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PERMIT #: M-2009-076 <br />INSPECTOR'S INITIALS: JLE <br />INSPECTION DATE: October 27, 2010 <br />OBSERVATIONS <br />This was a pre-operation inspection of the Hukill Gulch Millsite; DRMS File No. M-2009-076. This site is located <br />approximately 2 miles north of Idaho Springs, Colorado in Clear Creek County. 1, Jared Ebert and Tony Waldron of the <br />Colorado Division of Reclamation, Mining and Safety (Division) conducted the inspection. Mr. Ryan McHale and <br />Patrick Maher of Venture Resources, Inc. and Bruce Humphries accompanied the Division on the inspection. <br />This is a proposed 8.76 acre 110d hard rock operation. This site consists of two distinct areas, a .635 acre mobile millsite, <br />and a 8.125 tailings impoundment area. The Applicant proposes to excavate old waste rock piles located in the permit <br />area and process this material at the millsite. Tailings from the millsite will be transported to the tailings impoundment <br />area. The operator proposes to store the tailings in 5 benches using an upstream raised embankment method. <br />A description of the millsite set-up and equipment can be found in Exhibit C of the application. In summary, the millsite <br />consists of a small parking area surrounded by a crusher, conveyors and several trailers housing the processing equipment. <br />The waste rock piles are located within a steep gulch. A two track road leads from the millsite to the tailings <br />impoundment area. Venture Resources has constructed a concrete barrier/earthen dam at the base of the waste rock piles <br />to act as a toe dam and leachate collection barrier. As the Operator excavates the waste rock piles, the impoundment area <br />will be cleared and a liner will be installed. The processed mill tailings will be deposited on top of the liner in the <br />impoundment area. Below the concrete barrier a small storm water catchment pond has been constructed. The waste rock <br />area consists of un-even/randomly dumped piles of material. The surrounding area consists of a conifer forest on steep <br />slopes. The gulch continues south and turns dramatically to the west prior to reaching I-70. <br />Throughout the review process of this application, the Division has raised the concern about the stability of storing the <br />tailings using an upstream raised embankment method. The Division believes the tailings produced during the mill <br />process will remain in a saturated state adding the possibility of liquefaction of the tailings resulting in a failure of the <br />impoundment during a seismic event. Also, stability analysis conducted with the proposed design yielded an <br />unacceptably low factor of safety for the proposed static and seismic conditions. Venture Resources submitted a letter <br />dated October 13, 2010 to the Division requesting the Division conduct this inspection. Two issues were raised in the <br />letter for the Division to consider. The Applicant indicates the prescribed safety factors for the tailings impoundment is <br />excessive based on remote location of the site, and they argue the impoundment meets the "Low Hazard Dam" criteria <br />defined by the State Engineers Standards since loss of human life and damage to structures/public facilities area unlikely. <br />However, even though the site is remote and structures do not exist immediately below the impoundment currently and <br />may never be constructed in this location, if the tailings impoundment did experience a failure, offsite damage would <br />occur. Areas outside of the affected land must be protected from slides or damages occurring during the mining <br />operation and reclamation in accordance with C.R.S. 34-32-116 (7) (h). <br />Also, the Applicant expressed in the October 13, 2010 letter the Division should consider Rule 6.4.20 (e) which state; <br />"The Board shall also consider current or pre-existing conditions and the degree to which the proposed plan would <br />provide a net improvement in the protection of human health, property, or the environment." The Division agrees <br />reprocessing these waste rock piles would clear up a acid and heavy metal pollution source. The Division is not opposed <br />to cleanup of these piles, but must insure the tailings and/waste produced by the cleanup operation will not damage the <br />environment and the surrounding area due to the properties of the tailings and the manner in which they are stored after <br />processing. <br />During the inspection, Mr. McHale indicated Venture Resources has considered installing a geogrid or geonet <br />incrementally in the tailings impoundment to improve the stability and drainage of the tailings. They may add other <br />drainage features to the design such as a French drain in order to ensure the mine tailings are unsaturated. The mine <br />tailings must be unsaturated in order to prevent liquefaction causing a impoundment failure. The Applicant would need to <br />submit a technical revision to change the design of the tailings impoundment to use the geogrid/net and French drain <br />system. Geotechnical stability tests will need to be done for the tailings embankment under un-saturated conditions and <br />the factors of safety must meet/exceed the Divisions requirements of 1.1 for seismic conditions and 1.5 for static <br />conditions. Also, the outslope angle of the impoundment must be revised to a 2:1 ratio for reclamation/revegetation <br />purposes; which may also improve the factors of safety. If the factors of safety are met with the new design, the Division <br />Page 2 of 4