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(Page 2) <br />MINE ID # OR PROSPECTING ID #: M-1981-243 <br />INSPECTION DATE:12-14-04 <br />OBSERVATIONS <br />INSPECTOR'S INITIALS GRM <br />This inspection was conducted as part of the normal monitoring program established by the Colorado Division of <br />Minerals and Geology. The South Fruita Pit is located at the southern end of 17'/<Road (Maple) on the north side <br />of the Colorado River in Fruita, Colorado. Ed Settle, the operator's representative, accompanied the inspector on <br />site. The inspection was conducted in heavy fog. While the fog limited distant vision, it was cleaz enough to seethe <br />site to access current conditions. <br />The mine identification sign and affected azea boundary markers are in place and incompliance with Rule 3.1.12. <br />The South Fruita Pit is an active 112c permitted site. The inspector noted several stockpiles ofprocessed materials, <br />overburden and topsoil. The active pit portion in Phase V has been allowed to fill back in with water so highwall, <br />grading and slopes below water line could not be assessed. The 2004 Annual Report states that slopes in the <br />southeast corner were sloped to 3:1 and seeded. The inspector could not verify this due to weather and the water <br />line. No portable equipment was observed. A fuel storage tank was observed in proper secondary containment. <br />The old pit area is now a pond. Banks aze stable and erosion free. Some ricegrass, crested and slender wheatgrasses <br />were noted as well as rabbitbrush. There aze Russian olive and tamarisk on site. Both the inspector and the operator <br />will have to assess their presence on site after the Reclamation Boazd has released its policy on controlling these <br />species. Knapweed was noted along irrigation ditches not directly under the control of the operator, but disturbed <br />azeas appear to have only minor infestations that aze being actively controlled. <br />Overall, the site is clean of debris. No stormwater or erosion issues were noted. No sedimentation issues were <br />observed. There appeazs to be no off site damage as well. All haul roads aze in good condition. <br />The Financial Warranty was reviewed with the approval ofAM-02 hi August of 2001. Per Division policy the bond <br />is due for an update. Based on current conditions, the inspector will use accepted tasks and volumes for the update. <br />The operator appears to be following the approved Mining and Reclamation Plans. No issues were noted or <br />observed at this time. <br />