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The baseline rock conditions described in Amendment 3 to Mining Permit M-1973-021 are <br />"competent" for granite or biotite gneiss and "poor" for shear zones or highly to extremely <br />weathered zones that have the potential to decrease the stability of the slope. The conditions <br />observed in highwalls mined in 2006 in the North Quaay indicate that the rock is predominantly <br />"competent" with localized areas of "poor". Further, no features were observed that are anticipated <br />to cause large block size failures, rather the projected failures are estimated to be raveling of <br />smaller blocks in localized areas. These localized failures are not anticipated to extend further than <br />the bench width. <br />5.0 <br />The observed condition of the slopes within the Central Quarry appears to be stable. Observations <br />of the Central Quarry include: <br />• No large scale failures in the past year. <br />• Minor accumulations of small rocks (up to 1 '/~ feet diameter) on bench surfaces. <br />• Nearly all material was contained on the adjacent bench surfaces with very little evidence <br />of the material proceeding down slope to subsequent benches or into the water storage <br />reservoir. <br />• The stabilized slope in the southeast section of the Quarry did not exhibit any instability or <br />large erosional features. <br />Mining in the Notch Quarry in 2006 appeared to adhere to the mine plan and expanded the quarry <br />area towards the east highwall and south highwall mining limits. Current mine slopes are being <br />excavated to approximately the default slope configuration utilizing 1:1 highwall height to bench <br />width. Rock observed in the highwalls was predominantly competent granitic gneiss with the <br />following exceptions: <br />• Lower highwall station 0+35 to 0+50 consisted of a bowl shaped failure of weathered <br />granitic gneiss. <br />• Lower highwall station 0+75 to 1+35 consisted of highly weathered biotite gneiss and <br />biotite schist. <br />• Upper highwall station 3+00 to 4+50 contained a shear zone consisting of slightly <br />weathered biotite gneiss. <br />The combination of the moderately dipping foliation and various joint set orientations creates the <br />potential for continued localized areas of instability and block raveling in the future. The sections <br />of poor rock observed in the 2006 mined areas in the North Quarry are localized areas and <br />instability arising from these features is anticipated to be contained on bench surfaces. Based on <br />our observations, these conditions encountered are anticipated to remain relatively minor, with the <br />overall slope conditions considered stable, and warrant only operational considerations. <br />F:U919_038~Annual_Repott_2006~Annual_Report_2006.doc - 5 - Apnl 2007 <br />