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(Page 2) <br />MINE ID # OR PROSPECTING ID # M-1990-057 <br />INSPECTION DATE 06/18/09 INSPECTOR'S INITIALS PSH <br />OBSERVATIONS <br />This was an inspection of the Hopemore Mine and Leadville Mill, File No. M-1990-057, conducted by Peter <br />Hays and Steve Shuey with the Division of Reclamation, Mining and Safety (Division). Nick Michael, Steve <br />Craig and Mike Elder with Union Milling, Tom Hendricks with Calais Resources Colorado, Inc., Dave Young with <br />Calais Resources, Inc., and Bob Calder with Hopemore Shaft were present during the inspection. <br />The mine site is located approximately 3.3 miles east of Leadville and the mill is located roughly 2 miles south <br />of Leadville off of Highway 24. The total disturbance for the mine and mill area is 8.5 acres (6.6 acres at the <br />mill site and 1.9 acres at the mine site). The sites were last inspected by the Division on August 8, 2007. <br />The Division approved the Transfer of Permit and Succession of Operator (SO-02) application from Capital <br />Gold Corp. to Calais Resources Colorado, Inc. on April 6, 2009. The intent of the operator is to separate the <br />mine and mill by submitting a new 110(2) application for the Hopemore Shaft site. Upon approval of the new <br />Hopemore Shaft permit, the shaft will be removed from the Leadville Mill permit. <br />A mine identification sign and permit boundary markers were noted at the Leadville Mill and Hopemore Shaft <br />sites. The current temporary mine signs will be replaced by metal signs in the future. Per Rule 3.1.12 (1), the <br />signs are required to display the name of the Operator, a statement that a reclamation permit for the <br />operation has been issued by the Colorado Mined Land Reclamation Board and the permit number. <br />Annual reports indicate the sites have not been active for quite some time and appear to meet the <br />definition of a site that needs to be placed in temporary cessation (as required by Rule 1.13). Because <br />annual reports indicate the site has been inactive for more than 5 years, the operator will need to initiate <br />reclamation, put the site in temporary cessation (may require a hearing before the Mined Land Reclamation <br />Board), submit proof of recent activity or submit a technical revision to change the site to intermittent <br />status. The Division notes this as a problem and requires completion, within 30 days, of one of the <br />corrective actions specified above. <br />The Division currently holds a reclamation bond in the amount of $83,000.00, which is adequate to complete <br />the reclamation of the site based on the observations from this inspection. <br />Leadville Mill <br />The mill property, equipment, supplies and access agreement have been transferred from Capital Gold <br />Corporation to Constructive Investments, LLC. <br />No milling was taking place during the inspection. The mill has not been in use for several years. The last <br />reported activity was in 1999. Mr. Elder stated the mill roof was recently repaired following a collapse of the <br />lower roof. The operator intends to start milling ore from the Cross Mine in the fall. A small pile of magnetite <br />material was observed adjacent to the tailings pond. The operator stated the stockpile will be removed and <br />the magnetite circuit will be removed from the mill.