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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1991-146 <br />INSPECTION DATE 11/1/05 INSPECTOR'S INITIALS WHE <br />OBSERVATIONS <br />This inspection occurred as part of DMG's routine monitoring of 110c in-stream operations. The inspection <br />commenced with an on-site visit on November 15S and concluded on November 23rd with a fly over to obtain air <br />photos of the operation. This report records observations made by DMG during the on-site portion of the inspection <br />as well as observations made from the air photos. Seven photos accompany this report. <br />As shown in photos 1 - 3, the permit area is located in a braided reach of the Uncompahgre River. As typical of <br />braided stream segments, the active floodplain is wide, sparsely vegetated, and contains multiple high-water <br />channels. The location and configuration of the interconnecting channels tend to shiftdue to seasonal erosion and <br />re-deposition of excess bedload. The channel bed and banks are composed of sand, pebble, cobble, and small <br />boulder-sized detritus. Such materials have low cohesion and in the absence of stabilizing vegetation are easily <br />eroded. Lateral stability of the braided channels, and what might be called the banks of the river, is low within the <br />boundaries of the active floodplain. Remnants of flood control levees, shown in photos 1 and 2, border portions of <br />the east and west banks. The river has eroded portions of the levees, leaving isolated segments of levee within the <br />floodplain. These flood control levees were constructed along what appeared at the time to be the riverbanks, but <br />in fact lie sometimes at the edge and sometimes within the active floodplain. <br />The ZMK permit area is located entirely within the active floodplain. The excavation and processing areas are <br />separated from the low-flow channel by the flood control levee. The flood control levee pre-dates the permit. <br />Permit conditions allow the operator to breach a portion of the levee during high flow season to allow the river to <br />enter the extraction area, deposit its bedload and recharge the extraction area. After high flow season has passed, <br />the operator restores the levee at its approximate original alignment, replacing all flow to the main channel. <br />DMG last inspected the site on May 31, 2005, and observed that approximately 600 feet of the flood control levee <br />had been eroded by peak flows, similar to the erosion resulting from the 2003 peak flows. Approximately 200 feet <br />of the eroded portion of the levee was located within the permit area with the remaining 400 feet of eroded levee <br />located upstream (south) of the permit area. <br />During this November 151 and 23rd inspection, DMG observed that all portions of the eroded levee, located on lands <br />owned by ZMK, had been restored. However, portions of the eroded levee located beyond ZMK lands had not been <br />restored. Maintenance of the historic levee appears to be at the discretion of individual landowners. Permit <br />boundary markers were posted. Mining activities were confined to approved areas. No water was observed within <br />the extraction and processing area. Mining activities appeared compliant with permit conditions and the Act and <br />Rules. No problems or possible violations were observed. <br />DMG has reviewed the current cost of reclamation, totaling $3,160. Copy of DMG's January 23, 2006 reclamation <br />cost estimation, totaling $3,160, is enclosed. Therefore, the existing $3,750 financial warranty appears sufficient to <br />ensure successful completion of reclamation. <br />I & E Contact Address <br />NAME <br />OPERATOR <br />STREET <br />CITY/STATE/ZIP <br />Richard Zannett <br />ZMK Construction. Inc. <br />P.O. Box 1817 <br />Ouray. CO 81427 <br />cc: Harry Posey, DMG <br />X COE, Sue Nall <br />^ BL <br />^ FS <br />^ HW <br />^ HMWMD (CH) <br />^ SE <br />^ WOCD (CH) <br />X R. Larson, Monadnock Mineral Services <br />