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STATE OF COLdRAD~~ <br />DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />7313 Sherman SL, Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3567 <br />FAX: (303) 832-8106 <br />September 11, 2006 <br />Mr. Raymond "Rocky" Conner <br />Comstock Mining & Refining <br />P.O. BOX 841 <br />Silver Springs, NV 89429 <br />RE: Phil Sheridan Lode; Permit No. M-1988-081 <br />- -Notice of-Possible Violation- - -- '-- <br />Dear Mr. Conner, <br />COLORADO <br />D I VISION O F <br />RECLAMATION <br />MINING <br />- Sc- <br />SAFETY <br />eul ovens <br />Governor <br />Russell George <br />Executive Director <br />Ronald W. Cattany <br />Division DlreC[Or <br />Natural Resource Trustee <br />On July 19, 2006 the Division of Reclamation, Mining and Safety (Division) conducted an inspection and <br />required Comstock Mining & Refining to submit documentation regarding proof of legal right of entry <br />for the Phil Sheridan Lode, Permit No. M-1988-081. I7T addition, the Division required the operator to <br />submit proof that Comstock Mining & Refining currently exists as an entity to do business in the State of <br />Colorado and has the financial ability to perform reclamation on site. The information was due no later <br />than September 1, 2006. The Division has not received the information as required in the July 19, 2006 <br />inspection report. <br />Therefore, the Division believes the Operator to be in possible violation of the Colorado Mined <br />Reclamation Act (Act) and the Hazd Rock/Metal Mining Rules and Regulations (Rules) and the <br />Performance Warranty, specifically; <br />C.R.S. 34-32-118(1)(d) of the Act and Rule 4.20(1)(d) for failure to demonstrate to the Division <br />Comstock Mining & Refining's financial ability to carry out their obligation under the article. <br />Rule 6.3.7 of the Rules and the Performance Warranty for failure to provide a description of the basis <br />for legal right of entry to the site and to conduct mining and reclamation. <br />The Division will schedule this matter before the Mined Land Reclamation Board. <br />A Formal Public Hearing will be held during the October 18-19, 2006 Board meeting for consideration of <br />the possible violations. The hearing will be held in Room 318 of 1313 Sherman Street, Denver, Colorado, <br />beginning at 9:00 a.m. on October 18`s or beginning at 9:00 a.m. on October 19`h, or as soon thereafter on <br />each of those days so that the matter can be considered. At that hearing you will have the opportunity to <br />be represented and heazd. It will be reiterated that there is reason to believe that you are in violation of <br />the provisions noted above. <br />Ifthe Board finds a violation at this hearing, it may issue a Cease and Desist Order, assess a Civil Penalty <br />in the amount of $100 to $1000 for each day of violation, and/or order the permit be suspended, modified, <br />or revoked. Ifyou have evidence indicating that the possible violations noted above do not exist or have <br />been corrected, please provide it to us as soon as possible or bring it to the hearing. <br />Office of Office of <br />Mined Land Reclamation Attive and Inactive Mines <br />