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(Page 2) MINE ID # OR PROSPECTING ID # M-1979-166 INSPECTION DATE 12-8-2004 INSPECTOR'S INITIALS SSS OBSERVATIONS This was a routine monitoring inspectiomconducted as part of DMG's ongoing monitoring program for permitted mines in Colorado. -- The mine identification sign and affected area boundary markers are in place and in compliance with Rule 3.1.12. No significant infestations of noxious or other problematic weeds were noted on site during this inspection. Some tamarisk, Russian olive and Russian knapweed were noted, but were not infesting the site. The operator has been spraying the knapweed to control it. The permit contains a generalized weed control plan that indicates measures will be taken to control any noxious weeds. Now that tamarisk and Russian olive have been added to the state noxious weed list, measures to control these species will need to be taken. Timing and methodology of the control measures for these species can be critical to success. DMG highly recommends that the operator contact the local weed control authority about specifics of management of these weed species. These specifics should be incorporated into the permit through the revision process. At the very least, thorough documentation of measure taken to manage these species should be included in the annual report for this site. No significant erosional features were noted on the affected areas of the site. However, the river is beginning to cut away at the riverbank on the southeast corner of the site, in an area where the flow gets a fairly straight shot toward the pit. The portion of the riverbank where just a small dike separates the river from the pit, just down stream from the current erosional feature, appears to have stabilized and vegetated itself after it was severely eroded several years ago. Though this riverbank location appears to be outside the permit area, it is likely that a significant spring runoff event could erode this location well into the permit area, compromise the pit, and contribute significant amounts of sediment into the river. DMG strongly recommends that the operator investigate this potential problem and take appropriate measures to stabilize the location and protect the mining area. In an effort to ensure the financial warranty remains adequate to reclaim this site per the requirements of the approved reclamation plan, DMG has updated the reclamation cost estimate (copyenclosed). Clearly, the site is currently under-bonded. Therefore, pursuantto Section 34.32.5-117(4) of the Colorado Land Reclamation Act, adequate financial warranty must be submitted to DMG within 60 days of the mailing date of this report. Please review the enclosed figures as soon as possible and contact our office if any calculation errors are noted. Responses to this inspection report should be directed to Steve Shuey at the Division of Minerals and Geology, Grand Junction Field Office, 101 South 3rtl Street, Room 301, Grand Junction, Colorado 81501, phone number 970-243-6368. I & E Contact Address NAME OPERATOR STREET CITY/STATE/ZIP Mr. Harold F. Elam Elam Construction. Inc. 1225 South 7`" Street Grand Junction. CO 81501 cc: ^ CE ^ BL ^ FS ^ HW ^ HMWMD (CH) ^ SE ^ WOCD (CH) ^ OTHER