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OBSERVATIONS <br />This inspection occurred as part of the Division's monitoring program for permitted operations. This report is <br />accompanied by 10 photos. <br />The water treatment plant was active. The Operator indicated the groundwater in the West Pit area was <br />maintained at 8583 feet elevation. Pond 4 was inactive. However, the operation still utilizes the brine pond, <br />the influent pond and the clarifier pond to maintain compliance with water quality regulations. <br />Reclaimed lands in the East Pit area appeared stable, no evidence of settling, sliding or excessive erosion was <br />observed. As shown in the photos, several gullies were present on the east face of Waste Rock Stockpile C. <br />The gullies appeared to have occurred prior to the establishment of vegetative cover. The gullies were not <br />active and appeared to be healing. Waste Rock Stockpile C had been constructed during the opening of the <br />East Pit. Later, as the mining activity progressed to the West Pit area, the East Pit excavation had been <br />backfilled with overburden and waste materials generated at the West Pit. Rock lined drainage ditches <br />throughout the East Pit area appeared intact and well maintained. Vegetative cover was well established and <br />included a variety of grasses, forbs, shrubs and trees. The Operator indicated the East Pit area had been <br />seeded during 1996 -1997. Elk and deer scat were observed at numerous locations. <br />The highwalls of the West Pit area had been stabilized by constructing a series of benches. Numerous <br />seedlings had been planted within the Pink Gneiss Pit, located at the west end of the West Pit. The <br />transplanted seedlings appeared to be thriving. <br />Waste Rock Stockpiles B and D appeared stable and well vegetated. <br />Inspection Contact Address <br />William Lyle <br />Battle Mountain Resources, Inc. <br />P.O. Box 310 <br />San Luis, CO 81152 <br />Enclosure: 10 photos <br />ec: Steve Shuey, DRMS GJFO <br />PERMIT #: M- 1988 -112 <br />INSPECTOR'S INITIALS: WHE <br />INSPECTION DATE: July 12, 2011 <br />Center -pivot irrigation equipment was active at the tailings pond, irrigating an experimental crop of rapeseed, <br />intended to produce Canola oil for biodiesel fuel. <br />The Division holds $7,400,000 financial warranty, which appears sufficient to ensure reclamation. <br />Page 2 of 2 <br />