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BTU EMPIRE CORPORATION -EAGLE MINES <br />PARTIAL LIABILITY RELEASE <br />• RESPONSES TO TECHNICAL ADEQUACY COMMENTS <br />Field Inspection/Permit Compliance Items <br />1. Two drilllzoles were identified during a May 20, 2004 inspection. These two holes were identified as <br />lzavirtg been drilled prior to 1979, based upon a memo front Cyprus Geologist Rocky Thompson, <br />dated April 9, 1991, and upon a CX-126-07 Drillhole map. These two identified drill holes are <br />located within art area that has been removed from t12e liability release area, based upon the revised <br />liability release areas-Map #1 submitted December 16, 2004. The disposition of the holes are not a <br />part of this liability release application but will need to be sealed in accordance with Rule 4.07 to <br />assure they do not pose a Duizard. <br />Response: To the extent that the identified drillholes are within an area where right-of-entry and access <br />are not disputed, BTU Empire Corporation (Empire) will proceed with plugging and sealing of the <br />drillholes in compliance with approved drillhole reclamation plans. Empire is in the planning and <br />permitting phase of a 3-year exploration program for the Eagle Mines property. We anticipate that we <br />will have drilling equipment on-site within the next 12 months and will complete plugging and sealing <br />activities at that time. <br />2. During the Division's liability release inspecrion conducted on November 18 and 19, 2004, the <br />Division observed surface cracking and holes of ground and rock outcrop on areas overlying <br />underground workings. The following features were identified as having openings to the surface that <br />could be hazardous to livestock and foot traffic (feature numbers, locations and photos are described <br />in the November 18-19, 2004 bond release inspection report): <br />Feature No. 5.• An 18-nzch diameter hole approximately 70 ft., N16°W, from the air-monitoring <br />tower <br />Feature No. 11: A crack in the Twentymile smzdstone outcrop, approximately 4-6 inches wide, IS <br />feet deep and approximately 40 feet long <br />Feature No. 16.• A crack in a Twentymile sandstone outcrop located west of the Yampa River <br />overlying the 1'~` Left pmzel <br />Feature No. 17: A hole approximately 3 feet in diameter by approximately 5-6 feet deep, and a <br />crack extending roughly 120-150 feet in a S32°W direction through the Twentymile <br />sandstone outcrop <br />Feature No. 18: A crack oriented parallel to Feature no. 17 extending roughly 120-150 feet, with <br />a width of less than 6 inches, and an estimated depth of 5 feet <br />Feature No. 19: A crack approximately 10 feet in length and 3-4 inches in width, located <br />approximately 50 feet N45°W from Feature no. I8 <br />The approved postminiig land use in the areas where the surface cracks were encountered is <br />rmigelmad. Some of these areas have cattle grazing lease agreements and hunting leases. The <br />Division is concerned that these surface cracks and holes may present a safety hazard for the <br />approved postmining land use. Mitigation of the surface cracks and holes by filling with soil or other <br />permanent material will be necessary to ensure health and safety of humans and livestock (Rule <br />4.20.3(2)). <br />Liability Release Response - No. 3 1 12/07/05 <br />