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MINE ID # / PROSPECTING ID #: M-1999-018 <br />INSPECTOR'S INITIALS: DMC <br />INSPECTION DATE: June 7, 2010 <br />OBSERVATIONS <br />This monitoring inspection was conducted as part of the Division of Reclamation, Mining <br />and Safety (DRMS) normal inspection and enforcement program. The inspection <br />commenced at approximately 12:00 p.m. on June 7, 2010. Jay Wagner was present, <br />representing Wagner Construction, Inc., during the inspection. Figures are included at the <br />end of this report to illustrate the conditions observed during the inspection. The red <br />arrows on the index maps show the origin and direction of the photographs. <br />Wagner Rock is located approximately 3.25 miles southeast of Craig and accessed by <br />turning south off of Highway 394. The mine identification signage is located at the <br />intersection of Highway 394 and the mine site access road, and is adequate and in <br />compliance with Rule 3.1.12 (Figure 1). The mine site entrance is located approximately <br />.8 mile from this intersection. Permit area boundary markers are clearly visible and <br />adequate, marked by orange survey lathe (Figures 2, 3, 6, 13). <br />Various equipment was observed onsite in the permit area, south and west of the scale <br />area (Figures 4, 7, 10). If this equipment is not operational and/or utilized for mining <br />operations at this site, it must be removed from the site. <br />Mining was occurring during the time of this inspection, with material being extracted by <br />hydraulic excavators from a northwest-southeast trending ridge located at the north side <br />of the permit area (Figures 8, 11). It should be noted that per the conditions of DRMS <br />permit M-1999-018, mining is only authorized to a depth of 40 ft., and mining beyond <br />this depth will require a Technical Revision to the permit to be approved by DRMS. The <br />depth of the pit in the western portion of the pit area does not appear to be greater than 40 <br />ft. at this time, but is near this 40 ft. limit. <br />Topsoil stockpiles were observed in the western portion of the permit area that are clearly <br />marked and vegetated, with no signs of erosion observed during the inspection (Figure <br />12). <br />In an effort to ensure that the financial warranty remains adequate to reclaim this site per <br />the requirements of the approved reclamation plan, DRMS has updated the reclamation <br />cost estimate (copy enclosed) for the site. Staff believes that the Financial Warranty <br />currently held for this site is insufficient. Therefore, pursuant to Section 34-32.5-117 <br />(4) of the Colorado Land Reclamation Act, the operator shall submit adequate financial <br />warranty, as determined by the DRMS. The DRMS will be sending a separate surety <br />increase notice to the operator regarding the increase of the financial warranty. The <br />operator will have 60 days from the date on the surety increase notice to post the <br />additional financial warranty. Please review the enclosed figures as soon as possible and <br />contact our office if any calculation errors are noted. <br />Page 12