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Mr. Michael Cunningham - February 15, 2011 <br />Page Two <br />AGC RESPONSE: The disposition of mill tailings at locations exterior to the approved <br />tailing storage facility is a result of actions taken during prior (pre-AGC) operations. It is <br />AGC's understanding that a slurried tailing matrix was emplaced into two former (collapsed) <br />shaft features, both of which are exterior to the permit boundary. The two affected features <br />are the Cy Eaton and the White Cloud shafts, respectively (see attached Figure 1). The <br />latter (White Cloud) was reportedly "reclaimed" by the prior operator through the apparent <br />spreading of mulch and/or pine duff over the hardened tailing surface. DRMS staff has <br />verbally indicated that this level of reclamation is satisfactory and no further action is <br />required. No reclamation of the Cy Eaton shaft area has been undertaken to date, <br />presumably because the prior operator was ordered to cease such discharges of tailing prior <br />to any attempt to reclaim. In conjunction with the cease order, DRMS apparently obtained <br />samples of the tailing matrix for SPLP (Synthetic Precipitation Leaching Potential) analysis <br />at the U.S. EPA Region VIII laboratory in Golden, Co. To date, there has been no indication <br />from DRMS that any of the parameters exhibit concern, nor have any formal decisions or <br />enforcement actions ensued. <br />The estimated volume of tailing deposited in each of the fully caved features (based on site <br />observations and knowledge prior to the occurrence) would be on the order of 40 cubic <br />yards of material (assuming a 20-ft. diameter "inverted" right circular cone shaped feature <br />with a nominal center depth of 10-ft) at each location, thus a total of about 80 cubic yards. <br />With DRMS concurrence, AGC will conduct final reclamation of the Cy Eaton feature by <br />dozing or pulling the surrounding dump material into the remaining depression, bringing the <br />feature to an elevation compatible with immediately surrounding topography, followed by <br />surface preparation, soil amendment, and revegetation in accordance with the approved site <br />reclamation specifications. AGC will need to research permit file information to obtain the <br />approved revegetation specifications. Once this information is ascertained, AGC will submit <br />the specific re-seeding plan (for DRMS approval) in advance of initiating field activities. <br />Due to seasonal conditions, as well as a desire to optimize mobilization of equipment and <br />field crew personnel for this and other planned onsite activities, AGC respectfully requests <br />extension of the corrective action date (e.g., full completion of field reclamation activities) to <br />July 31, 2011. <br />A third instance of tailing placement at a location external to the approved tailing storage <br />facility [but within the associated Cash and Who Do Mines (Permit No. M-1983-141) permit <br />boundary] apparently occurred as utilization of tailing materials for underground stope fill. <br />This occurred within two stopes (namely, stopes C2 and F4) of the Cash Mine 3`d Level <br />production zone as a means of accomplishing tailing disposal through direct tailing backfill <br />processes. <br />Based on pre-acquisition underground inspections conducted by AGC, the amount of tailing <br />disposed at these underground locations would appear to be on the order of 25 to 30 cubic <br />yards in each stope location, for a total of 50 to 60 cubic yards. The material appeared to <br />consist solely of fully drained, granular, but consolidated tailing materials with no visible <br />evidence of pozzolan additive or observed hardness. The material is commingled with sub-