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OAIQtIDGE ENERGY, INC. CARBON JUNCTION MINE (C-1992-080) ANNUAL HYDROLOGIC REPORT WATER YEAR 2006 The Oakridge Energy, Ina Carbon Junction Mine (CDMG Permit No. C-1992-080) is located approximately 2 '/z miles southeast of Durango, Colorado. The mine is located on an azea known as Ewing Mesa neaz the junction of Highways 160 and 550. The mine site is located in the upper drainage basin of Carbon Junction Canyon. Carbon Junction Canyon is an intermittent tributary of the Animas River. Much of the Cazbon Junction Canyon drainage has a steep grade with a total drainage basin of 0.8 square miles. Hydrologic sampling and data collection has been conducted at the Cazbon Junction Mine since 1982. The mine site was originally permitted by the Division of Reclamation, Mining and Safety (CDRMS), formerly Mined Land Reclamation Division, in 1983 and re- permitted in 1993. To date, coal mining activity has been initiated on the site on a minor scale. The extent of coal mining activities at the Carbon Junction Mine included opening both the North and South pits. Ancillary activity included construction of a permanently reclaimed spoils area, sediment control structures, topsoil stockpiles, and pads for equipment. Permanent reclamation at the mine site was initiated in 1998 and completed in August 2006, with the only outstanding reclamation being the remaining sediment ponds and topsoil piles. During discussions concerning Technical Revision 13 during 2005 and 2006, Qakridge energy and CDRMS agreed to terminate groundwater (well) and surface water (spring and seep) monitoring at the mine site, effective in 2006. It was concluded that the limited mining activities at the mine did not negatively impact the hydrologic balance over the course of the operation. The remaining hydrologic monitoring at the mine includes discharge monitoring (required for the CDPS permit) and quarterly sediment pond inspections. This report includes the sediment pond inspection reports and dischazge monitoring reports for the 2006 water yeaz (October 2005 through September 2006) and the fourth calendar quarter of 2006. SEDIlVIENT POND INSPECTIONS AND DISCHARGES The Carbon Junction Mine has two sediment ponds, 001 and 002. Michael Savage of Savage and Savage, Inc. prepared inspection reports for both sediment ponds during the first (October 5, 2005), second (February 23, 2006), third (April 28, 2006) and fourth (August 16, 2006) quarters of the 2006 water year. Sediment pond inspection reports are included for the 2005 water year. No significant concerns were identified during the inspections. Carbon Junction Miice Page t Annual Hydrologic Report for Water Year 2006