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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1992-045 <br />INSPECTION DATE 08/25/06 <br />INSPECTOR'S INITIALS ESC <br />This was an inspection of the Phil Sheridan Lode conducted by Erica Crosby of the Colorado <br />Division of Reclamation, Mining and Safety. Harry Covey, Matt Collins and Gordon Sweeney were <br />present during the inspection. <br />On September 27, 2006, a Transfer of Permit and Succession of Operations Application (SO-03) <br />was submitted to the Division to transfer the permit from Comstock Mining and Refining to <br />Harry Covey. The purpose of the inspection was to discuss two items with Harry Covey; the <br />increase in the reclamation bond and the water discharging from the historic Phil Sheridan <br />Portal below the mine site. <br />Increase in Reclamation Bond: On September 25, 2006, the Division notified Comstock Mining <br />& Refining of the increase in the reclamation bond from the existing amount of $1,718.41 to <br />$8,365.00. The estimate was based on the reclamation requirements noted in the permit and <br />noted site disturbance. The Division discussed a number of ways that the bond can be reduced <br />with the parties attending the inspection; <br />o Install a covered locking device over the shaft to prevent vandals from cutting the <br />lock. Proof of this installation must be documented to the Division prior to reducing <br />the bond amount. <br />o The permit area is 1.9 acres in size, but approximately 1 acre is disturbed. <br />Therefore, the area to be reseeded can be reduced from 1.9 acres to 1.0 acres. The <br />Division will revise the bond estimate to reflect this change. <br />o Revise the reclamation plan to leave structures on site (the wood shed and the framing <br />near the shaft). The site is currently approved to be reclaimed to residential, so <br />structures that conform to this use (and constructed and built to County code) may <br />remain on site. However, a revision to the permit must be filed to retain such <br />structures. The revision must be filed by Comstock Mining & Refining or another entity <br />with the authorization to do so by Comstock Mining & Refining. <br />Changes to the bond estimate will be submitted under separate cover. <br />Water discharged from the historic Phil Sheridan Tunnel: According to the permit files, in <br />1995 a shaft was sunk on the mine site in order to connect with the historic Phil Sheridan <br />Tunnel. The tunnel is located approximately 100 feet below the surface at the shaft collar <br />location. The portal to the Phil Sheridan Tunnel was inspected. The portal is down the hill <br />from the permit area, across the county road, and at the east end of the Harry Covey <br />property. At the time of the inspection, there were several puddles of water outside of the <br />portal making its way through a grassy ditch to a dilapidated building. From there the water <br />seeped back into the subsurface, and no surface discharge was noted. Adjacent to the portal <br />is an ephemeral stream that is tributary to Fourmile Canyon Creek. The operator was reminded <br />a number of times during previous inspections to obtain a CDPS permit from the Colorado <br />Department of Public Health and the Environment for possible discharge into the ephemeral <br />stream. The Division is not aware if a CDPS permit has been obtained by the operator. Mr. <br />Covey was reminded that if he assumes the Phil Sheridan Lode permit, he may be responsible <br />for the water discharging from the tunnel. <br />I & & Contact Address <br /> ^ CE <br />NAME Mr. Raymond (Rocky) Conner ^ BL <br />OPERATOR Comstock Mining & Refining ^ FS <br />STREET P.O. Box 841 ^ HW <br />CITY/STATE/ZIP Silver Springs, NV 89429 ^ HMWMD (CH) <br /> ^ SE <br /> WQCD (CH) <br />Cc: Carl Mount; DRMS <br />Harry Covey <br />