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(Page 2) MINE ID # OR PROSPECTING ID # M-2005-065 INSPECTION DATE 6/6/06 , INSPECTOR'S INITIALS WHE OBSERVATIONS This inspection occurred in response to operator requestto evaluate potential alterations to the approved mine plan. The proposed alterations address an expansion of the sediment pond and relocation of the emergency spillway, from the southwest corner of the pond to the southeast corner of the pond. The potential alterations will not affect the configuration of the permit boundary and appearto have less than a significant impact to permit conditions. Therefore, such revision would be appropriately submitted as a Technical Revision as described under Construction Materials Rule 1.9. The permit area is located approximately 3.5 miles north of Silverton, along the east bank of the Animas River. Most of the 5.9-acre permit area is located within the 100-year floodplain. Permit conditions require that mining activities not approach the east bank of the low flow channel closer than 50 feet. The excavation is to be conducted to maihtain internal drainage, no pit dewatering is anticipated. Material processing includes crushing, screening and washing. Fuel storage area will be located above the 100- year floodplain. An historic railroad grade, located along the east side of the permit area, will remain unaffected by mining and reclamation activities. Reclamation will be conducted to support developed water resources (pond) post-mining land use. DMG is awaiting the $7618 financial warranty required for the operation. Mining activities had riot commenced. The permit application was approved on February 28, 2006. DMG is awaiting submittal of the $7618 financial warranty required for the operation. Pursuant to Rule 4.1(2), DMG has not issued the permit and mining activities shall not commence until DMG receives the appropriately executed warranties necessary for issuance of the permit. ,As noted during the inspection and recorded in this report, mining activities had not commenced. Therefore, the permit holder appears to be complaint with permit conditions and the Act and Rules. Two photos accompany this report. No problems or possible violations were observed. Response to this report should be addressed to the Division of Minerals and Geology, attn. Wally Erickson, 701 Camino del Rio, Room 125, Durango, CO 81301, phone (970) 247-5469. I & E Contact Address cc: David Berry, DMG NAME Jack Clark, Jr. ~ ^ BL OPERATOR Jack Clark, Jr. ^ FS STREET P.O. Box 767 ^ HW CITY/STATE/ZIP Silverton, CO 81433 ^ WOCD (CH) X Charles Ponchak, permitting contact