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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources 737 3 Sherman St., Room 27 S Denver, Colorado 80203 Phone: (303) 866-3567 FAX: (303) 832-8106 3une 9, 2004 Mr. 3erry Nettleton Environmental Manager RAG-EC 29515 Routt County Road 27 Oak Creek, CO 80467 Re: Eagle Mine Complex, Drill holes located in T6N R92W NE'/a NE'/< Section 36. Deaz Mr. Nettleton: COLORADO D t V t$ 1 D N O F MINERALS GEOLOGY 0.ECUNATION•N IN~NG SAFETY•SCIf NCf Bill Owens Governor Russell George Executive Director Ronald W. Gttany Division Director Natural Resource Trustee During my last inspection at the Eagle Mine on May 20, 2004, RAG-EC personnel and I investigated the two drill holes that Mr. Brad Bazker notified me about located in T6N R42W NE `/. NE'!A Section 36. (Mr. Bazker's GPS coordinates; 40°26'01"N, 107°39'36"W; of the North hole's location, Mr. Barker's GPS coordinates; 40°25'50"N, 107°39'38"W; of the South hole's location). Reseazch into these two holes found that they correlate to drill holes 196c (North hole) and 197c (South hole) shown on a map in the Division's file identified as "Empire Energy Corporation (subsidiary of Cyprus Minerals Company) Exploration Permit, CX- 126-07, 1982 Proposed Drillhole Location Map". These two holes were not, however, approved under CX- 126-07, and based upon the referenced map, pre-date the 1982 exploration permit. Cyprus's numbering convention prefaces the hole number with the year the hole is to be drilled, i.e. 83-O1, and 83-03, or the numbering designation prefaces the hole number with the coal seam the hole is drilled to, i.e. F1, G2, E3, D2. Holes shown on the map with HNG preface in the number refer to Houston Natural Gas drill holes. RAG-EC's geologist, Mr. Rocky Thompson, provided additional verbal information regarding these old drill holes on May 26, 2004. According to page 1 of the Eagle Mine Complex permit, C-1981-044, Cyprus Coal Company acquired the mine property that the holes aze located on from Zigler Coal in 1982. The permit states that a subsidiary of Zigler Coal Company mined the No. 5 Mine beginning in 1972. RAG-EC purchased Cyprus-Empire in 1999. The permit states that mining has occurred throughout the azea since the 1930's. According to a phone conversation with Mr. Thompson on May 26, 2004, the Silengo brothers were active on the mine area since the 1930's. Although no drilling date has been found for drillhole 196c and 197c, hole 251 is recorded as having been drilled in 1976. Assuming that drill hole numbering is sequential, one would assume that 196 and 197 would have been drilled at an earlier date than hole 251. Drilling data was located by Mr. Thompson for holes 196c and 197c, and faxed io the Division on May 26, 2004. The total drill depth for 196c was 434 feet from the surface. Mr. Barker reported to me on May 11, 2004 that hole 196c measured 40 feet deep from the surface. As observed during DMG's inspection on May 2Q, 2004, no drill casing remains at the surface. The drill log for drillhole 197c reports the total drilling depth of 416 feet deep measured from the surface. Mr. Barker measured the depth of drillhole 197c as 58 feet and provided this information to me in a phone conversation on May 11, 2004. As observed during DMG's inspection on May 20, 2004, no drill casing remains at the surface of this hole. These two holes would appeaz to pre-date Colorado's permanent program for Coal Mining and Reclamation. No exploration permit or reclamation bond have been found to be assigned to these two holes. Office of Office of Colorado Mined Land Reclamation A~"^~^ ^-a '---"-- "'-