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Deserado Complete Oversight Inspection Colorado Division of Reclamation, Mining and Safety (DRMS) Permit ID # C-1981-018 Wednesday September 16, 2009 8:00 —2:30 Participants: Jason Musick, Division of Reclamation, Mining and Safety (DBMS) Scott Wanstedt,Blue Mountain Energy (BME) Christine Belka, Office of Surface Mining Reclamation and Enforcement (OSM, Badge# 182) Weather conditions: warm (70's), dry, sunny This was a complete oversight inspection as well as an evaluation year 2010 (EY 10) special focus evaluation of signs and markers at the Deserado mine. Mine identification signs were in place and maintained at the entrance to the mine and at all locations where roads intersect the permit area (intersection of CR 65 & Hwy 64 by raw water lagoon, CR 96, and five places along CR 73). All signs were uniform and displayed the mine and operator name, operator address and contact number, MSHA ID number and DRMS permit ID number. The raw water lagoon was holding water at the time of inspection. Water is pumped from this lagoon for use at the mine. Return shaft 4 de-gas borehole is fenced and marked as dangerous, hazardous gas, and "8LVS" (see Figure 2). The surrounding area will be revegetated up to a radius of 25' from the borehole this fall. The unused casing on the ground is now the property of BME after an agreement was reached with the drilling company that was dismissed. The casing will be used for future drilling proj ects. Return shaft 3 was sealed with stoppers, lightweight aggregate and polyurethane foam (see Figure 3). The structure is to be removed and the hole backfilled with material from the adjacent stockpile. The berm surrounding the gas and diesel storage tanks is intact. There is no reason to believe the underground liner has been damaged and the spill prevention, control and countermeasures (SPCC) appear sufficient. Process pond 2 was holding water and plentiful vegetation was growing (see Figure 4). Ducks were present at the time of inspection. Water from this pond is also pumped down for use in the mine but can discharge to Scullion Gulch when overfilled. DP-1 pond contains and treats runoff from the facilities area. The main riser discharges through a culvert to Scullion Gulch (see Figure 5). The emergency discharge channel has a concrete cutoff at the approved channel elevation. Approximate 2—4' riprap is in good condition and the channel appears stable. 1