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Ms. Erica Crosby Division of Minerals and Geology exercises. April 5, 2006 Page 10 of 21 The May 2005 modeling indicated that the only impacts on the water table in the vicinity of the slurry walled pits will be slight mound and shadow effects up- and down-gradient of the slurry walls. These effects are predicted to range in magnitude throughout the town area from 0.25- to 0.5-feet, either positive or negative drawdown. The Phase 1 modeling has indicated that, under the scenario whereby the Phase 2 and 3 slurry wall is not in place, there will be an area of several feet of drawdown immediately adjacent to the mined area but only approximately 0.5-feet or less throughout the bulk of the area that would encompass the Phase 2 and 3 mining areas that would later be slurry walled. Throughout the area comprising the town, there is less than 0.5-feet of drawdown predicted. Immediately north and south of the Phase 1 mine area there is predicted drawdowns of 1- to 2-feet that fall off rapidly as one moves away from the mine area. In the scenario whereby the Phase 2 and 3 slurry wall is installed prior to the completion of the Phase 1 mining, there will be even less impact to the east and in the vicinity of the town. In this case, there is essentially no drawdown from the mined area, but rather slight mound and shadow effects from the slurry walls. 24. The Division received comments from the Office of the State Engineer (OSE) regarding the proposed application. According to the OSE, before a well permit can be approved the applicant must conduct a field location of the site and document the locations of all wells within 600 feet of the permit area. The applicant must then obtain a waiver of objection from all well owners with wells within 600 feet of the permit area or request a hearing before the State Engineer. See the attached OSE letter for further detail. Please commit to not exposing groundwater until a well permit is obtained from the OSE. In addition, once the well permit is obtained a copy must be submitted to the Division. The applicant commits to not exposing groundwater until a Gravel Well Permit is obtained from the Office of the State Engineer. Prior to permit approval, a field location of the site will be conducted to document all wells within 600 of the permit area. The applicant will obtain a waiver of objection from all well owners within 600 feet or request a hearing before the State Engineer. 25. A more detailed review of the groundwater model will be forthcoming, and additional questions may arise based on the review. We received the follow-up Hydrology Review memo from Tom Schreiner, dated January 12, 2006, and have responded to his questions later in this letter.