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(Page 2) MINE ID # OR PROSPECTING ID # M-1999-069 INSPECTION DATE 11/OB/OS INSPECTOR'S INITIALS ESC 0H38RVATION3 This was a pre-operation inspection of the Wagner/Kauffman Pit #3 conducted by Erica Crosby of the Colorado Division of Minerals & Geology. Troy Kauffman of Jake Kauffman & Son, Inc. and Bill Schenderlein of the Applegate Group were present during the inspection. The Kauffman Pit is located approximately 1.5 miles southeast of Loveland in Larimer County, Colorado. The 112 Mining and Reclamation Permit was issued to Jake Kauffman & Son, Inc. on January 5, 2000 for a permit area of 232.5 acres. On July 5, 2005, the permit area was reduced from 232.5 acres to 185.5 acres, through the release of 47 acres in the eastern portion of the Phase i area. Under the Amendment O1 Application (AM-O1), the operator intends to increase the permit area by 55 acres to the south. The 55 acres is currently located in the Kauffman Pit permit area, Permit M-1978-327. The entire pit area will then be reclaimed to a clay-lined reservoir used for future water storage. Mining in the 55-acre parcel is currently taking place under the M-1978-327 Kauffman permit. The area adjacent to the Big Thompson River has already been mined and backfilled for a distance of approximately 200 feet. According to the operator mining in this area took place 5-6 years ago. The operator intends to reclaim the clay-lined reservoir at least 400 feet from the river. Topsoil piles were noted in the bottom of the active pit, and are not affected by the active mining operation. No new structures were noted in the amended area. I & 8 Contact Address r NAME Mary Kauffman j' OPERATOR Jake Kauffman & Sona Inc. r STREET 808 SCR 9E r' CITY/STATE/ZIP Loveland, Colorado 80537 j' r r cc: Carl Mount; DMG Bill Schederlein; Applegate Group CE BL FS HW HMWMD (CH) SE WQCD (CH)