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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY oF~co~ Department or Natural Resources s ~~ ~ N 1317 Sherman SL, Room. 215 (; , ~ • ~ Denver, CC 90201 as/ • • Phone:1307i 856-3567 lB96 FAX: 1103; 83?8106 Rov Romer Grnemor March $ , 1993 Michael B. Long Dirivon Dneuor Mr. Ken Kluksdahl Battle Mountain Gold Company P.O. Box 310 San Luis, CO 81152 RE: Third party monitoring program; Battle Mountain Resources, Inc.; San Luis Project; Permit No. M-88-012 Dear Mr. Kluksdahl: This letter refers to the February 19, 1993 meeting betw~en BMG, BMRI, RCG/HBI, the Division, and your attorney and to your letter of February 23, 1993. Your letter requests that the Division acknowledge that "both parties will review and (where applicable) extend credit to B I for costs incurred and paid out but were not applicable to th third party contract or MOU." Please know that your letter did not ontain copies of the RCG/HBI invoices as noted. We will need to see tlhose if we are to comment. L I note that Section V.F. of the M.O.U. (Submittal of Invoices), in combination with Article 3 of the Contract, specifies !that invoices -~~ shall be submitted by RCG/HBI to DMG's project Manag~r, who shall review them. If the DMG project manager disagrees with components of ~~" the invoice, he is to return comments to RCG/HBI for revision. Once ~ approved, the DMG project manager is to forward the invoice to BMRI for payment. BMRI may challenge the invoice if it desires. ~2CG/HBI failed to submit the invoices to me for review and approval, andIBMRI paid the invoices without my review or approval. In this regard, the Division will make no acknowledgement to "extend credit." Rather, I will complete my review and comment as provided in the MOU after I have been provided copies of the invoices. You indicated that invoiced expenditures to date repres@nt 35~ of the contracted price but only 9~ of the actual work to be performed. You indicated that the costs associated with the initi~l report are questionable to BMRI due to the scope of work being exceeded in several instances. Given BMG & BMRI's interpretations of the MO~J as stated in the meeting, your concerns are obvious. However, the Division has expressed that it does not concur with significant po>:+tions of your interpretation of the Scope of Work.