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PERMIT #: M-1994-117 <br />INSPECTOR'S INITIALS: MAC <br />INSPECTION DATE: December 22, 2010 <br />OBSERVATIONS <br />The inspection was conducted by Michael Cunningham, Tony Waldron and Tim Cazier of the Division of <br />Reclamation, Mining and Safety (Division). Jim Beck and Jim Smith, representing AGC Resources LLC, were also <br />present for the inspection. The Gold Hill Mill is located 10 miles northwest of Boulder, CO. The site is <br />permitted for 8.4 acres and the post-mining land use is forestry. <br />The Gold Hill Mill Reclamation Permit was transferred from Mount Royal Ventures, LLC to AGC Resources LLC <br />on August 2, 2010. The Division has recently assigned all Boulder County sites to Michael Cunningham. The <br />purpose of this inspection was to allow Division staff to become familiar with the site and to follow-up on <br />unresolved problems that were cited during the Division's inspection on June 12, 2009. <br />Currently there is no mining or mill work being performed at the Gold Hill Mill; however, mine personnel are <br />present on site and are working towards bringing the mine back into full operation. This report will focus on <br />the four outstanding problems identified during the Division's previous inspection. <br />Processing Waste: <br />The freeboard of the tailings pond was measured at 0.3 feet during an inspection conducted by the Division on <br />July 20, 2010. The tailings pond is required to have a minimum freeboard of 2 feet during non-operational <br />periods. The freeboard was not measured during the inspection; however, visual observations confirmed the <br />water level had subsided by several feet. According to Mr. Jim Beck, the decrease in the water level was <br />achieved through evaporation. The tailings pond is not in imminent danger of overtopping and should be able <br />to handle any input from spring precipitation. <br />During the inspection conducted on June 12, 2009, the Division noted that a thin layer of tailings had been <br />deposited on the out-slope of the tailings dam. This was cited as a problem and the Operator was required to <br />describe the cause of the tailings deposition on the dam and the measures to be taken to prevent this from <br />occurring in the future. During this inspection a thin layer of tailings was observed in the same location as well <br />as on the southeast bank of the tailings pond. This area is subjected to intense crosswinds from the west, <br />which blow over the tailings pond. It appears the desiccated tailings are blown out of the pond and deposited <br />on the southeast bank and the tailings dam out-slope. This is an ongoing problem which the Operator must <br />resolve. Notice of this problem and the required corrective actions will be sent under separate cover. <br />During the inspection conducted on June 12, 2009, the Division noted mill tailings were discharged to <br />locations outside of the approved pond. This was cited as a problem and the Operator was required to provide <br />map(s) and/or cross sections showing the locations where tailings were discharged to surface pits and <br />underground mine workings. In addition, the volume of tailings discharged was to be provided to the Division. <br />The Division inspected one of the historic prospect pits in which mill tailings were placed; the pit is located <br />outside of the permit boundary and has not been reclaimed. Samples of the tailings were collected during the <br />inspection conducted on June 12, 2009. The samples were analyzed using the synthetic precipitation leaching <br />procedure (SPLP) at the Environmental Protection Agency (EPA) laboratory in Golden, Colorado. The results of <br />the SPLP tests are currently being assessed by the Division and the EPA. Any decisions and/or enforcement <br />actions relating to this matter will be sent under separate cover. <br />Page 2 of 4