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(Page 2) MINE ID # OR PROSPECTING ID # M-1999-022 INSPECTION DATE 9/15/05 INSPECTOR'S INITIALS RCO OBSERVATIONS This inspection was performed by the Division as part of its monitoring of Construction Materials 110 permits. The Division attempted unsuccessfully to contact the operator. The site was inactive and the operator was not present during the inspection. Telephone records show that there is new landowner (name shown at bottom of report narrative) who wishes to succeed as the operator of this permit. Since the new landowner is now involved with the management of the site, copy of this report will be sent to him also, to explain what was inspected and what problems were found. No permit transfer paperwork has been received by this Division, and the permit has not been transferred to the successor operator (new landowner). Therefore the Division still considers the original permitted operator (Crites Construction) to be the party liable for maintaining the site and the bond, and for correcting any problems at the site (even if he is no position to do so). Timely correction of problems found at the site is a requirement. If they are left uncorrected, the operator may be found in violation, resulting in permit revocation. If the permit is revoked, future operations will require a new permit. Therefore the new landowner may wish to coordinate with the permitted operator to pertorm the corrective actions for the problems noted below. and to provide the written follow-up to this inspector. It is also recommended that the permit transfer paperwork be completed, and submitted to the Division. along with a replacement bond. Problem 1. boundary be marked. The correction of this problem will be for the operator to mark the boundaries. Please see the last page for the correction date. Most of the stockpiles have been removed. There is a little debris left on the site and adjoining land. It is known that the existing operator also operated a construction business and farming business, and has stored equipment and materials related to those businesses on lands adjacent to the permit area. There has apparently been much clean-up and removal of most of the equipment and debris, both from the permitted area and from adjacent lands, but some debris still remains. This is not a problem, as long as the bond is adequate to cover removal costs, and as long as non-mining related items are kept out of the permit, and mining-related items are contained within the permit. (This is another reason to mark the boundaries.) There is a separate excavation area of the permit, located on a dry hillside across the irrigation canal. This was originally a 6- acre rectangular block, consisting of three 2-acre phases, but one of the 2-acre phases was released from the permit in 2003, leaving 4 acres of permitted land there. That release was intended to be the first part of a "land exchange" that was to include the subsequent addition of a 2-acre area near the pond and stockpile areas. However, the operator did not submit the required documentation or fee to add any land. (The total permitted acreage now stands at 7.99 acres.) No disturbance has occurred to any of this hillside excavation area to-date. Note: the boundary markers are not posted at this 4-acre area either, so these must also be installed, according to the "problem 1"discussion above. No further items were observed during the inspection. Responses to this inspection report should be directed to the Division of Minerals and Geology, 701 Camino del Rio, Room 125, Durango, Colorado 81301, Attn: Bob Oswald; phone no.970-247-5193. Cont. Problem 2. There is a group of steel drums and buckets on the south end of the site. containing waste oil. Some of the containers are open and full. The area around the containers exhibits oil-stained soil, indicating Door hydrocarbon storage and handling. This