2011-10-17_INSPECTION - P2011031

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This concluded the inspection. PERMIT #: P- 2011 -031 INSPECTOR'S INITIALS: MAC INSPECTION DATE: October 6, 2011 30 feet from James Creek, at which point the mine pool discharge fanned out along the bank of James Creek. The discharge of mine pool water contained a significant amount of iron precipitate which was evidenced by the orange staining which could be seen inside of the mine, within the ditch, along the banks of James Creek and on the rocks within the creek. The area between the end of the ditch and the southern bank of James Creek contained at least six inches of the iron oxide precipitate. Mr. Cook had created a berm out of tailings and waste rock along the southern bank of James Creek. The berm was approximately 2 feet in height and 20 feet in length. The berm may have prevented some of the precipitate from flowing into James Creek. However, the geochemical composition of the tailings is unkown and this material should not be used to protect James Creek from additional loading of iron oxide precipitate. At the time of the inspection the precipitate was beginning to dry out; however, the material could be easily mobilized and transported into James Creek during a rain or snow event. The Division collected a grab sample of the mine water from the ditch. The samples will be analyzed for total and dissolved metals. In addition, the Division took field measurements of pH, total dissolved solids, and temperature using a Hanna multi- meter. The water flowing through the main channel of James Creek was clear at the time of the inspection. A small amount of iron oxide precipitate was observed along the banks of James Creek where the water flow was minimal. Following the inspection, the Division verified that a NOI to conduct prospecting was not issued to Mr. Cook. The Division was able to confirm that Mr. Cook had purchased the James Creek Placer claim (BLM File No. CMC278995). Upon further review, the Division determined that Mr. Cook was not located on the James Placer Claim, but on the private property of Mr. Jerome Freel who was not home at the time of the inspection. The Division has been unable to establish contact with Mr. Freel; the Boulder County Assessor's office lists his permanent address in Houston, Texas. The certificate of location (COL) filed with the Bureau of Land Management locates the James Creek Placer claim further upstream from the Alicia Mine. In addition, the COL depicted the James Creek Placer claim as a 20 acre parcel of land located on James Creek. The coordinates which were specified in the COL actually encompass a 10 acre parcel which is located south of James Creek. To summarize, Mr. Cook has a valid placer claim, but he did file a NOl to conduct prospecting with the Division. The prospecting activities conducted by Mr. Cook occurred on the private property of Jerome Freel and not on the James Creek Placer claim. The Colorado Mined Land Reclamation Act defines prospecting as the act of searching for or investigating a mineral deposit. Prospecting includes, but is not limited to, sinking shafts, tunneling, drilling core and bore holes and digging pits or cuts and other works for the purpose of extracting samples prior to commencement of development or extraction operations, and the building of roads, access ways, and other facilities related to such work. Based on the findings of this inspection, the Division has reason to believe the Operator is in violation of C.R.S. 34 -32- 113(1) for failure to obtain from the Board or office a notice of intent prior to engaging in prospecting operations. The possible violation will be scheduled for the November 9, 2011 Mined Land Reclamation Board Hearing. In addition, the Division has issued a cease and desist order which requires Mr. Cook and /or Mr. Freel to immediately cease and desist all mining, prospecting, and exploration activities. The notice of possible violation and the cease and desist order will be sent under separate cover. Page 3 of 10