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Mr. Thomas A. Schreiner -Page Two <br />January 20, 2006 <br />7. Re: Describe the groundwater gradient within the Cash Mine and in the <br />surrounding area. <br />As indicated in MRV's letter of January 31, 2006, the original permit application, <br />along with numerous subsequent submittals, provide detailed discussion of localized <br />geologic conditions as pertaining to groundwater. <br />Both geologic literature and prior analyses (Ted Zorich and Associates, Inc. - <br />Consulting Engineers in Water Resources; September 1985) have indicated that the <br />entire area of interest is underlain by crystalline rock with fractures trending from the <br />southwest to the northeast. Generally, the extent of fracturing decreases with depth <br />to about 300 feet, where the fracturing is diminished. Zorich also noted the presence <br />of the 10- to 80-ft. wide, "impermeable" Hoosier Reef (extending southeast to <br />northwest along the western edge of the permit area) as a localized hydrologic <br />barrier or control feature. <br />As is typical in afracture-system environment, the groundwater "gradient" is fracture- <br />controlled, and as such, likely highly variable throughout the Cash Mine permit area. <br />Discontinuous fracture system occurrences of groundwater are difficult to assess in <br />terms of establishing "groundwater gradient"; however, it would be reasonable to <br />presume that the general gradient for the Cash Mine area (i.e., the lower portions of <br />the southwestern extent of Bighorn Mountain) would mimic surface topography, thus, <br />a gradient to the south-southeast. This would be consistent with the occurrence of <br />Cash Gulch, an intermittent stream that sources as a surface expression of <br />groundwater in the vicinity of the 8,250 to 8,300 ft. elevational area some 900 to <br />1,000 ft. north of the Cash Mine. Conversely, there is likely a higher elevation <br />groundwater "divide" nearer to the saddle of Bighorn Mountain (i.e., the 8,400 to <br />8,450 ft. elevation range defined by Sunshine Canyon Drive) as fracture orientation <br />(southwest to northeast) would suggest the higher elevation groundwater gradient <br />would likely trend northeasterly toward Left Hand Canyon. <br />It would not be unreasonable to presume that underground workings or voids provide <br />a preferential flow pathway and function as a "groundwater sink" for those <br />encountered water-bearing fractures immediately above and/or surrounding the <br />workings. Recognized fracture system yields from area groundwater wells, as well <br />as observed "inflow" to these workings during prior mining episodes and recent <br />exploration activity (by MRV) demonstrate that there is no continuous "aquifer" <br />system present in the vicinity of the mine. Inflow is generally limited to the stored <br />volume within the fracture feature, with recharge being directly influenced by <br />localized precipitation and/or snowmelt. <br />MRV has previously stipulated to best management practices (BMPs) and <br />underground water management techniques to mitigate effects on both quantity and <br />quality of groundwater encountered, to include operation of the mine as a "zero- <br />discharge" facility. Given the foregoing, the performance of an extensive hydrologic <br />