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~, June 15, 2001 Colorado Division of Minerals and Geology Attention: Carl Mount 1313 Sherman Street Room 215 Denver. CO 80203 CONNELL~ESOURCES, INC. STEAMBOAT DIVISION P.O. Box 882590 23690 US Hwy 40 Steamboat Springs, CO 80488 r~tnt.a70-0200 FAX (970) 87D-0290 IIIIIIIIIIIII III 999 Re: Tellier Pit MLRD # 98-058 Self Report of Disturbance Violation Out Of Permit Area Dear Mr. Mount: Thank-you for meeting me yesterday regarding the disturbance violation at our Tellier pit operation. In the interest of resolving my mistake as quickly as possible, Connell Resources hereby waives their right to 30 day notice and asks that we be placed on the June 27 or 28`" monthly Board hearing schedule for the violation hearing. As we discussed yesterday, Connell Resources has backfilled the gravel against the pit wall, which with the slope of the wall and the depth of the overburden amounted to a .07 acre of mining. The gravel was placed in lifts and wheel rolled by a Cat 9801oader to achieve compaction and stability of the gravel, which was replaced. As I stated in my previous letter, it is important to me ethically that our company does not gain salable materials from this error so we replaced the gravel bench of pit run material. The total out of boundary disturbance acreage is .21 acres on Colorado State Land Board property. This week I met with Mrs. Edna Tellier who is the mineral rights lessee on the State Land Board property and Frank Camilletti who is the administrator for the Tellier Family Trust. The Tellier Family Trust has the surface lease on the Land Board properly. Mrs. Tellier verbally stated her damages for this violation could be settled for 1500 CY of gravel which could have been removed, times the market price of the gravel of $4.50. I have provided a draft of this settlement and the accompanying permission to reclaim you suggested For the Board's review. Mr. Camilletti stated the Family Trust would not seek damages. Beverly Rave from the State Land Board had previously told me on May 14~ that the Land Board would not seek damages if Mrs. Tellier were satisfed. Connell Resources would like to respectfully submit two possible plans to remedy the violation for the Board's consideration. Our preferred option would be to backfll, topsoil, and seed the entire Western pit slope by October 25, 2001 and have it available for the Division's inspection and verification of reclamation standards. The best time to seed in Routt County is between October 15 and November 15. We are also notifying all parties involved and believe we have agreement and approval to trespass to complete restoration. A secondary option you said might be required is to have Connell Resources complete a technical revision where we pull out .21 acres of mining from our boundary and add this .21 acres to our permit. While this does not effect our reclamation plan or timing stated above, the parties involved have not discussed this option. If required, this is not a problem for us to change our boundary on our lease area owned by Luke and Caroline Tellier since there is an unmined and unaffected area in the Northwest corner and north boundary which we were not going to mine which steps off as larger than the violation area. Thank-you for your direction and patience in this manner. I appreaate your suggestions on topsoil and stormwater management and will incorporate them in our next phase of mining. I also appreciate the manner in which you have handled my mistake.