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(Page 2) MINE ID # OR PROSPECTING ID #: M-2001-060 INSPECTION DATE: 6-20-07 OBSERVATIONS INSPECTOR'S INITIALS GRM This inspection was conducted as part of the normal program established by the Colorado Division of Reclamation, Mining and Safety for permitted sites were citizen complaints and inquires are received. The Division received a written complaint about possible off site damage from a Mrs. Dewsnup on December 11 `s, 2006. Due to heavy snow cover and winter conditions an on site inspection was not achievable. The Division issued a Weather Letter on January 3`d, 2007. Conditioned did not improve until April and Division scheduling did not allow for an inspection until mid June. Inspectors Russ Means and Tom Schreiner met with Steve Baker of 3 B's, personnel from the nearby Bunn Ranch Pit and Mrs. Dewsnup. Of specific concern to Mrs. Dewsnup is the creation of an erosional feature along the west side ofherproperty which is adjacent to the Deakins Pit. The property is the site of the old Craig Drive-in movie theater which sits on an upper terrace above the area of concern. Mrs. Dewsnup contends in her letter that the Deakins Pit caused damage to her property during a spring flood event. Inspectors visited the site and reviewed information with Steve Baker from 3 B's Enterprises. 3 B Enterprises is the operator ofthe Deakins Pit and the subject ofthe complaint. Mr. Baker had supplied an aerial photo ofthe area and had drawn in arrows showing river flows during the event in question. The inspectors first hand observations ofthe erosion indicate that the flow of water came from the east to the west. The flood water appears to have transversed the Dewsnup property and appears to have built up in front of the security berms along the Deakins Pit. Once sufficient water built up it breached the berms and flooded the Deakins Pit. The breach cut the bank back across the Dewsnup property creating a gully system that encompasses approximately a quarter acre. The erosional cuts appear to be roughly 3 to 4 feet deep but exact measurements could not be made because of free standing water in the pit and cuts. The physical evidence clearly indicates a water flow pattern from the Dewsnup Property to the Deakins Pit. Mr. Baker showed the inspectors two 18" culverts that go under the railroad tracks south of the pit and the Dewsnup property. The operator stated he has capped the culverts to prevent water flows but the railroad uncaps them in flood conditions which release the water onto the Dewsnup and indirectly Deakins Pit permit area. Mr. Baker contends that flows are coming from activities at the Bunn Ranch Pit which include building up berms along the river edge which diverting flows to other areas including Mrs. Dewsnup's and the 3 B's properties.. The inspectors did observe berms along the Ana Branch of the Yampa. Discussions with Mr. Baker about the beans indicate he has talked to the Corp of Engineers and they have stated they have no jurisdiction over the berms. The inspectors asked for any additional information to be submitted by July 16, 2007 so that a final analysis of the situation could be addressed. Information gathered through the inspection of the Bunn Ranch and a site visit with Mrs. Dewsnup will be used for a final discussion on the complaint. It is important at this time to note that the inspectors do not feel that the Deakins Pit or it's operator are in anyway responsible for off site damage to Mrs. Dewsnup's property. This opinion is based on the fact that all water flowed from east to west from Mrs. Dewsnup's property into the Deakins Pit not the other way as contended in the original complaint letter.