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DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866 -3567 <br />FAX: (303) 832 -8106 <br />October 4, 2011 <br />Michael Quinlan. <br />Gault Group, LLC <br />36 West Main Street <br />Cortez, Colorado 81321 <br />Cam? *1 <br />STATE OF COLORADO <br />Re: Tomichi Creek Exploration Project, Notice of Intent No. P- 2011 -018, Review Complete, and <br />Reclamation Liability Estimate. <br />Dear Mr. Quinlan, <br />Mined Land Reclamation <br />COLORADO <br />D I V I S I O N O F <br />RECLAMATION <br />MINING <br />—&— <br />SAFETY <br />John W. Hickenlooper <br />Governor <br />Mike King <br />Executive Director <br />Loretta E. Pineda <br />Director <br />The Division of Reclamation, Mining, and Safety began the review process of the above referenced <br />Notice of Intent (NOI) and sent notice of deficiencies on July 20, 2011 with a decision date of September <br />19, 2011. Tomichi Creek requested a 60 day extension of the review period from September 20, 2011 to <br />November 21, 2011. On September 30, 2011 the Division received Tomichi Resources responses to the <br />outstand deficiencies previously noted. <br />Per the documentation presented, Tomichi Creek is proposing 9 core holes on existing National Forest <br />Service (FS) roads. The original application states 10 holes and some FS documents refer to 14; however <br />Tomichi has withdrawn the extra holes from consideration due to potential access issues. The FS has <br />confirmed both in writing and verbally that no revegetation is required and two access berms "tank <br />traps" are to be removed and re- established when the drilling is complete. <br />Based on the information provided, the Division has calculated a reclamation liability estimate (copy <br />enclosed). The estimate is based on what it would cost the State of Colorado to hire an independent <br />contractor to complete reclamation in case of a default by any operator. The estimate is based on a <br />commitment to "seal as you go" rather than the entire project. As a reminder failure to abide by this <br />commitment may result in the project being ordered suspended until a bond for the entire project is <br />submitted and accepted by the Division. The Division calculated reclamation liability is $41,000.00. The <br />amount is $16,259.43 more than the original bond posted by Tomichi. The primary difference appears <br />to be labor, mobilization, and overhead costs differences between what it would cost the State and <br />those supplied by Tomichi. <br />Per a memo of understanding the USFS must concur on the bond amount. A copy of the estimate is <br />being forwarded to the FS. Tomichi may begin the process of submitting the additional bond but please <br />be aware that the amount may change if the FS has issues with the Division's estimate. Once the FS <br />concurs on the bond amount the Division can call the Notice complete and render its decision. Tomichi <br />has until November 21, 2011 to post the additional bond. <br />Office of Office of <br />Denver • Grand 'unction • Durango Active and Inactive Mines <br />