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MINING, LLC <br />THIRD QUARTER 2006 <br />ENGINEERING INSPECTION <br />EAST YARD, WEST VALLEY FILL AND II WEST <br />COAI. MINE WASTE DISPOSAL PILES <br />The approved Oxbow Mining, LLC (OMLLC) Mine permit includes a requirement for quarterly inspections of <br />coal mine waste piles for stability. The inspection is to be performed by a registered engineer or other qualified <br />professional specialist, who is experienced in the constmction of earth and rockfill embankments. On <br />September 27, 2006 visual inspections were performed of the East Yazd, West Valley Fill and II West coal <br />mine waste disposal areas. <br />EAST YARD -The East Yazd disposal area has reached its design capacity, and no new waste material has <br />been placed since June of 2001. The revegetated slope was inspected for signs of erosion or instability and <br />vegetation establishment. No erosional features were noted requiring repairs to revegetated areas. The covering <br />of the waste pile is considered complete. The ramp will be seeded in the coming fall. Nothing was observed <br />during the inspection that would indicate the pile has a potential for structural failure. <br />WEST VALLEY FILL -The West Valley Fill had received additional waste material (approx imately 880 cy) <br />during the third quarter of 2006, up to the approximate 6225' elevation, Compaction tests are required, as <br />necessary, based upon the amount of material added to the waste area. Six (6) compaction tests were <br />conducted (on 8/02/06 and 9/05/06) demonstrating compliance with the design requirements. A copy of the <br />test reports are attached. <br />The revegetated outslope located between the Fill slope toe to the approximate 6200 elevation was inspected <br />for signs of erosion and instability. No erosional features were noted requiring repairs to any vegetated areas. <br />The third bench (approximate 6200 elevation) setback remains established for the final lift of waste material <br />and the ramp constructed on the waste pile to provide access to the II West Coal Refuse Facility light use road <br />and haul road. These two roads continue to be utilized. No springs or seeps were noted. Surface drainage <br />control features are performing according to the plan. Nothing was observed during the inspection that would <br />indicate the West Valley Fill has a potential for structural failure. <br />l] WEST -The TI West disposal area received coal mine waste material for the first time. Initial underdrain <br />construction was completed according to the plan. Approximately 1250 cy of waste material was hauled and <br />placed in II West to the approximate 6160' elevation. A total of six (6) compaction tests were conducted (on <br />9/5/06 and 9/ 15/06) demonstrating compliance with the design requirements. A copy of the test reports are <br />attached, The limited amount of outslope located below the present approximate 6060' elevation will be seeded <br />this fall. <br />Date <br />No. 14726 <br />3737 hlwy 133 P.O. Box 535 Somerset, Colorado 81434 USA <br />TEL (970) 929-5122 FAX (970) 929-5177 <br />