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Memo to Bob Oswald 4 December 20, 2004 Golden Wonder Mine Permit No. M-1978-091-UG There is a historically operated adit just to the south of the proposed adit location; based on the size of the mine dump at the historic adit, the distance it was driven into the mountain is insubstantial compared to the new adit's anticipated length. There was no surface flowing discharge from the historic adit at the time of the October 13, 2004 inspection; it was observed that water is pooled on the sill just inby of the portal. Sampling and analyses conducted by the Operator show that this water is low pH and high in dissolved metals. Visible traces of past surface water flow emanating from the historic portal were observed, indicating that the adit does dischazge periodically. The Operator is advised to track flows from this adit, and to measure flow rates whenever they occur. It is imperative that any surface discharge from the historic adit be sampled and analyzed in accordance with the DMG letter to Lance Barker dated March 24, 2004. It is the Operator's position that the historic adit was driven on a surface exposure of the so-called Gold Quartz vein; there are other historic workings on this vein located up the mountain to the east. Moreover, the Operator espouses the position that ground water movement through this part of the mountain is essentially unsaturated and is largely confined to the Gold Quartz vein. It was discussed with the Operator on-site during the October 13, 2004 inspection that a point or points of compliance must be established for ground water related to the proposed new adit. The regulatory aspects of establishing ground water points of compliance are described in Rule 3.1.7 of the Hard Rock/Metal Mining Rules and Regulations of the Mined Land Reclamation Board. Given the Operator's position that ground water encountered during driving of the adit will be minimal, and that ground water flows are focused on the Gold Quartz vein, it was discussed during the inspection that ground water quality along the Gold Quartz vein continuation in the field below the proposed adit must be characterized. The difficulty involved in drilling a well to intersect a relatively narrow vein structure for the collection of water samples was also discussed. The operator stated a willingness to drill an angled hole to assure that the target structure would be intersected. The DMG agrees that an angled hole would have a much higher probability of intersecting the vein than a vertical hole. The angled monitoring hole must be planned based on best available information to intersect the vein at an elevation lower than the thalweg of the immediately adjacent reach of the Lake Fork (this will be discussed further below). It is the Operator's opinion that driving the new adit and stoping upward on the Golden Wonder vein will not have an adverse impact to ground water quality. The Operator intends to route any water encountered in the proposed mining operation to the Gold Quartz vein. The Operator's plan is to drill angled boreholes from within the new adit to intersect the Gold Quartz vein; the plan anticipates routing mine water to the boreholes with the intention of discharging this water into the Gold Quartz vein. If the mine water is of equal or better quality to the ambient ground water quality in the Gold Quartz vein, and if the Gold Quartz vein is sufficiently permeable to accept all of the water dischazged to it through the angled boreholes, then the Operator's plan would be in conformance with the Interim Narrative Standazd for ground water (5 CCR 1002-41), which states: 6. Interim Narrative Standard a.The "Interim Narrative Standazd" in 41.5(C)(6)(b)(i)belnw is applicable to all ground water, to which standazds have not already been assigned in the state, with the exception of those azeas where the total dissolved solids (TDS) are equal to or exceed 10,000 mg/1. This standard is applicable independent of and in addition to the statewide standards for radioactive materials and organic pollutants established in this section 41.S.C.