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STATE OF COLORADO <br />DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3567 <br />FAX: (303) 832-8106 <br />February 13, 2009 <br />Scott Wanstedt <br />Blue Mountain Energy, Inc. <br />3607 County Road #65 <br />Rangely, CO 81648 <br />RE: Deserado Mine (Permit No. C-1981-018) <br />2008 Annual Hydrology Report Review <br />Dear Mr. Wanstedt, <br />COLORADO <br />DIVISION OF <br />RECLAMATION <br />MINING <br />SAFETY <br />Bill Ritter, Jr. <br />Governor <br />Harris D. Sherman <br />Executive Director <br />Ronald W. Cattany <br />Division Director <br />Natural Resource Trustee <br />The Division has completed its review of the above referenced report received on 02 Feb 2009. The <br />Division finds the 2008 Annual Hydrology Report (AHR) in compliance of the following Rules: <br />Rule 4.05.13(4)(a) - The data compiled in the 2008 AHR is kept and maintained at the Deserado Mine <br />office. <br />Rule 4.05.13(4)(c) - The 2008 AHR is in compliance of this rule, as the report was received by the <br />Division on 02 February 2009. <br />Rules 4.05.13(4)(c)(i), (ii), (iii) - The 2008 AHR identifies the water quality data obtained during the <br />2008 water year. This includes data from each monitoring site. The AHR included interpretation.of <br />the data and related impacts to the hydrologic balance. <br />Following is a review as per the predicted probable hydrologic consequences based on the base line <br />predictions in the Deserado Mine permit. Predictions appear to be accurate and meet the operator's <br />obligations. <br />1. PHC: The impact of mining on the quantity of water in the White River will be minimal. <br />The water withdrawal rate from the lagoon at the White River during the 2007 reporting year <br />was estimated at 95,402,000 gallons or 290 acre-feet. This compares with an expected <br />withdrawal rate of 552 acre-feet per year at full production. <br />Office of Office of <br />Mined Land Reclamation Denver • Grand Junction • Durango Active and Inactive Mines