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PERMIT #: M-1983-141 <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 Cash and Who Do Mines are located 10 miles northwest of Boulder, CO. The <br />site is permitted for 9.83 acres and the post-mining land use is forestry. <br />The Cash and Who Do Mines Reclamation Permit was transferred from Mount Royale Ventures, LLC to AGC <br />Resources LLC on August 2, 2010. The purpose of this inspection was to allow Division staff to become familiar <br />with the site and to follow up on outstanding problems identified during the Division's previous inspections. <br />Hydrologic Balance: <br />The Mount Royale Adit No. 1, also referred to as the 3rd level Adit, was inspected and was found to be <br />discharging water from the Cash Mine at a rate of approximately 5 - 10 gpm. The water flows directly from the <br />adit for a distance of approximately 10ft before it collects into a small sump, which is located on top of a waste <br />rock pile. The water appears to infiltrate into the waste rock and there was no evidence the water was <br />reporting directly to a surface water body. A small trickle of water was observed flowing from the base of the <br />waste rock pile; however, the source of the water could not be determined. According to Mr. Beck, the water <br />is sampled at the sump and within the adit. A review of the permit file found the Division does not have any <br />record of the water sampling results. The adit discharge has been cited as a problem; please see page 1 of this <br />report for the required corrective actions. <br />The Mount Royale Adit No. 1 has been historically dewatered via a well that connects to the 7th level of the <br />Cash Mine workings. The water was then pumped to the tailings pond at the Gold Hill Mill (M-1994-117) <br />where it was allowed to evaporate. The Cash Mine well is not permitted with the Office of the State Engineer. <br />Mr. Beck indicated the Operator is in the process of permitting the well and obtaining the necessary water <br />rights to use the Cash Mine water for consumptive purposes. Once the well is permitted and the necessary <br />water rights are obtained, the Operator will be able to pump the Cash Mine water and eliminate discharge <br />from the Mount Royale Adit No. 1. The unpermitted well has been cited as a problem; please see page 1 of <br />this report for the required corrective action. <br />Gen. Compliance With Mine Plan: <br />The Division noted a secondary escapeway for the Mount Royale Adit was possibly constructed outside the <br />permit boundary during an inspection conducted on May 5, 2009. The construction of the escapeway was a <br />safety requirement mandated by the Mine Safety and Health Administration. The Operator has indicated the <br />escapeway will be reclaimed and an alternate escapeway will be utilized when mining commences. This is an <br />ongoing problem which the Operator must resolve. Notice of this problem and the required corrective actions <br />will be sent under separate cover. <br />Signs and Markers: <br />During an inspection conducted on June 12, 2009, the Division found the boundary was delineated with <br />surveyor's lath. This was cited as a problem as the lath was not sufficiently robust to meet the boundary <br />marker requirement. The surveyor's lath was likely destroyed during the Four Mile fire and the Operator has <br />not replaced the boundary monuments. This is an ongoing problem which the Operator must resolve. Notice <br />of this problem and the required corrective actions will be sent under separate cover. <br />This concluded the inspection. <br />Page 2 of 4