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CLIMAX MOLYBDENUM COMPANY <br />HENDERSON MINE AND MILL <br />Operational and General Clarifications in Response to Financial Warranty <br />Increase <br />Permit M-77-342 <br />1.0 INTRODUCTION <br />The Henderson Mine and Mill (Henderson) is an active molybdenum mining and <br />milling operation wholly owned and operated by the Climax Molybdenum Company <br />(GMC), which is a wholly owned subsidiary of Pheips Dodge Corporation {PDC). <br />Henderson began underground mining of molybdenite ore and the production of <br />molybdenum disulfide concentrates in mid-1976. The Mining and Reclamation <br />Permit (Permit) required under the Colorado Mined Land Reclamation Act of 1976 <br />(Act} was approved by the Colorado Mined Land Reclamation Board (Board) in late <br />1977. This Permit is M-77-342. Subsequently, the permit was formally amended <br />in 1981 (AM-01) and in 1998 {AM-03) when the rail haulage system was replaced <br />with the present conveyor system. In addition, the Colorado Division of Minerals <br />and Geology (DMG) has approved 10 Technical Revisions (TR) to the Permit over <br />the 24 year operating history of Henderson. One other TR {TR-04) remains under <br />review by DMG, and 7R-12 was submitted to DMG on September 6, 2002. TR-12 <br />involves proposed FW changes for specific areas within the regulatory definition of <br />a TR and is included herein by reference. <br />Historically and operationally, there has been little change in Henderson's <br />operations since production was initiated with the exception of the Henderson <br />2000 change to underground crushing and the mill conveyor system which were <br />subject of AM-03. The mine and mill facilities have been active through the past 24 <br />years with no periods of temporary cessation. Presently, the underground mine is <br />producing at a rate of approximate-y 24,000 Ions per day, 246 days per year; <br />production levels and schedules that are dependent upon market conditions and <br />may vary on short notice. <br />The mine is located at the headwaters of the West Fork of Clear Creek on the East <br />Side of the Continental Divide. Mined ore is crushed underground and conveyed <br />1 <br />