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CDPHE WOCD Fax:303-782-0390 May 5 2000 18:17 • P. 02 COLORADO DEPARTMENT OF PUBLIC $EALT'H AND ENVIRONMENT WATER QUALITY CONTROL DIVISION/BATTLE MOUNTAIN (',OLD SETTLEMENT AGREEMENT On May 7, 2000, the Colorado Department of Public Health and Environment's Water Quality Control Divisions entered into a Settlement Agreement and Stipulated Order with Battle Mountain Gold Company and Battle Mountain Resources, Inc. The settlement addresses alleged violations of the Colorado Water Quality (:ontrol Act at the San Luis Mute, located approximately five miles northwest of the town of San Luis, Colorado, in Costilla County. The settlement imposes against Battle Mountain a civil penalty of $86,700 which is based on 682 days of violation which began on October 7, 1997 and ended on August 20, 1999. The penalty is being offset by $15,000, bringing it to $71,700. The $15,000 offset is based on half the cost of the $30,000 supplemental environmental project which Battle Mountain has agreed to fund in Costilla County as part ofthe settlement. For the project, the company will provide the 530,000 to the Costilla County Water and Sanitation District for improvements to the treatment plant located at the Town of San Pablo, which is south of San Luis. The settlement and civil penalty are an outgrowth of gold mining operations which Battle Mountain Resources, a wholly owned subsidiary of Battle Mountain Gold, conducted at the San Luis Mine from January 1990 through October 1996 under a Mining and Reclamation Permit from the Colorado Mined Land Reclamation Board. The mining operations took place in two pits at the site - the East Pit and the West Pit. The southern edge of the West Pit, which was the subject of the division's enforcement action, is located approximately 200 feet upgradient from the Rito Seco, a small creek that flows west from the Southern Sangre de Cristo Mountains. In the final stages of its mining operations, Battle Mountain Resources proposed to backfill the West Pit with waste rock as part of its reclamation plan with the Coloraoo Department of Natural Resources' Division of Minerals and Geology. The Division of Minerals and Geology conditionally approved the backfilling proposal on July 20, 1995, and Battle Mountain Resources completed the backfilling process in August 1997. In July 1998, samples collected from monitoring wells installed by Battle Mountain Resources, under its reclamation permit, indicated the presence of pollutants in the ground water that had flowed from the West Pit. The ground water flowed from a window in the West Pit and into the Rjto Seco alluvium and a portion of the flow ultimately reached the surface water of the Rito Seco. The principal pollutants rinsing from the backfilled West Pit into the Rita Seco alluvium and surface water included total dissolved solids, manganese, and sulfate. There was no cyanide in the material used to backfill the West Pit and, acwrdingly, no ryanide has been detected in the ground water flowing from the pit. On November 2, 1998, Battle Mountain Gold notified the Division of Minerals and Geology and the Water Quality Control Division that a seep had been discovered flowing into the Rito Seco undo ux C.olaado Wata Qusliy Caenol na the Cobndo lkyatonete of Pubh'e treahh and Favvaroeot's WaW Qulhy Caoaol Lkvisioo is takly tapasibk fa tfw iansatre W ad'acmms dyermiv audwixmgpoiot sauce disch>egm b suttlce wNas dthe Shtc, while the Colando Mind l~od Recltmutioe head aid dr Celnado DRartr"mt of NaLVaI Rawtocea' nivifYm of Minerals snd Grobgy) }ure prvruryjurisdimon ova die protection of ground wva quality awnated wig minvtg aid talamatico altiNliti.