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(Page 4) MINE ID # OR PROSPECTING ID # M-2001-088 INSPECTION DATE 12-21-2005 INSPECTOR'S INITIALS SSS The following problems (PB) and/or possible violations (PV) (and suggested corrective actions) were identified during this inspection. The problems should be corrected by the dates given, or they will become possible violations. The possible violations should be corrected by the dates given to reduce their severity when considered by the Mined Land Reclamation Board. The inspector noted on the previous page should be notified of all corrective actions taken. PROBLEMSIPOSSIBLE VIOLATIONS AND CORRECTIVE ACTIONS CORRECTION DATE ~~ Mining activities have affected acreage aifside the annroved Hermit hnunda Tnnccihty in violation of C.R.S. 34-32.5-116-(4).(i) for failure to prof t ar a outsid th . aff t d land from lid or damagrL _~ ~ occurring during the mining operation and reclamation or C.R.S. 34-32.5-109(11 for failure to first obtain a permit prior to engaging in a new operation PB or PV: PV CORRECTIVE ACTION: TOPIC(S): OD Attend the scheduled formal public hearing to address this possible violation and Dertorm the corrective actions required by the MLRB by the correction dates they specify The corrective action due date will be determined by the MLRB. '~~ Mining and rer•.lamatinn operations are not in romplianre with the approved mining and reclamation „i,,,,~ 03 / 06 / 2006 PB or PV: PB CORRECTIVE ACTION: TOPIC(S): MP Submit a revision to the permit to update the mining and reclamation plans to reflect current and B~ ~rooosed future mining and reclamation~ractices at this site The revision must include updated Lf S phase locations. disturbed acreage and mine depth figures. mining and reclamation details adjusted for increased mine depth and overburden volume, accurate mans and reclamation cost fiaures. These revised materials may be included in an amendment or conversion application submitted to address the off-site disturbance issue noted above v3. Off-site mining disturbance, increased disturbed area, and increased pit depth have resulted in an inadequate reclamation financial warranty held by the state for reclamation of this site. 03 / 06 / 2006 PB or PV: PB CORRECTIVE ACTION: TOPIC(S): FN Submit adequate financial warranty in the amount shown on the enclosed reclamation cost estimate. - _ _ the correction date noted. This amount is an interim reclamation cost estimate and may be revised upon approval of any revisions submitted to correct the above noted issues. I, Steve Shuey, hereby certify that on January 5, 2006, I deposited a true and complete copy of this foregoing inspection report in the United States Mail, first class postage paid, to the operator of record for this site at the address indicated, and to those others within the body of this report who have been designated to receive copies (DMG personnel excepted). Signa re