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(Page 2) MINE ID # OR PROSPECTING ID # M-1999-002 INSPECTION DATE 11/08/04 INSPECTOR'S INITIALS ESC OBSERVATIONS This was an inspection of the Yankee gulch Sodium Minerals Project conducted by Erica Crosby of the Division of Minerals and Geology. Ed Cooley of American Soda L.L.P. was present during the inspection. The mining and reclamation permit was issued to American Soda L.L.P. on July 16, 1999. The total permit area is 4,084 acres whereas 512.5 acres is to be affected in the first five-year panel block. The site is on land owned by the Bureau of Land Management (ELM). The Division holds a bond in the amount of $236,424.00. The total reclamation coat estimate for the Yankee Gulch Sodium Minerals Project totals $7,444,531.00, and the BLM retains a majority of the bond. American Soda has nearly completed the phasing down of the Piceance Operations. In April of 2004, American Soda notified the Division that due to high energy costs and a depressed soda ash market, the Sodium Carbonate/Sodium Bicarbonate processing operations was operating at a net loss. By year-end, American Soda was to phase down, curtail the mining operations, mothball the facilities and maintain the operations so that they can be re- established in the near future. According to Ed Cooley, only a few employees remain at the mine site. A majority of the work is performed at the Parachute site. The Process Plant Equipment has been flushed, drained and sealed. A number of the Instrumentation skids have been removed from the well site and placed in storage. The pipeline systems have been flushed, drained and sealed and will be maintained until the operations are restarted. Agate will be installed at the mine entrance road to prevent access. Wells are either to be placed on Long Term Standby or permanently plugged and abandoned. Once a well has been depressurized the production tubing is removed and a cast iron bridge plug or cement plug is placed in the casing as close as possible to the bottom of the crown pillar. Once the plugs are in place, a Mechanical Integrity Test is performed on the well. For wells in Long Term Standby, a Mechanical Integrity Test is conducted on two-year intervals as long as the well is in temporary status. The Division approved TR- OS to the permit that describes the temporary abandonment procedures for wells that are to be placed on Long Term Standby. A majority of the wells were inspected, and comments are as follows; • well 29-20; American Soda intended for well to be placed in Long Term Standby. Problems occurred to the well when the casing was pulled and would not hold the required pressure. Therefore, the well was permanently abandoned. • Well 20-12; Well was converted to a subsidence monitoring well. The skid has been removed and the pad will be graded, topsoiled and seeded either this fall or next spring. • Well 20-11; Well permanently abandoned and the well head has been cut off below the surface. Pipe insulation has been removed. The pad will be graded, topsoiled and seeded either this fall or next spring. • Well 20-19; Well on Long Term Standby. The well head and the piping have been pulled. The skid was located adjacent to the site. • Well 20-3; Well permanently abandoned and the well head has been cut off below the surface. The piping has been removed. This area will not be graded or seeded due to the proximity to the pilot plant. • Well 20-2; Well permanently abandoned and the well head has been cut off below the surface. The skid has been removed, but the piping will need to be removed. The road will remain to access other well sites. • Well 20-14; Well permanently abandoned and the well head has been cut off below the surface. A portion of the pad area will be graded and seeded this fall or next spring. The road will remain to access other well sites. • Well 21-15; Well permanently abandoned and the well head has been cut off below the surface.