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October 13, 2011 <br />Inspection Topic Summary <br />NOTE: Y= Inspected N =Not Inspected R= Comments Noted <br />N - Air Resource Protection <br />R - Availability of Records <br />N - Backfill & Grading <br />N - Excess Spoil and Dev. Waste <br />R - Explosives <br />N - Fish & Wildlife <br />R - Hydrologic Balance <br />R - Gen. Compliance With Mine Plan <br />R - Other <br />R - Processing Waste <br />C- 1981- 018/Deserado Mine <br />COMMENTS <br />V= Violation Issued NA =Not Applicable <br />R - Roads <br />N - Reclamation Success <br />N - Revegetation <br />N - Subsidence <br />N - Slides and Other Damage <br />R - Support Facilities On -site <br />N - Signs and Markers <br />N - Support Facilities Not On -site <br />N - Special Categories Of Mining <br />N - Topsoil <br />JRS <br />This was a complete inspection of the Deserado conducted by Jim Stark of the Colorado Division of Reclamation, <br />Mining and Safety. Scott Wanstedt of Blue Mountain Energy accompanied me on the inspection. The mine has <br />received about an inch of rain and snow in the past week. The mine is actively producing coal, hauling refuse to <br />the refuse piles and loading and shipping coal. The weather was cool and clear and the ground was mostly dry. <br />AVAILABILITY OF RECORDS — Rule 5.02.4(1): <br />- All of the required records were available in Scott Wanstedt's office at the mine site. Please see the DRMS <br />Availability of Records form at the end of this inspection report for more details. <br />EXPLOSIVES — Rule 4.08 <br />Distance Prohibitions 4.08.4; Warnings 4.08.4; Control of Adverse Effects 4.08.4: <br />- The explosives and cap magazines are located at the end of the road spur leading to pond DP -1. The magazine <br />pad was stable at the time of the inspection. <br />HYDROLOGIC BALANCE - Rule 4.05 Drainage Control 4.05.1, 4.05.2, 4.05.3; Siltation Structures 4.05.5, <br />4.05.6; Discharge Structures 4.05.7, 4.05.10; Diversions 4.05.4; Effluent Limits 4.05.2; Ground Water <br />Monitoring 4.05.13; Surface Water Monitoring 4.05.13; Drainage — Acid and Toxic Materials 4.05.8; <br />Impoundments 4.05.6, 4.05.9; Stream Buffer Zones 4.05.18: <br />- Pond RP -1 was dry at the time of the inspection. The pond embankment was well vegetated and stable and no <br />erosional problems were noted. <br />- Pond RP -2/3 was dry at the time of the inspection. The two presettling cells in the pond contained some water <br />but were not discharging into the main pond. The pond embankment was well vegetated and stable and no <br />erosional problems were noted. <br />- Pond RP -4 contained a small amount of water but was almost dry. The pond embankment was well vegetated <br />and stable and no erosional problems were noted at the time of the inspection. <br />- Pond RP -5a contained a small amount of water and was almost dry. The pond embankment was well vegetated <br />and stable and no erosional problems were noted. <br />Number of Partial Inspection this Fiscal Year: 2 <br />Number of Complete Inspections this Fiscal Year: 2 <br />Page 2 of 10 <br />