2009-04-01_PERMIT FILE - X200923100

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Page 1 of 1 Hernandez, Daniel From: Berry, David Sent: Wednesday, April 01, 2009 12:35 PM To: Hernandez, Daniel; Musick, Jason Cc: Brown, Sandy; Mathews, Dan; Berry, David Dan and Jason - I apologize for my delay in responding to your inqiuiries of yesterday regarding the NOI vs. MR issue for the pending Sage Creek exploration activities. I will respond here in the interest of time. It is my understanding that Sage Creek wishes to conduct geotechnical investigations in advance of the pending new Sage Creek mine permit application, on the Seneca II permit area, by amending an existing NOI. You correctly advised Mr. Nettleton that exploration within a permit area should be done by the MR process rather than by the NOI process. Mr. Nettleton called me following your advice to do so, and he explained their position that the proposed geotechnical investigations should be reviewed under the NOI process. After my inquiry to Mr. Nettleton, I also received an email from Mr. Nettleton indicating the phase II bond release application status for the Seneca II Mine area in question. I understand that the proposed geotechnical investigations will be instructive to mine planning and mine permit application process for the potential Sage Creek Mine application. This application will eventually overlap a portion of the existing Seneca II permit. Once (and if) the Sage Creek Permit is issued, then the overlap area will be removed by an appropriate permitting/release process from the Seneca II permit. First, I continue to advise that when exploration is conducted by an entity, within the same entity's permit area, we should be requiring that said exploration should be addressed as an MR or TR to the entity's permit. This course seems to be consistent with both state and federal regulations that make reference to exploration activities, by regulation section title, as activities outside the permit area. The present situation involving Sage Creek may be a slightly different in that we have two separate business or permitting entities (Sage Creek and Seneca) involved in the situation. In this case, the exploration is proposed to be conducted by Sage Creek, but on Seneca permit area. It is my understanding that Seneca is not conducting the proposed activities. Although a strict interpretation of our regulations might lead us to conclude that Seneca should provide an MR to permit all of the exploration, I do not think that is a practical solution in this case because the Seneca entity is not conducting the exploration. I recommend that we allow Sage Creek to permit the proposed geotechnical drilling on the Seneca permit area using the NOI process. I suggest this course because Sage Creek is the exploring entity, not Seneca. Sage Creek does not yet have a permit, thus their exploration will not be occurring in any Sage Creek permit area. I also recommend that there should be a concurrent MR to the Seneca permit to formally recognize that the Sage Creek activity will be occurring and that the Seneca entity agrees that the Sage Creek exploration activity will be occurring on Seneca permit area. The NOI must be precise in describing exploration disturbance locations and boundaries to ensure proper compliance accountability to Sage Creek and to prevent any detrimental compliance implications to the Seneca entity and reclamation/liability release process. This issue is difficult given the mix of regulatory and practical issues, so this recommendation is for this situation only and is not to be taken as precedent for any other circumstance. Please continue to check with me if and as these situations arise. Your initial advice to Mr. Nettleton was generally consistent with our previous and ongoing direction. Feel free to forward this message to the Sage Creek and/or Seneca representatives. Thanks, DB 4/2/2009