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Received <br />JUN 2 3 2010 <br />Quality Co?rol J. M. BECK & ASSOCIATES <br />6130 W. Vassar Way <br />Lakewood, Colorado 8=7 ENGINEERING Wining & Ermronmenw Engineering <br />7elep Fax (303) 989118-1521 <br />5-1532 <br />?Cj •???" E-mail: jmbeckpe@comcastnet <br />. t <br />June 18, 2010 <br />Mr. Allen C. Sorenson <br />State of Colorado - Dept. of Natural Resources <br />Division of Reclamation, Mining, and Safety <br />1313 Sherman Street - Room 215 <br />Denver, CO 80203 <br />RE: Change in Ownership and Current Conditions <br />Limited Impact 110 Permit #M1983441- Cash and Who Do Mine <br />Limited Impact 110 Permit #M1994-117 - Gold Hill Mill <br />Dear Mr. Sorenson: <br />Effective Tuesday June 15, 2010 AGC Resources LLC (a Colorado Limited Liability Company) <br />acquired the assets of Mount Royale Ventures LLC (°MRV°) as pertaining to the above- <br />referenced permits and in doing so assumed MRV's position in the joint venture partnership that <br />operates the Cash and Who Do Mines and Gold Hill Mill, located in Boulder County, Colorado. <br />In conjunction with this transfer in ownership, AGC will shortly be fling the "Transfer of Permit(s) <br />and Succession of Operator" and "Performance Warranty" forms, respectively, as well as <br />providing replacement financial warranty. <br />I have been retained by AGC Resources LLC (°AGC°) to direct all activities associated with site <br />permitting and operational environmental compliance. Accordingly, I herein advise you of (i) site <br />conditions effective the date of ownership transfer, and, (ii) AGC's commitment to bringing the <br />site and all operations into compliance with all relevant permitting authorities. In this regard, I <br />bring to your attention the following: <br />On June 15, 2010 AGC documented the following specific site conditions that we believe <br />require immediate attention: <br />• The Gold Hill Mill tailing pond water level was measured at 0.64 ft. below the top of the <br />synthetic liner along the central portion of the dike. In this regard, it is my understanding <br />that the minimum allowable freeboard is 2.0 ft. below top of liner, per DRMS permit <br />stipulation. <br />• The Mount Royale Adit (i.e., the 3'd Level Adit) was discharging at an estimated rate of <br />15 gpm following the prior two days' major precipitation events. The discharge has been <br />observed to range from approximately 25 gpm in late May (in conjunction with snowmelt) <br />down to about 5 gpm during the week prior to ownership transfer. We anticipate the flow <br />rate will remain in the 3 gpm to 5 gpm range (or less) over the next few months. In this <br />regard, it is my understanding that the site is permitted through DRMS as a "zero <br />discharge" facility.