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<br />Climax MolA Freeport-McMoRan Company <br />March 4, 2011 <br />Mr. Eric Scott <br />Environmental Protection Specialist <br />Colorado Division of Reclamation Mining and Safety <br />1313 Sherman Street; Room 215 <br />Denver, CO 80203 <br />Climax Mine <br />Hwy. 91 <br />Climax, CO 80429 <br />Phone (719) 486-2150 <br />Fax (719) 486-2251 <br />Re: July 8, 2011 Letter to DRMS from Clinton Ditch & Reservoir Company Regarding Climax Mine <br />Amendment to Permit M-1977-493 <br />Dear Mr. Scott, <br />This letter is to respond to the July 8, 2010 letter filed by the Clinton Ditch & Reservoir Company <br />("Clinton") seeking party status in the permit amendment application process for the AM-06 amendment <br />to permit M-1977-493, filed by Climax Molybdenum Company ("CMC") and called complete for review <br />on August 24, 2010 by the Division of Reclamation, Mining and Safety ("DRMS"). <br />Clinton owns the Clinton Gulch Reservoir. CMC conveyed the land and water for the Clinton Gulch <br />Reservoir to Clinton via a July 1992 agreement. As part of the agreement, CMC committed that it would <br />not operate in a manner that could impair the water quantity or water quality in facilities conveying water <br />across CMC property to Clinton Gulch Reservoir, or in the Reservoir itself. <br />In its July 8, 2010 request for party status, Clinton has raised concerns that overlap with the agreement. <br />Clinton states broadly that it is concerned that CMC's proposed actions under AM-06 could adversely <br />impact the prevailing hydrologic balance of the affected lands and surrounding area, and the quality and <br />quantity of surface and ground water. Ultimately, the issues raised by Clinton relate to CMC's <br />obligations under the 1992 agreement. <br />CMC believes the proper forum for resolution of these issues is under the covenants of the agreement and <br />outside the permitting process. Nevertheless, because Clinton has raised these issues in the AM-06 <br />permit application process, CMC submits the following responses to Clinton's issues for the record in <br />advance of the formal hearing before DRMS. <br />Since receiving notice of the July 8, 2010 letter from Clinton, CMC has been working directly with <br />Clinton, in good faith, to address its issues. Representatives from CMC met with the engineer for <br />Clinton, and with its legal counsel, in November 2010 and January 2011 to understand Clinton's concerns <br />more specifically. From its meetings and other communications with Clinton, CMC understands <br />Clinton's specific concerns to be as follows: <br />1. Water quality protection for the East Interceptor Ditch: Clinton has expressed concern that the <br />quality of the water delivered to Clinton Gulch Reservoir from McNulty Gulch, via the East Interceptor <br />Ditch, will be adversely affected by the planned enlargement of the McNulty Overburden Storage Facility <br />(OSF).