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PERMIT #: M-1977-170 <br />INSPECTOR'S INITIALS: GRM <br />INSPECTION DATE: March 15, 2011 <br />OBSERVATIONS <br />This inspection was conducted as part of the normal monitoring program of the Colorado Division of Reclamation, <br />Mining, and Safety (Division). Division inspector Russ Means was accompanied by Butala representative Tom Eve. The <br />Butala Pit is a 112c permitted site located a just north of the area known as Smelter Town, NW of Salida, Colorado on <br />County Road 151. Butala is finishing up mining in Phase 1 and wishes to move into the next phase. <br />The mine identification sign and affected area boundary markers are in place and in compliance with Rule 3.1.12. The <br />sign is located at the entrance to the site off CR 151 it enters the permit access point. Permit boundaries are marked by <br />t-posts, mesa edges, and visual berms that mark the affected areas as well. Concrete pipe and t-posts delineate an <br />excavation exclusion zone discussed below. <br />The mine is active with processed materials stockpiles noted. Excavation was noted along the southwestern edge of <br />Phase 1. Material is being hauled to a screening and stockpile area noted as the creosote exclusion area. Mining is <br />progressing from west to east as approved. The highwall on the eastern edge is approaching its final limits. The <br />approximate height of the highwall is 40 feet. No groundwater or drainage issues were observed. <br />Phase 2 is the creosote area. Butala is allowed to use the area for surface work but is not allowed to excavate. The <br />plans call for its use a stockpile and processing area only and is being used accordingly. It appeared that a new stockpile <br />was being set up as the stacker and screener were just beginning to produce processed materials. While it was very <br />breezy, dust was limited and was down within the permit area. <br />Phase 3 will soon be opened up. The area is a continuation of the mesa bench being mined. No issues were observed <br />that should prevent Butala from moving into the area when needed. The eastern edge of the creosote area is well <br />defined and the operator is well aware of the excavation limits. <br />Reclamation of Phase 1 has begun with 2:1 slopes established on the north and west boundaries. Topsoiling and <br />revegetation still is needed. The topsoil and final reclamation tasks for Phase 1 will begin this year according to Mr. Eve. <br />Some minor riling and gulling is noted on the north slopes but not a concern at this time. Maximum disturbance as of <br />this date is approximately 35 acres. <br />Overall the site is very well maintained. No unnecessary debris or trash was observed on site. All fuels and containers <br />are in approved secondary containment. No evidence of spills or leaks was noted. <br />The financial warranty has not been updated since 2004. The inspector notes reclamation of Phase 1 has started and <br />the operator intendeds to move to Phase 3. The acreage proposed in Phase 3 is less than in Phase 1. However, there <br />will be a transition time that needs to be accounted for as reclamation is accomplished and the new area is opened. The <br />inspector will update the reclamation liability estimate and address the issue through separate cover. <br />No issues, problems, or violations were noted or observed. <br />Responses to this inspection report should be directed to Russ Means at the Division of Reclamation, Mining, and Safety, <br />Grand Junction Field Office, 101 South 3rd Street, Room 301, Grand Junction, Colorado 81501, phone no. 970-241-1117. <br />Page 2 of 5