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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 />March 1, 2010 <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 />2009 Annual Hydrology Report Review <br />Dear Mr. Wanstedt, <br />COLORADO <br />D I V I S I ON OF <br />RECLAMATION <br />MINING <br />SAFETY <br />Bill Ritter, Jr. <br />Governor <br />James B. Martin <br />Executive Director <br />The Division has completed its review of the above referenced report received on 28 January 2010. <br />The Division finds the 2009 Annual Hydrology Report (AHR) in compliance of the following Rules: <br />Rule 4.05.13(4)(a) - The data compiled in the 2009 AHR is kept and maintained at the Deserado Mine <br />office. <br />Rule 4.05.13(4)(c) - The 2009 AHR is in compliance of this rule, as the report was received by the <br />Division on 28 January 2010. <br />Rules 4.05.13(4)(c)(i), (ii), (iii) - The 2009 AHR identifies the water quality data obtained during the <br />2009 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 2009 reporting year <br />was estimated at 115,500,000 gallons or 354 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