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Cotter <br />Via Email and U.S. Mail <br />September 3, 2010 <br />Mr. Anthony J. Waldron <br />Division of Reclamation, Mining and Safety <br />1313 Sherman Street, Room 21 <br />Denver, CO 80203 <br />Re: Schwartzwalder Mine. Permit No. M-1977-300 <br />Dear Mr. Waldron: <br />As you requested in our telephone conversation on September 2, 2010, Cotter Corporation <br />(N.S.L.) ("Cotter") is submitting this letter to describe a condition discovered at the <br />Schwartzwalder Mine site and to advise you of the actions Cotter is taking in response <br />thereto. <br />A pipe was found on the bank of the old emergency storage pond at the Schwartzwalder <br />Mine site during the installation of the 100 gallons per minute (gpm) water treatment system. <br />Please find enclosed a map indicating the approximate location of that pipe. Water samples <br />were taken and the technician stopped the flow of water from the pipe by elevating it. <br />As discussed, I entered into the AgQA computer program the chemical concentrations from <br />the pipe water and the mine pool water to generate a Piper diagram. That diagram showed <br />that the chemical characteristics of the pipe water were consistent with the chemical <br />characteristics of the mine pool water. The pipe water also showed uranium concentrations <br />generally similar to uranium levels in the mine pool. However, a comparison of radium and <br />molybdenum concentrations showed radium and molybdenum concentrations significantly <br />different in the pipe water from that in the mine pool water. <br />Cotter is arranging for COLOG, a borehole geophysics company, to be on-site next week <br />with equipment which will allow a video camera accelerometer to be passed through the <br />pipe. This will generate a three-dimensional image of the underground path of the pipe and a <br />video record of what is encountered inside the pipe. In the event that it is found that the pipe <br />is connected to the mine pool, Cotter intends to use appropriate means to permanently seal <br />any such mine opening in accordance with Colorado standards. As the area where the <br />current visible end of the pipe now resides is part of the permitted (disturbed) area under the <br />above referenced permit, reclamation of this area is already approved by permit conditions. <br />Cotter will keep Division of Reclamation. Mining and Safety staff apprised of conditions <br />encountered during this effort. <br />Cotter Colpor3tion ; e!eity! ene (7191275.7413 <br />Canon Citv Mill, P.O. BOX 7750, COOn Cray, CO 81215-1750; SA <br />F a <br />x t i 19) 27?- 1@69