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(Page 2) MINE ID # OR PROSPECTING ID #: M-1999-058 INSPECTION DATE: 10-31-06 OBSERVATIONS INSPECTOR'S INITIALS GRM This inspection was conducted as part of the normal monitoring program established by the Colorado Division of Reclamation, Mining and Safety for permitted sites. Division Inspectors Russ Means and Carl Mount were accompanied by Colorado Stone Representative Francois Darmayan. The Yule Quarry is a 110c permitted site located south of Marble, Colorado at roughly 10,000 feet elevation. Due to snow cover, the inspectors did not address most issues regarding reclamation, roads, sedimentation and storm water controls. These issues will be addressed during a second inspection some time next summer. The Division had initially planned an early inspection, but scheduling conflicts for Division staff prevented the visit. The mine identification sign was not observed and must be installed per the requirements of Rule 3.1.12 (1) that state: The operator shall post a sign at the entrance to the mine site which shall be cleazly visible from the access road and specify the following; a) the name of the operator; b) indicate that a reclamation permit for the operation has been issued by the Colorado Mined Land Reclamation Board, and; c) the permit number. The lack of an identification sign is noted as a problem with the corrective action(s) and correction date specified on the last Wage of this report. The inspectors noted a Company sign at the main gate leading up to the site. The required permit sign should be placed at this point as it is the main access to the site. Permit boundary markers were not observed. However, due to snow the issue will be addressed during the next visit. Boundary markers should be clearly visible to prevent off site damage. Prior to the summer visit, when it is safe to do so, the operator needs to ensure that markers are located and clearly visible. The main generator for the mine is located at the entrance to the mine. The inspectors noted some waste oil storage issues that must be addressed. Oils from drain cocks and valves are being allowed to either fall directly onto the ground or to escape secondary containment. The operator needs to install containment devices that do not allow the oils to reach the ground. Commercially available devices are available that can be deployed to help prevent such situations from occurring. Within the mine, waste oil tanks and other oil containers were within an acceptable secondary containment structure. The fuel azea however was only a wood pallet that presented the same issue of fuel being spilled on the ground. It is understood that most of the water is contained initially underground, but the oils will eventually find there way out through pumping, etc. Therefore, some type of secondary containment must be constructed for this area as well. The spillage ofpetroleum products on the ground is noted as aproblem with the corrective action(s) and correction date specified on the last pace of this report. As noted above, waters generated within the mine are captured and sent to a central holding area. Most of the water is recycled within the mine itself for cutting and drilling. The operator is in the process of placing 5 large tanks underground for water recovery and eliminating the open sedimentation pond underground. This must be done to facilitate production of lower lifts of marble that are beginning to be developed at this time. Overall, the mining area is well kept. No unnecessary trash or non-mine related debris was noted. The Financial Warranty will not be reviewed at this time although it is due. A comprehensive review will be done when the inspector can evaluate outside conditions next summer. No other issues or problems are noted at this time.