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-3- July 22, 2009 <br />' second phase of our operations will be to construct a 400 ton/day permanent facility. We envision this process to <br />become the premier solution for mitigating the waste rock problem in this vicinity. <br />The concentrates made will be sold shipped to a third party for further refining. We choose an offsite location <br />in Clear Creek county for our rocessing and tailings solid waste impoundment. This site will become a very <br />effective single point, and care grrlated repository for cleaned and now inert mill tails. It should be also noted <br />that the Mining District zoning regulations in Clear Creek county supports this activity as a use by right. <br />After careful review of Article 32 - Colorado Mined Land Reclamation Act and the subsequent Hard Rock Rules, <br />we were lead to believe that the action of picking up and transferring the waste rock dumps from an abandoned <br />mine to an offsite processing facility does not constitute a "Mining Operation". First of all, the dumps are a waste <br />product and do not exist in a state of their "natural occurrence". They result from a hand sorting, high-grading, <br />procedure that was often done in the late 19"' century separating direct smelting ore from waste material brought up <br />from the underground mines. This waste was simply dumped on the surface for future generations to contend with. <br />Furthermore, Rule I - Definitions states that: <br />(17) "Extraction" means the removal of minerals and/or overburden from places of natural <br />occurrence to surface locations. <br />It is our contention that "extraction" of this dump waste material has already occurred, a very long time ago. Again, <br />we are picking up and transferring a waste by-product. We see this no different than cleaning up trash and refuse <br />that a prior landowner left dumped on the land. <br />We do not believe we are creating a "captive mill" because the mill is not part of a "mining operation". Based on <br />our determinations, the offsite processing mill and tailings impoundment would then fall under the regulatory <br />jurisdiction of the Colorado Department of Public Health and Environment (CDPHE), as a Solid Waste disposal <br />facility. <br />Additionally, we do not believe we are a "custom mill" (as defined by DRMS) in the sense that we will not be <br />receiving ore from other third party's "mining operations"; only our solely owned material that is not part of a <br />"mining operation". The CDPHE REGULATIONS PERTAINING TO SOLID WASTE SITES AND FACILITIES, 6 <br />CCR 1007-2, PART 1, Section 1.2 Definitions defines a "custom mill" differently than the DBMS: <br />"Custom Mill" means an operation or facility for the extraction of metals or minerals from ores. <br />Such a facility receives its raw materials from one or more sources off-site of the mill property." <br />Because of this we fall under a statutory exemption from acquiring a Certificate of Designation because we are <br />disposing of our own waste on our own properly, Specifically, CRS 30-20-102(3) states: <br />--Two Stage Crushing Trailer <br />--Ball Mill & Concentrating Table