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PERMIT #: M -1994 -117 <br />INSPECTOR'S INITIALS: MAC <br />INSPECTION DATE: August 24, 2011 <br />During an inspection conducted on June 12, 2009, the Division noted mill tailings were discharged to locations <br />outside of the approved pond and outside of the permit boundary. This was cited as a problem and the <br />Operator was required to provide map(s) and /or cross sections showing the locations where tailings were <br />discharged to surface pits and underground mine workings. In addition, the volume of tailings discharged was <br />to be provided to the Division. Samples of the tailings were collected during the inspection conducted on June <br />12, 2009. The samples were analyzed using the synthetic precipitation leaching procedure (SPLP) at the <br />Environmental Protection Agency (EPA) laboratory in Golden, Colorado. The results of the SPLP tests were <br />received from the EPA in September of 2009, and showed antimony and thallium were elevated above <br />numeric standards for Domestic Water Supply as determined by the Colorado Department of Public Health <br />and Environment. The Division required further analytical testing of the tailings material; one sample was <br />collected from the Cy Eaton Shaft and three samples were collected from the TSF. The samples were analyzed <br />using the acid -base accounting procedure by a commercial lab (ACZ). The Division reviewed the results and <br />determined at that time the tailings could be left in place without a significant threat of pollutants being <br />released to the surface or subsurface drainage system, provided that the disposal locations were properly <br />reclaimed. <br />The Operator committed to reclaiming the prospect pits by July 31, 2011. The Division inspected the Cy Eaton <br />and White Cloud shaft and found them to be in the same unreclaimed state as they were during the previous <br />inspection. The Cy Eaton prospect pit is approximately eight to ten feet deep and has not been backfilled with <br />overburden or topsoil. The White Cloud shaft was partially covered with organic material; however, tailings <br />are still visible at the surface. Both of the prospect pits still require final reclamation. The Cy Eaton shaft and <br />the White Cloud shaft are both approximately 315 square feet in size; their respective locations are shown on <br />the Tailing Discharge Locations Map (copy enclosed). <br />Based on the findings of this inspection, the Division has reason to believe the Operator is in violation of C.R.S. <br />34- 32- 116(7)(c) for failure to handle acid - forming or toxic - producing material in a manner that will protect the <br />drainage system from pollution. The possible violation will be scheduled for the October 12 -13, 2011 Mined <br />Land Reclamation Board Hearing. Notice of such hearing will be sent under separate cover. <br />This concluded the inspection. <br />Page 3 of 6 <br />