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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1987-064 <br />INSPECTION DATE 12/21105 <br />OBSERVATIONS <br />INSPECTOR'S INITIALS WHE <br />This inspection occurred as part of DMG's routine monitoring program of permitted operations. The <br />Dalton Land & Cattfe operation is approved for 111 acres affected area for extraction of alluvial materials <br />from the Animas River and from the floodplain area east of the river channel. The permit acreage <br />includes approximately 50 acres of river corridor, 44 acres of floodplain area (AM-01), and a 17-acre <br />processing yard. Reclamation of the floodplain area will support developed water resources post-mining <br />land use. Reclamation of the river corridorwill support wildlife habitat post-mining land use. Reclamation <br />of the processing yard will support industrial/commercial post-mining land use. DMG holds $20,216 <br />financial warranty. Four photos accompany this report. <br />Excavation was active at the AM-01 area. Evidence of recent activity in the river corridor appeared <br />limited to the low water crossing. Low water crossing for the Animas River appeared intact. Numerous <br />end-dump piles of recently excavated materials were stockpiled at the processing yard. Mining and <br />reclamation activities appeared to be occurring in accordance with permit conditions and the Act and <br />Rules. <br />No problems or possible violations were observed. <br />Responses to this inspection report should be directed to the Division of Minerals and Geology, 701 <br />Camino del Rio, Room 125, Durango, Colorado 81301, Attn: Wally Erickson, phone no. 970-247-5469. <br />I & E Contact Address <br />NAME <br />OPERATOR <br />STREET <br />CITY/STATE/ZIP <br />Dave billion <br />Sandco. Inc. <br />P.O. Box 4440 <br />Durango. CO 81302 <br />cc: Bruce Humphries, DMG <br />^ CE <br />p BL <br />^ FS <br />^ HW <br />^ HMWMD (CH) <br />^ SE <br />^ WOCD (CH) <br />^ OTHER <br />