2011-08-11_INSPECTION - P2008037

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OBSERVATIONS PERMIT #: PF.Id INSPECTOR'S INITIALS: RCO INSPECTION DATE: July 28, 2011 This was a partial monitoring inspection performed by the Division. The operator named on page one was present throughout the inspection. This NOI contains drill pads and roads which are currently in final reclamation and a site which supports active drilling activity. The temporary access road to pad sites #1 through #4 is gated and becoming well reclaimed. These four sites and the temporary access road were inspected on foot last year, and reclamation was found to be well underway. The four pad sites were not inspected this year, and only the portion of the temporary road that was visible from the forest road was inspected. Pad site #5 is adjacent to the forest road, and was easily inspected. It consists of a small clearing in the forest (the approved size of the pad disturbance) that has been graded and seeded. Revegetation has become established there. The clearing is gated to prevent damage from vehicles. The forest road leads to pad site #6, which, though it is not being drilled, is not being reclaimed either. The cut and fill earthwork that created the pad still exists, and tanks and pumping equipment for holding and conveying drilling water were present on the pad. The size of the disturbance is in conformance with the plan. Sediment and runoff are controlled, and there were no apparent offsite impacts. There are no chemicals or contaminants at the site. At this time the revegetation of the roads and pad sites was not closely inspected. The revegetation of the reclaimed sites will be inspected more closely in another inspection, to assess the success of vegetation establishment and presence of any weeds. The operator is encouraged to stay current with monitoring and treating weeds, and seeding disturbed areas during the proper season as they are reclaimed. Additional drill sites along this road were originally approved under this NOI. The operator has eliminated them from this plan, and included them under a more recent NOI (P- 2010 -014). No more drill sites are located further north on this road. The operator is aware that drilling activity and reclamation activity will be included in the annual reports. All activities were in accordance with the approved plan. There were no problems noted at this time. For questions regarding this inspection please contact this inspector at the Division's Durango Field Office: DRMS — Durango Field Office, 691 CR 233, Room A -2, Durango, CO 81301 (Telephone: 970 - 247 -5193) (No photos are included in this inspection report.) Inspection Contact Address Randy McClure Rio Grande Silver, Inc. PO Box 610 Creede, CO 81130 CC: Tom Malecek, USFS, 13308 W Hwy 160, Monte Vista, CO 81144 Page 2 of 2