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STATE OF COLORADO DIVISION OF RECLAMATION, MINING AND SAFETY Department of Natural Resources 1313 Sherman $t., Room 215 Denver, Colorado 80203 Phone: (303) 866-3567 PAX: (303) 832-810b April 9, 2007 Franklin Consolidated Mining Company, Inc. c/o A.S. Austin Company 1265 Avocado Blvd #104-402 El Cajon California 92020 COLORADO DIVISION OF RECLAMATION MINING - 6c- SAFETY Bill Ritter, lr. Governor Harris D. Sherman Executive DirecYOr ' Ronald W. Cottony RE: Reason To Believe a Violation Exists, Franklin Mine & Mill, Permit No. M-1983-083, Class: Enforcemant Division Director Natural Resource Trustee Dear Sirs: On February 2 and 12, 2007 the Division of Reclamation, Mining, & Safety sent a request for either a replacement bond or supplemental bond adequate to complete the requirements of the reclamation plan a[ the Franklin Mine and Mill. The fatal amount of bond required is $1,100,700. The amount of reclamation bond currently held is $252,070. The Division specified in its February 2 and l2, 2007 correspondence that the increased bond was to be posted no later than April 2, 2007, ie. 60 days from Febmary 2, 2007. To date, this requested bond increase has not been posted. The Division believes this is in violation of Section 34-32-I 17(4)(b) of the Colorado Mine Land Reclamation Act and Rule 4.2.1(1) of the Mineral Rules and Regulations of the Colorado Mined Land Reclamaton Board for Hard Rock, Metal, and Designated Mining Operations for failure to maintain the financial warranty at a level which refleMS the actual current cos[ of fulfilling the requirements of the reclamation plan. Therefore, the Division has found reason to believe a violation exists to the Law and has scheduled this matter before the Mined Land Reclamation Board. A Formal Public Hearing will be held during [he May 16.17, 2007 Board meeting for consideration of possible violation. The hearing will be held in Room 318 of 1313 Shemlan Street, Denver, Colorado beginning at 10:00 a.m. on the 16`", and 9:00 a.m. on the 17th, or as soon thereafter as the matter can be considered, and you will have the opportunity to be represented and heard. It will be reiterated that there is a reason to believe [hat you are in violation of the provisions noted above. We advise you to contact the Board's assis~nt on the Monday prior to the scheduled hearing to detemline which day your item will be heard. If the Board finds a violation at this hearing, it may issue a cease and desist order, assess a civil penalty in the amount of $50 to $200 for each day of violation, or order the pemlit be suspended, modified or revoked. If you have evidence indicating that the possible violation noted above does not exist or has been corrected, please provide it ro us as soon as possible or bring it to the hearing. Following the hearing, all parties have an opportunity to review and comment on a draft of [he Board's order before it is issued. If you wish to do so, you must provide the Board a written request to review the draft order a[ your hearing. You must include your mailing address and, if possible, a fax number or email address. You will be provided a copy of the draft order for your review as soon as it is available. The Board must receive any comment within five days following your receipt of the draft order, unless that deadline is extended. Submit al] comments in writing to Tyson Powell, Assistant Attorney General, 1525 Sherman Street, 5`" Floor, Denver, CO 80203, FAX # (303) 866-5395. The Board will resolve any issues regarding the form of the order. This process does not affect your right to request reconsideration by the Board or appeal the substance of the order. [f any questions please contact Tom Schreiner. /Bloc l// RONALD W. CATTANY Division Director RWC/ CERTIFIED MAIL NO. 7005 3110 0000 2197 5142 Returned Receipt Requested Cc: William T Gorton Office of Office of Mined land Reclamation Denver • Grand Junction Durango Active and Inactive Mines