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GCC Energy, LLC <br />GCC Post Office Box 2827 <br />Durango, CO 81302 <br />E n e r g y Telephone: 970.385.4528 4424 County Road 120 <br />"Safety as a Value" Facsimile: 970.385.4638 Hesperus, CO 81326 <br />September 11, 2008 <br />State of Colorado <br />Division of Mining, Reclamation & Safety <br />1313 Sherman Street, Room 215 <br />Denver, Colorado 80203-2273 <br />Attn: Tom Kaldenbach, Reclamation Specialist <br />1EDE'VED (V. a <br />SEP Z 3 <br />1008 <br />Division of Keclamation, <br />Mining and Safety, <br />Re: King II Mine <br />Pond Quarterly Inspection <br />3rd Quarter 2008 <br />Dear Mr. Kaldenbach, <br />An inspection of the pond at the King II mine was performed today for the 3rd quarter of 2008. The pond <br />contained a pool of water approximately 2 feet deep. The pond embankment, inslopes and spillway all <br />appeared in good condition. All features appear to be in place and functioning with the following <br />exceptions. <br />1. The decant valve and catwalk shown in Detail B of drawing King II-007C is not in place. These <br />features will be removed from the final designs by Tom Paluso, P.E. (pond design engineer). <br />Apparently, the decant valve's only function is to assist in rapid draining of the pond to allow <br />sediment cleanout to be more convenient for the operator. Other means will be utilized should <br />more rapid removal of water from the pond become necessary. <br />2. The sediment marker staff has not yet been placed. Final design elevations from Fleming <br />Engineering have been received. We are allowing the pond to dry somewhat after recent heavy <br />rains to place the marker. <br />Please call Tom Bird at (970) 385-4528 x 14 with questions or comments. <br />Sincerely, <br />Tom Bird <br />Manager of Coal Services <br />GCC Energy, LLC