2011-02-15_INSPECTION - M1983141

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Mr. Michael Cunningham - February 15, 2011 Page Five AGC RESPONSE: The discharge from the Cash Mine pool is also a condition evolving from the purported "zero-discharge" status that was apparently represented as fact within the (pre-AGC) Permit No. M-1983-141 Amendment No. 02 application and subsequent adequacy review technical memoranda. It is clearly evident that the Cash Mine water level was artificially drawn down to and maintained below the 3rd level through dewatering activities during the period circa 2004-2009. It is further evident that some portion of this dewatering volume was transferred to the tailing storage facility (TSF), which in turn resulted in its being filled to capacity and such that the water level within that feature significantly exceeded the DRMS permit-stipulated allowable freeboard of 2-ft. minimum. That condition has since been abated by evaporation during AGC's onsite tenure, and approximately four (4) feet of freeboard exist at present. [Note: In this regard, and inasmuch as AGC wishes to sever and disassociate its project from prior operations' actions or inactions, AGC wishes to note for the record that the subject adit should no longer be referred to as the Mount Royale Adit No. 9, but hereafter shall be referred to as the "Cash 3'd Level Adn As stated above, on assuming ownership on June 15, 2010 and identifying certain permitting deficiencies AGC immediately commenced the undertaking of a multi-faceted and relatively complex permitting effort to specifically address the identified deficiencies relating to the site-wide water balance in a manner that addresses the inherited site conditions while also incorporating planned AGC project requirements. Thus, the aforementioned Section 37-92-308(5) SWSP effort. Due to the complexities and uncertainties associated with procurement of sufficient water rights to support project demands, project planning has not yet advanced to the stage where a definitive water balance has been developed; however, work is underway in that regard and conceptual level project infrastructure requirements are being evaluated to address the water management aspects of both near-term and long-term operation. Accordingly, AGC respectfully requests a 60-qp extension of the corrective action date to April 15, 2011 in order to allow sufficient ti to: (i) monitor progress on the Section 37-92-308(5) SWSP process; (ii) advance the iiect infra tructure planning, design and permitting such that interim and long-term waiver management options can be identified and more fully defined within the project design process; and, (iii) more fully evaluate the logistical and permitting requirements associated with the various water management alternatives that may be available to AGC. The resultant increased level of knowledge will allow AGC the ability to make more informed decisions relative to long-term, site- wide water management. AGC understands the significance of these compliance concerns, and AGC remains committed to establishing compliant operations at the Cash and Who Do Mines while working through this difficult period of transition. We trust that the foregoing responses address the outstanding