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MINE ID # OR PROSPECTING ID #: M-2006-021 INSPECTION DATE: April 26. 2006 (Page 2) INSPECTOR'S INITIALS: RMW/AJW This inspection was apre-operational inspection as required by Rule 3.2(7) of the Mineral Rules and Regulations of the Colorado Mined land Reclamation Board for the Extraction of Construction Materials. Present at the inspection were Richard W enzel and Tony Waldron of the Division of Minerals and Geology (DMG). No representative of the operator was present for the inspection. However, prior to the inspection DMG personnel met with the operator's consultant, Bob Gowing, P.E. of QED Associates to discuss the proposed mining operation and the permitting process. The site of the proposed Glade sandstone quarry is located in a valley approximately 4.5 miles north of Laporte, Colorado on the west side of Highway 287. The valley is bordered on the east by the Cretaceous age Dakota Sandstone and on the west by the Pennsylvanian age Fountain formation. The area to be mined is an outcrop of Permian age Lyons sandstone. A sign indicating that a reclamation permit has been applied forwas posted at the site. Currently, the site is undeveloped and is used for rangeland. Post-mining land use is intended to be rangeland. However, the Northern Integrated Supply Project (NISP) is proposing to construct Glade Reservoir in this same valley. The proposed reservoir would flood the entire permit area. Based on conversations with Bob Gowing, the operator intends to mine the area only if the proposed reservoir is approved and will be constructed. During this inspection DMG personnel reconnoitered the proposed mining area to verify the current site conditions. Vegetation on the site generally conforms to that which is described in the permit application. Vegetation on the flanks of the hogback consists of a Mountain Mahogany overstory and native grass understory with a Cheatgrass infestation. The native grasses consist primarily of Western W heatgrass and Blue Grama. Two patches of leafy Spurge were observed on the southern half of the site; one on the east side of the hogback and one on the west side. DMG recommends that these patches be controlled to reduce the potential of spreading this noxious weed. This issue will be addressed further in the Adequacy Review Letter. An area of disturbance measuring approximately 80 feet by 80 feet was observed near the middle of the hogback. A review of DMG files revealed two active prospecting permits (P-2004-004 and P-2004-009) for this site. Prospecting permit P-2004-009 covers the existing area of disturbance. Prospecting permit P-2004-004 has had a partial surety reduction as the area of disturbance covered by that permit has been backfilled and revegetated. Upon issuance of the permit for the proposed Glade Quarry, the operator can request a bond release for both prospecting permits. Numerous manmade structures were observed within 200 feet of the affected areas during this inspection. Those structures include several irrigation ditches with associated culverts and headwalls on the east Flank of the hogback, a fence running east- west on the east side of the hogback, a fence running east west on the west side of the hogback, a sign on the west side of the hogback indicating an underground cable running north-south, a pond southwest of the southwest corner of the affected area, a breached earthen berm at the south end of the site, and a PVC pipe on the surface of the ground running east-west at the south end of the site. These structures will need to be identified on the pre-mining and mining plan maps in the permit application and the affect mining will have on them addressed according to Rule 6.4.19, Exhibit S -Permanent Man-made Structures. As with the issue of noxious weed, this issue will also be addressed in the Adequacy Review Letter. The reclamation permit application for this site is currently being reviewed by DMG. DMG anticipates an Adequacy Review Letter will be forthcoming in early June. The decision date for this permit application is July 20, 2006. Enforcement and Inspection Contact Address NAME: James Striggow OPERATOR: Glade. LLC STREET: 1400 North Shields Street CITY/STATE/ZIP: Fort Collins. CO 80524 cc: U.S. Army Corps of Engineers U.S. Bureau of Land Management U.S. Forest Service CO Department of Transportation CO Hazardous Materials and Waste Division CO State Engineers Office CO Water Quality Control Division X OTHER: Bob Gowing. P.E.. QED Associates