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(Page 2) • MINE ID # OR PROSPECTING ID # M-77-436 INSPECTION DATE_March 25, 1998 INSPECTOR'S INITIALS TAS OBSERVATIONS 1. A site inspection was made of the Tower Pit No. 1 permitted by D.H. Holding, Inc. Present during the inspection was Dave Hammer of D.H. Holding, Inc. 2. The Tower Pit No. 1 is permitted for approximately 143 acres. Originally, the site was permitted for 354.5 acres of disturbance which included disturbances both east and west of the South Platte River. As of September, 1990 all permitted acreage east of the South Platte River was released from further reclamation responsibility. The operator has submitted a financial warranty of $45,000 in the form of a Deed of Trust. The post-mining land use for 143 permitted acres is recreation. Two lakes will be developed Consisting of 75 and 36 acres. 3. Active mining is taking place in Parcels A, B, and C west of the South Platte River. Under the terms of Technical Revision No. 1, approved by the Division on March 20, 1996, the operator is required to comply with the following criteria: a) the parking, road, and maintenance area shall not exceed 3.5 acres, b) the facility/crushing/stockpile area shall not exceed 6.5 acres, c) the topsoil and overburden stockpile areas shall not exceed 4 acres, and d) the unreclaimed pit area shall not exceed 13 acres. The operation appeared to be in compliance with these criteria at the time of inspection, The most current map on file used to verify these acreages and the permit boundaries is the May 20, 1993 Boundary Survey. 4. The topsoil and overburden stockpiles were located in the northern portion of Parcel A, significantly more than 100 feet away from the west bank of the South Platte River. The volume of stockpiled material was verified to be 52,000 cubic yards. 5. The operator has completed rough grading of approximately 808 of the east pit wall in Parcels A and C to a 3:1 slope. There is significant sloughing and erosion in a number of areas that will require regrading. Mr. Hammer confirmed the intentions of D.H. Holding, Inc. to regrade these areas prior to final reclamation. The sloughing and erosion was well within the permit boundary and did not pose a threat to the stability of areas outside the permit area. 6. Excavation in Parcels A and C has occurred to a depth of 25-30 feet, down to blue clay or shale bedrock. At the time of inspection there was water seeping into the excavation in the southeast corner of Parcel C, approximately 100 feet from the centerline of the South Platte River. The flow rate was not measured, but estimated to be 3-5 gallons per minute. Mr. Hammer explained that the Tower Pit No. 1 is to mined as a "wet" pit with no dewatering required. water is currently pumped from the active portion of the pit to a small holding pond that flows very slowly into a "slough" of the South Platte River. Mr. Hammer indicated that D.H. Holding, Inc. applied for an NPDES Water Discharge Permit for this site 3 years ago. However, there is no correspondance in the permit file to verify that an NPDES Permit has been issued. Therefore, the Colorado Department of Health, Water Quality Control Division will be sent a copy of this report. Any correspondance verifying that an NPDES Permit has been issued for this site should be sent to the Division. Until such time that evidence of a NPDES Water Discharge Permit can be provided, the operator is advised to maintain all pit water on site in the holding pond or other suitable structure. Mr. Hammer also explained that D.H. Holding, Inc. has filed an application for a temporary substitute supply plan (TES P) with the Office of the State Engineer, but that a decision on the application is still pending. The Division considers this matter to be problem that will require corrective measures by the operator. Mr. Hammer explained that D.H. Holding, Inc. is in the process of filing an application for a revision to the permit to allow for