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October 21, 2010 C-1981-018/Deserado Mine JHB <br />BME had begun pad construction for SH #3. Vegetation and topsoil have been pushed to the side of the <br />pad and a mud pit has been constructed. Drilling has not begun on this pad. <br />Exploration pads were being constructed near the RDA's. BME has constructed 3 pads that were visible. The drill <br />rig encountered problems on one of the holes. The operator will continue to drill once the problems are resolved. <br />PROCESSING WASTE/COAL MINE WASTE PILES - Rule 4.10 and 4.11 ? ? Drainage Control; Surface <br />Stabilization; Placement: <br />The refuse piles were well graded and in good condition prior to wetter winter weather. All stockpiled <br />refuse had been spread. Only a few (7-10)end dump piles were in place at the north west end of RA -4. Slopes on <br />the RDAs were not steep , and ditches around the perimeters were in place. No problems were identified on the <br />refuse piles. <br />ROADS - Rule 4.03 ? ?Construction 4.03.1(3)/4.03.2(3)0 ?Drainage 4.03.1(4)/4.03.2(4)0 ?Surfacing and <br />Maintenance4.03.1(5) and (6)/4.03.2(5) and (6) El ?Reclamation 4.03.1(7)/4.03.2(7): <br />Access roads & haul roads were damp, and no dusty. Road ditches were in good order and no ponding of <br />water on the roadways was encountered. One puddle was present under the conveyor by the RR-I pond. Access in <br />this area is very limited-so the puddle is not a problem. <br />REVEGETATION - Rule 4.15 ? ? Vegetative Cover; Timing: <br />Fall seeding has not yet occurred. Fall weather has been unusually warm this year. BME will wait until <br />code weather to seed. This is in agreement with the approved reclamation plan. <br />SUBSIDENCE - Rule 4.20: <br />BME continues to mine LW-II. The long wall has progressed under the Rio Blanco county road. BME <br />monitors this road visually. Minor cracking in the surface of the dirt road was evident, but no offset could be <br />noted. The cracks were very minimal and looked Similar to desiccation cracks. No damage to the roadway was <br />observed. <br />SIGNS AND MARKERS - Rule 4.02: <br />Mine id sign on the North access from the county road was posted and contained the appropriate <br />information. <br />The Division continues to discuss disturbance area markers with the operator. The Division and OSM have <br />discussed this concern. <br />Annual AVS inspection was conducted with the operators answers in agreement with the permit. <br />SEALING OF DRILLED HOLES AND UNDERGROUND OPENINGS - Rule 4.07 <br />RECLAMATION PLAN COMPLIANCE - Rule 4.13 <br />Number of Partial Inspection this Fiscal Year: 3 <br />Number of Complete Inspections this Fiscal Year: 1 <br />Page 3 of 8