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BEFORE THE MINED LAND RECLAMATION BOARD <br />STATE OF COLORADO <br />ANSWER OF COTTER CORPORATION (N.S.L) TO THE SEPTEMBER 16, 2010 <br />NOTICE OF A REASON TO BELIEVE A VIOLATION EXISTS AT THE <br />SCHWARTZWALDER MINE <br />Cotter Corporation (N.S.L.) ("Cotter") hereby respectfully answers the letter dated <br />September 16, 2010 from Loretta Pineda, Director of the Division of Reclamation, Mining and <br />Safety ("DBMS") to Randy Whicker of Cotter, entitled "Notice of a Reason to Believe a <br />Violation Exists at the Schwartzwalder Mine" ("Notice"). <br />The Notice asserts that Cotter has failed to comply with the requirements identified in <br />Corrective action numbers two and three of the August 11, 2010 Findings of Fact, Conclusions <br />of Law, and Order ("Order"), despite Cotter's consistent and technically supported position that <br />these requirements are not justified. Corrective action number two is to "reinitiate mine <br />dewatering and water discharge treatment sufficient to bring the mine water table to a level at <br />least 500 feet below the Steve Level, and sufficient to reestablish a hydraulic gradient away from <br />Ralston Creek," by August 31, 2010 ("Action Number Two"). Corrective action number three is <br />to provide financial warranty for Action Number Two ("Action Number Three"). The Notice <br />also asserts that Cotter has not paid the maximum penalty allowed by the Colorado Mined Land <br />Reclamation Act of $1,000 per day for a total penalty of $55,000, with all but $2,500 suspended <br />if Cotter complied with the August 31, 2010 deadline for mine dewatering. The Order demanded <br />that this penalty be paid by September 10, 2010. <br />On September 24, 2010, Cotter appealed the Order in a Complaint for Judicial Relief, <br />Declaratory and Injunctive Relief ("Cotter Appeal"), which is incorporated by reference herein <br />and has already been served on DRMS and the Mined Land Reclamation Board ("Board"). The