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January 3, 2007 <br />Twentymile Coal Company <br />29515 RCR #27 <br />Oak Creek, CO 80467 <br />Attn: Mr. Jerry Nettleton <br />Job Number: 99-3983 <br />Subjecn Quarterly Observation Report, Refuse Pile, <br />Foidel Creek Mine, Routt County, Colorado. <br />Dear Mr. Nettleton, <br />As requested, NWCC, Inc. has prepared this report outlining our observations made during the fourth <br />quarter of 2006 a[ the Refuse Pile, which is located at Twentymile Coal Company's (TCC) Foidel Creek <br />Mine in Routt County, Colorado. During this quarter, we visited the project site on December 28, 2006 to <br />provide our quarterly inspection/observations. <br />At the Ume of our site visit on December 28, 2006, we completed a site inspection of the pile with Jetry <br />Nettleton. Based on our observations made during this visit, it appeared that the contractor was presently <br />stockpiling the refuse coal in Area 254 of the pile. I[ also appeared that they had stockpiled some sediment <br />that had been removed from several of the sedimentation ponds in the extreme south end of Area 3. Mr. <br />Nettleton advised us that these materials were only being stockpiled at this location on a temporary basis <br />and that the materials were going to be removed from [he pile. <br />I[ should be noted that the site was covered with approximately 3 m 12 inches of snow at the time of our <br />site visit. The surface drainage wnditions [hat could be observed appeared to be adequate aaoss the top <br />and sides of [he pile, including [he areas in which the sediment was temporarily being stockpiled. A[ [he <br />Ume of our visit, we did not observe any signs of instability, structural weakness or hazardous conditions at <br />the pile. <br />As suggested, the water levels in the monitor wells installed on Ocmber 23, 1997 and December 9, 1999 <br />were measured during this quaz[er on a monthly basis. A table and graphs showing the monthly water <br />levels are attached. <br />We were advised that the mine had produced approximately 31,285 tons of waste coal during the month of <br />October 2006: 27,785 tons during November 2006: and approximately 28,310 tons during December 2006. <br />It is our understanding that the fines being produced at the wash plant, which consists of 10 to 20 percent of <br />the total materials being produced, are being pumped underground into the mine. <br />(970) 879.7888 • Fax (970) 879.7897 <br />2580 Copper Ridge Drive • Steamboat Springs, CO 80487 <br />