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STATE OF COLORADO <br />DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 8663567 <br />FAX: (303) 832-8106 <br />May 18, 2007 <br />Scott Wanstedt <br />Blue Mountain Energy, Inc. <br />3607 County Road #65 <br />Rangely, CO 81648 <br />RE: Quarterly Report Review, 4th Quarter 2006 and 1gt Quarter 2007 <br />Deserado Mine, #C-81-018 <br />Dear Mr. Wanstedt: <br />COLORADO <br />DIVISION OF <br />RECLAMATION <br />MINING <br />- &- <br />SAFETY <br />Bill Ritter, jr. <br />Governor <br />Harris D. Sherman <br />Executive Director <br />Ronald W. Cattany <br />Division Director <br />Natural Resource Trustee <br />The Division of Reclamation, Mining and Safety has completed review of the recent <br />quarterly reports submitted for sediment ponds, refuse piles, and pond discharges for <br />the Deserado Mine. Please find the results of this review under the respective headings <br />below. <br />Sediment Ponds <br />The reports reviewed demonstrate compliance with the requirements of Rule 4.05.9(17). <br />They also meet the additional requirements of Rules 4.05.9(14)-(15). Twenty-one ponds <br />at the site are checked for erosion and structural problems as welt as function of <br />appurtenant structures and operational status at the time of the inspection. Other than <br />minor maintenance, no issues were identified. <br />Refuse Piles <br />The reports reviewed demonstrate compliance with the requirements of Rules <br />4.09.1(11) and 4.10.2(2). Please note that a minimum of quarterly inspection is <br />required and for Deserado, more frequent inspection is required during critical <br />construction periods associated with 1) removal of topsoil, 2) installation of surface <br />drainage systems, 3) placement and compaction of materials, and 4) revegetation. <br />Please ensure that these specific activities are inspected and documented by date in <br />the report if they should occur during the quarter. <br />Office of Office of <br />Mined Land Reclamation Denver Grand Junction Durango Active and Inactive Mines <br />