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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1986-076 <br />INSPECTION DATE 10/30/08 INSPECTOR'S INITIALS RCO.PSH <br />OBSERVATIONS <br />This inspection was performed by the Division as part of its monitoring of Hard Rock/Metals 110d permits. The operator was <br />contacted about the scheduled inspection. The operator's representative named on page one met the inspectors prior to the <br />inspection at the La Plata River crossing, and all proceeded to the site; he was present throughout the inspection. <br />The required permit ID sign was posted at the entrance to the site, and the permit boundary signs are maintained at the <br />boundary corners. All activity is inside the permitted area boundary. <br />The site was active during 2008, despite temporary difficulties with the road access. Mining is carried out in accordance with <br />the approved phased mining plan. Part of the Environmental Protection Plan (EPP) requires the operator to provide sets of <br />water samples to DBMS, on a defined schedule every year that the mine and mill are active. The operator has submitted the <br />summer 2008 set of samples, and has yet to submit the fall 2008 set of samples. Please ensure that the fall samples were <br />taken and sent to the lab properly. (Note: The previous analysis did not include all of the five parameters that are required. <br />Please make sure the lab tests for pH, electrical conductivity, WAD cyanide, total dissolved solids, and sulfates.) <br />The mill building was in good condition. The concrete floor and stem walls serve as the secondary containment, so verifyindg <br />their integrity is important. The byuilding's outside corner that was previously noted becoming undermined by erosion has been <br />stabilized by rock placement and additional grouting. There were no cracks to the foundation or stem wall noted. The walls <br />and roof are metal and in good shape, adequate for keeping the weather outside. The floor was dry, and the building and the <br />containment appeared to be functional. <br />The milling circuit was operational during 2008, but was temporarily shut down at the time of the DBMS inspection. It will be <br />still winterized before the site is closed this year. The operator showed the inspectors all the chemicals being stored and used <br />onsite. They were all consistent with those in the approved plan. The inventory of chemicals in the building is being reduced by <br />the operator. When the unneeded chemicals are removed, the operator must provide an updated chemical list (including <br />quantities), and the operator should note if the updated list will become permanent. Reducing the list, without adding any new <br />chemicals to the list, will not require a technical revision. <br />The fuel storage (outside the building) is intact and covered. The tailings auger was clogged by sands, but will be cleaned out <br />as part of winterizing. The sump was full of tailings sand and must be mucked out and trammed down to the tailings pond prior <br />to operations next year. There is still a lot of remaining capacity to the tailings pond, though it was more full than last year. <br />Reclamation of the tailings pond was discussed: pulling embankment materials in over the tailings surface and recontouring the <br />cap to blend with the slope. The pond must not be over-filled. When capacity is being reached a new tailings location must be <br />approved. <br />The mining of the narrow vein is proceeding along the cut in the main mining area. Ore is still hand cobbed from the cut and <br />crushed to 3/4-minus before going to the mill. As the vein is further exposed along the nearly vertical wall, the height of the cut <br />is reaching its limit. The cut wall exhibits highly fractured rock, that has sloughed in a few places. Even though it is angular it <br />will continue to fail; over time the sloughing will continue farther up the slope, and eventually undermine the upper road bench <br />or damage native topsoil. This is not a problem at this time, but the operator must revise the method of mining, begin <br />backfilling the present cut, seek a different mining location, or actively find another solution. An unintended slope failure may <br />cause the bond to increase. <br />The site still contains a few pieces of unused, steel equipment and parts. These are not present in large quantity, but will <br />continue to be a reclamation cost liability until they are removed. <br />The operator will be installing earthen/rock safety berms along the crests of all roadways and benches that are used in the <br />operation. The roads and benches are narrow and allow little room for usable widths after the addition of the berms. The <br />operator is urged to install these berms carefully, since widening the working areas by new cuts or fills may destabilize portions <br />of the already-steep slope where the mine is located. Limited examples of slope movement exist at the site now, and the <br />operator must continue to avoid adding to the condition. <br />Weed control has been carried out every year, and this inspector is pleased to see that the Canada thistle is nearly gone. <br />Monitoring should continue and timely treatment should occur as needed. The operator has spot treated the problem plants <br />with Roundup, which is non-selective and kills good plants too. A couple large patches of thistle were eliminated, but all the <br />native forbs and grasses are gone there too. A different herbicide should be considered, one that targets broadleaf weeds. An