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October 13, 2011 <br />Number of Partial Inspection this Fiscal Year: 2 <br />Number of Complete Inspections this Fiscal Year: 2 <br />C- 1981- 018/Deserado Mine JRS <br />HYDROLOGIC BALANCE (cont.) - Pond DP -1 contained water approximately two feet below the discharge <br />pipe and was discharging through the weep hole in the primary discharge pipe at the time of the inspection. There <br />is some sediment at the inlet of the pond and a fair number of cattails in the pond. The pond embankment was <br />well vegetated and stable and no erosional problems were noted. The emergency spillway is a riprapped, open <br />channel, which appeared to be stable. <br />- The ditches from the prep plant bench into pond DP -1 were both stable at the time of the inspection. There was a <br />small amount of erosion in the short ditch segment to the north but it did not appear to be a problem at this time. <br />- Ponds SS -1 and SS -2 were dry at the time of the inspection. The sump before the culvert that runs to the pond <br />was recently cleaned out. The pond embankments were well vegetated and stable and no erosional problems were <br />noted. <br />- Pond PP -2 was full at the time of the inspection but was not discharging. This pond is a holding pond for the <br />coal wash plant. The pond is an incised pond and the embankment was well vegetated and stable and no erosional <br />problems were noted. <br />- The roadside ditch between the haul road and access road still needs to be cleaned. Sediment has built up behind <br />straw bales and the drop structures along the road. The rest of the ditches along the haul road (to the refuse pile, <br />north of Rio Blanco County Road 65) were clean. <br />- The roadside ditches along the conveyor corridor were clean and appeared to be stable. <br />- Deserado is planning on drilling the B -Seam dewatering hole (approved with TR -68) starting next week. Scott <br />said that they would then build the permitted water treatment ponds. He stated that these ponds would probably be <br />built after their 2011 drilling under their NOI was complete. Please note that no water may be discharged prior to <br />the construction of these ponds. <br />GENERAL MINE PLAN COMPLANCE: <br />- Deserado is currently mining the end of longwall panel LWB -11. They have completed approximately 90% of <br />the panel at this time. They have also completed development work on the headgate for longwall panel LWB -12 <br />(10 -Left). They are currently working on development of the B -Mains and then will probably begin working on <br />the headgate for longwall panel LWB -13 (11 -Left). Mining is progressing as permitted and shown on Map 120 - <br />B-Mine Plan. <br />- Deserado Has completed the drilling of the gob vent boreholes and nitrogen injection wells for longwall panel <br />LWB -12. This included the drilling of six GVB's and 5 nitrogen injection wells. <br />- Deserado will start drilling return shaft RS -6 in a few weeks. They have constructed the drill pad and mud pit for <br />the shaft. The shaft will be a lined, 24 inch shaft. <br />PROCESSING WASTE /COAL MINE WASTE PILES — Rule 4.10 and 4.11 Drainage Control; Surface <br />Stabilization; Placement: <br />- Reclaimed refuse pile RP -1 is well vegetated and stable. There is good perennial grass cover on the pile. There <br />were no erosional problems noted on the pile. <br />- Refuse pile RP -2/3/4 was well graded and compacted at the time of the inspection. The site has positive drainage <br />and there was no water pooling on the surface of the pile. There is some rilling on the outslopes of the pile. <br />Deserado has several piles of coarse refuse placed along the outslope to grade into these rills to help stabilize <br />them. <br />Page 3 of 10 <br />