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(Page 2) MINE ID # OR PROSPECTING ID #: M-1979-103 INSPECTION DATE: 1-11-06 INSPECTOR'S INITIALS GRM This inspection was conducted as part of the normal monitoring program established by the Colorado Division of Minerals and Geology. The inspector was in the area and observed a Public Notice posted at the site entrance. Contact was made with the operators and aPre-operation and normal monitoring inspection was done. DMG staff' appreciates the operators Jim and Diana Watson meeting with the inspector on short notice. The Notice is posted as part of a conversion from a 110 to a 112c. The mine identification sign and affected area boundary markers are in place and in compliance with Rule 3.1.12. The sign was posted at the entrance to the site off County Road 4. Permit boundaries aze mazked with fence lines and posts. The new area boundaries under consideration for the conversion are noted as fence lines. Current site disturbance encompasses the entire 9.9 acres under the current permit. Excavated highwalls aze noted at approximately 15 feet in height and run along the east and northpermit boundaries. Topsoil is pushed back to t he permit boundary and no further excavation can occur without negatively impacting the stockpiles. The conversion will allow the topsoil to be pushed farther to the east and north to prevent loss during excavation. The inspector noted a stockpile of processed materials on the pit floor. The proposed additional acreage is undisturbed natural highlands grasslands. No significant shrubs or trees are noted in the proposed area or adjacent lands. The inspector notes no utilities or other man-made structures within the proposed area or within 200-feet of the affected areas. There is a cell phone tower near the proposed boundary on the north. The exact distance appears to be close. The Division will require either a statement from the operator that the structure is not within the Z00-foot zone of notification or a statement from the tower owner that it is a temporary structure. If the structure is within the 200-foot zone and permanent, the operator will have to list it in Exhibit S and provide a damage waiver agreement per the rules. No petroleum products are stored on site. Stormwater appears to be contained on site. No erosion or sedimentation issues were observed. The bond will be recalculated as part of the conversion process. No other issues are noted. Responses to this inspection report should be directed to Russ Means at the Division of Minerals and Geology, Grand Junction Field Office, 101 South 3`d Street, Room 301, Grand Junction, Colorado 81501, phone no.970-241- 1117. I & E Contact Address cc: ^ CE NAME: Jim and Diana Watson ^ BL OPERATOR: same ^ FS STREET: P.O. Box 1056 ^ HW CITY/STATE/ZIP: Meeker. CO 81641 ^ HMWMD (CH)