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® L J DEVELOPMENT INC. JUN 29 Z??g 256 N. MERRILL DRIVE <br />ofi ?ecla?°o' PUEBLO WEST CO 81007 <br />pivis?'+ and Safety .' J <br />PHONE: 719-240-9424 FAX 719-583-0768 <br />May 29, 2009 CERTIFIED MAIL NUMBER 7007 2680 0002 7551 3591 <br />Ms. Kate A. Pickford <br />Environmental Protection Specialist <br />701 Camino Del Rio Rm 315 <br />Durango, CO 81301 <br />Re: Recalculate the FINANCIAL WARRANTY <br />Dear Ms. Pickford: <br />GHOST RIVER GRAVEL PIT M-2003-002 <br />After reviewing your letter sent to Stone Cliff Investments, LLC dated April 20, 2009 concerning the reclamation cost <br />pertaining to the Ghost River Grave Pit; changes have been made to the seeding recommendations. The operator had <br />the Natural Resources Conservation Service (NRCS) District Conservationist, Tony Arnhold review and make his <br />recommendations. Mr. Arnhold suggested that we drill the seed in lieu of the broadcast method that was suggested <br />when the reclamation plan was first adopted. Mr. Arnhold recommended the seed mixture that is included in this report <br />as an attachment. The seed mixture was then sent to the Arkansas Valley Seed Company for a price quote on the plant <br />live seed (pls) seed per acre required. The cost of the seed quoted is $ 125.00 per acre therefore the total cost for the ten <br />(10) acres is $ 1250.00. This was then taken into account when calculating the estimated bond cost. With the changes <br />made, a new FINANCIAL WARRANTY of $ 19,112.00 was the estimated dollar amount. <br />The revised reclamation costs calculations have been enclosed with this report for your review and comments please <br />see the attached "EXHIBIT D" GHOST RIVER RECLAMATION COST. The revised calculation have taken into <br />account all of the Division of Reclamation, Mining, and Safety cost recommendations as detailed by you on February <br />26, 2009, along with the new seeding method and some minor changes in other task item. The operator does not object <br />to a cost increase due to inflation over the past six (6) years. However the operator would suggest that an inflation rate <br />of approximately 17% to 19% might be a more reasonable rate for that period of time. The suggested rate was <br />determined by using the Bureau of Labor Statistics inflation calculator www.bis.2ov/data/inflation calculator.htm. <br />The recalculated Financial Warranty is about 27% -28% higher than the original bond cost. This new financial <br />warranty should be valid for another three (3) to four (4) years. <br />In closing the operator respectfully request that the Division of Reclamation, Mining, and Safety consider <br />using $ 19,112.00 as the new and revised reclamation bond cost. Please feel free to call me for further <br />information. <br />Sincerel , <br />Joe Gagliano <br />Consultant <br />Cc: Steve Shuey, DRMS <br />Steve Melvick, Stone Cliff Investments, LLC