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(Page 2) MINE ID # OR PROSPECTING ID # M-1986-076 INSPECTION DATE 10/5/06 INSPECTOR'S INITIALS RCO.ICAP OBSERVATIONS This partial inspection was performed by the Division as part of its monitoring of Hard Rock and Metals 110d permits. The operator was contacted about the scheduled inspection, but was not present onsite during the inspection. The site was secured and not active at the time of the inspection. The weather was rainy and foggy but conditions did not present the inspection. The required permit ID sign was observed posted at the entrance to the permit area. The permit area corners were marked by signs mounted on steel T-posts. All activity appears to be within the boundaries. There are numerous underground openings throughout the permit area, but all are caved shut, and all activity is carried out on the surface. The mill building was locked and the surrounding area was orderly. The concrete stem walls form the secondary containment for the milling circuit inside, and they appeared to be sound. The southern side of the building is situated above the steep cut for the access road. The unconsolidated material on the cut slope has been observed to be sloughing during recent years, which if allowed to continue, would undermine the building and compromise the integrity of the containment and the building. The operator has tried to prevent the loss of material by hand-placing large rocks on the slope surface, and has grouted portions of it. This seems to behaving the desired effect, but the sloughing is proceeding toward the west, just beyond the limit of the operator's past armoring. The cut slope is taller to the west, and stabilizing the slope may require different methods. It is suggested that the operator investigate a combination of driven or "planted" anchors, timber cribbing, larger angular boulders, or other type of revetment, in addressing this issue, before it becomes a problem. The operator is reminded that the mill building is one of the DMO's environmental protection facilities (EPFs) and its continued integrity is critical. The operator is welcome to contact this inspector to discuss stabilization options. Behind the building there is a water tank for milling needs, filled from pumping water from the lower portal. The diesel tank is also behind the mill, placed in a steel secondary containment tank, all of it covered to prevent it filling with preciptitation. The ore hopper and conveyor are installed here also, the hopper being covered to reduce weathering of the residual ore. These practices are proper and necessary, and the operator is urged to continue them. The tailings sump outside the east end of the building was fairly empty, apparently having been recently cleaned out. It is unlined and intended to allow dewttering of the neutralized tailings before their placement in the tailings pond. The approved plan requires that the tailings be completely neutralized before being introduced to the sump, and the operator must ensure that this is the only way the milling proceeds. The mining area east of the mill is proceeding up the hill slope in a narrow band, in accordance with the approved plan. The hillside being mined is steep. The operator is required to salvage topsoil for reclamation, and has several stockpiles of topsoil onsite. However, the native topsoil above the cut slope for the mining face does not appear to be stripped and is eroding down into the area of active mining, where some mixing of soil and rock was observed. It is probable that the steep gradient of the hill slope may prevent access to some areas by equipment to strip the topsoil prior to mining. Abetter effort to segregate the soil for later use in reclamation (for example, by either stripping it prior to initiating the mining cuts, or carefully removing fallen soil from the mining floor before it is degraded by mixing). The soil erosion and degradation is noted as a problem in this report and will require the operator to submit an explanation of how he plans to correct the problem See the last page for the correction date. Mining equipment and other items noted on the various bench levels of the site include a small dozer, backhoe loader, compressor, ore crusher, small cement mixer and extra milling equipment. The wooden shed on the mill level was intact and secured. There are several topsoil stockpiles. The tailings pond, also unlined, contained only a fraction of the voloume of tails it is designed to hold. There was an estimated volume of less than 50 yards of tailings sand in it. The cut slope above it, and the fill slope providing containment appeared stable. The access ramp is maintained. The road to the lower portal contains more soil than rock, and is the road most vulnerable to erosion on the site. It did not exhibit erosion damage this year, and the sediment containment pond at the bottom of the road was not filled. Afair amount of desirable natural vegetation was observed on the road, which probably helps reduce erosion. This road segment is also site to former Canada thistle patches, but the operator's diligence in control has paid off -there was no weed problem observed. Continued monitoring is needed, with treatments as necessary, here and throughout the site. The weed control efforts are commendable.