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~--- RE: MEh1PHIS~ FILE N:M-97-084 ~ Page 2 <lo pyrite overall wiCh no other sulfide ~ minerals observed The entire area to the east of the proposed operation is a center of volcanic intrusive activity, the "BLOWOUT". This area is intensely altered and mineralized, with naturally ocCUring alteration products such as limonite, hematite, kaolinite, alunite, jarosite, etc. The entire Blowout area is yellow-ochre in color and contains a defined copper-molybdenum mineral deposit together with skarn-type base and precious-metal mineralization. The waste rock-alluvium contains a small amount of this type of material, together with an abundance of the adjoining sedimentary arkose of the Permian Cutler formation. In regards to your question about acid generating potential, if the material that is to be removed had a high AGP, there would be indications of such within and around the base of the alluvium, since this material has existed in this location at least 50 years and possibly more than 100 years. The vegetation growing on and around this material shows no signs of being affected by low pH or heavy metals. This project is not one of mining massive sulfides and creating waste rock piles that at some future date, through oxidation, may create acid conditions and liberate toxic metals. This is a project of removing and using existing unconsolidated material, that has no indications of being harmful to man or the environment. This material will be used for fill or road base in other parts of the county, similarly to the material in Skyrocket Creek, which has continually been used for the past many decades by the City of Ouray, Ouray County, CDOT and private individuals . Exhibit B - Site Description/Location Map The attached copy of a portion of the Ouray 7.5" Quadrangle, shows the location of the proposed site together with the topography to the east of this area. As shown, the intermittant drainage extends only to the "bench" or flat area to the east. There are no basins or extensive slopes which would provide a larger source for potential storm discharges. The area that influences this drainage is from the above-mentioned bench, west to the flat where the proposed excavation is to be conducted. Within this drainage is the Memphis Dike, along which prospecting and mining has been conducted since the late 1800'x. This is a possible source of some of the mineralized material that is described above. Exhibit C - Mining Plan Your observations, both in review of the application and in the field regarding the potential of an unstable highwall being created by removing all of the material below the present drainage, is very well taken. Based upon your suggestion, it is proposed to expand the permit boundary to the east to include the drainage area, so that the additional unconsolidated material can be removed and stabilized during the mining process. It is proposed to remove the unconsolidated material down to bedrock, and allow the natural side slopes to remain as cliff faces. It is difficult to predict the