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PERMIT #: M-1998-058 <br />INSPECTOR'S INITIALS: DMC <br />INSPECTION DATE: August 17, 2010 <br />OBSERVATIONS <br />This inspection was conducted as part of the Division of Reclamation, Mining and Safety (DRMS) normal <br />monitoring program. Larry Johnson and Mike Duster, representing Connell Resources, Inc., were present during <br />the inspection. Photographs are included at this end of this report to illustrate the conditions observed during the <br />inspection. <br />The site is located approximately 5.6 miles west of Steamboat Springs and accessed by turning south off of <br />Highway 40 onto CR 33a. <br />The mine identification sign and permit boundary markers were in place and adequate. <br />Several stockpiles were present on site at the floor of the pit. Areas in the northwest region of the permit area <br />had largely been reclaimed at the time of this inspection, with mining nearing the southern permit boundary. <br />The mining process has created slopes at or near 3H:1 V which serves to keep reclamation liability lower. Due <br />to the nature of this mining operation, where reclamation closely follows the mining phases, the current <br />Financial Warranty held by DRMS for this site is considered adequate. <br />No possible problems or violations were noted during this inspection. <br />Inspection Contact Address <br />Larry Johnson <br />Connell Resources, Inc <br />7785 Highland Meadows Pkwy., Suite. 100 <br />Fort Collins, CO <br />80528 <br />Page 2 of 2