employ weed control methods for all prohibited noxious weed species. Evidence of the operator employing weed control methods, both chemical and mechanical, was observed throughout the permit and surrounding areas. On April 18, 2001, DMG calculated the cost of reclamation at $91,917. The current disturbance is significantly less than the disturbance anticipated for the reclamation cost estimation. Therefore, the existing $92,000 financial warranty appears sufficient to ensure completion of reclamation. I & E Contact Address NAME Arvol Brumley OPERATOR Four States Acareoates. LLC STREET P.O. Box 1568 CITY/STATE2IP Cortez. CO 81321-1568 cc: Harry Posey, DMG ^ CE ^ BL ^ FS ^ HW ^ HMWMD (CH) ^ SE X Ms. Pat Kantor, CFAR