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PERMIT #: M-1992-066 <br />INSPECTOR'S INITIALS: DMC <br />INSPECTION DATE: March 22, 2011 <br />OBSERVATIONS <br />This pre-operation inspection was conducted by the Division of Reclamation, Mining and Safety (DRMS) in <br />response to the 112c amendment application (AM2) submitted to DRMS by Duckels Construction, Inc. Bruce <br />Humphries, representing the Operator, was present during this inspection. Photographs are included at the <br />end of this report in order to illustrate some of the conditions observed during this inspection. <br />The Hogue River Pit is located approximately six miles west of Steamboat Springs, and accessed from Highway <br />40. <br />Mining was not occurring during this inspection. <br />AM2 will add approximately 11.7 acres to the existing 51 permitted acres. The premining land use of the area <br />to be included in AM2 is pastureland that is to be reclaimed as a pond for wildlife habitat. AM2 will be a <br />continuation of the mining and reclamation methods approved under the current permit. Process water and <br />groundwater exposed by mining at the site are pumped into a settling pond for sediment removal, prior to <br />discharge into the Yampa River through a ditch located on the east side of the permit area. The Operator has <br />committed to limiting the exposure of groundwater to no more than 25 surface acres, until the revision of well <br />permit 042066-F is approved by the Division of Water Resources. <br />Significant snow cover at the site prevented observation of vegetation during this inspection, but this <br />inspector believes that the Operator has adequately documented the current site conditions in the AM2 <br />application package. <br />DRMS currently holds a financial warranty amount of $51,000.00 for this site. This amount will be reevaluated <br />and addressed under separate correspondence. <br />No problems or violations were noted during this inspection. <br />Inspection Contact Address <br />Fred Duckels <br />Duckels Construction, Inc. <br />3500 Duckels Court <br />Steamboat Springs, CO <br />80487 <br />Cc: Bruce Humphries, Regulatory Permits Management, Inc. <br />Page 2 of 2