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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources 1313 Sherman St., Room 215 Denver, Colorado 80203 Phone: (303) 866-3567 FAX: (303)832-8106 October 31, 2002 N FcF~~~~ °j°~S%~~.: v ~s ~2 Jim Bender Deadwood Gulch Mining Co ~ 5529 US Highway 64 Farmington, NM 87401 Re: Incas Mine, Permit M-1986-076, Smmnary of Meeting at DMG Durango Field Office. Dear Mr. Bender, DIVISION OF MINERALS GEOLOGY RECLAMATION MINING•SAFETY Bill Owens Governor Greg E. Walther Executive Director Ronald W. Cattany Acting Division Director Thank you for the time you spent in coming to Durango on October 29, 2002, to discuss various topics related to the DMO permit at the Incas Mine. I feel it was especially valuable because Harry Posey, a specialist from our Denver office, was present also. As you know, we had planned to meet you at the mine site that day to discuss these same issues, but the road was in poor shape due to the weather, and attempting to drive up there would have been animprovident exercise. You also hand-delivered an analysis of the water samples taken in June 2000, but which had not been analyzed . until August 2002. The information in the reports is of limited use, but some of the results indicate certain general qualities in the water For monitoring or enforcement purposes, however, they fulfill no requirement. Thank you for having the samples analyzed anyway, and for delivering the results. I have tried to summarize most of the important topics of our meeting in the following pazagraphs. Some of this is information for your use, and some are items which will require a future response or action from you. Tailines Pond. This site is a DMO, which carves with it the requirement that various structures which are to be built or used in the operation must comply with the rules concerning Environmental Protection Plans (EPPs) and Environmental Protection Facilities (EPFs). These are to carry a certification of design and construction, mainly for purposes of environmental protection, but also to ensure that by operating within the limits of the approved plans there is a sufficient bond posted. Your present operation is utilizing a tailings disposal pond for which there is no documented design of its size and configuration, stability of its location, materials used in its construction or underlying it, or certifying its construction to a specification. The concerns related to this are that the structure may move or become damaged in its present hillside location due to the underlying strata, contribution of groundwater (daylighting from the shallow bedrock) or stormwater runoff, or sediment loading. The approved DMO plans allow this type of tailings disposal in the permitted area, but not in this exact location. Since the thickness of the talus (in other words, the depth to bedrock) is variable, then uniform stability cannot be assured throughout the slope. Also, different areas of the slope receive different amounts of stormwater runoff, by virtue of the roads and drainage controls on the site, which affects the capacity of the pond. It is possible that drainage control work will need to be done to divert stormwater runoff to other areas in an effort to provide better stability and assurance of maximum freeboard of the tailings impoundment. Without having provided any information as to the pond itself, and documentation of possible onsite influences, the requirements for the EPF rules are not being met. Your written response to this item will be to provide the needed information, including design specifications, fetch area of the runoff slope, upslope drainage controls, and characteristics of the site where it is located. If some of this exists already in the file for other locations on the permit, and which are also applicable to this location, you may make that reference. For all new documentation, this office will work with you if necessary, but it must be provided. Please review Hard Rock and Metals Rules 7.3 and 7.4.