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'DIVISION OF RECLAMATION, MINING AND SAFETY Department of Natural Resources 1313 Sherman St., Room 215 Denver, Colorado 80203 Phone: (303) 866 -3567 FAX: (303) 832 -8106 January 30, 2012 Mr. Randy Whicker Health Physicist / RSO ✓Cotter Corporation P.O. Box 1750 Cation City, CO 81215 1 Re: Schwartzwalder Mine, Permit No. M- 1977 -300 Permit Amendment AM -02, Environmental Protection Plan ( , - Two Options Regarding AM -02 and Additional Action Required to Complete EPP Dear Mr. Whicker: On August 15, 2011, the Division of Reclamation Mining and Safety (Division) suspended its review of Cotter Corporation's (Cotter) Permit Amendment Application 2 (AM -02), which represented Cotter's attempt to fulfill the EPP requirements for the Schwartzwalder Mine. The review was suspended pending resolution of Cotter's suit filed in Denver District Court for judicial review of the Mined Land Reclamation Board's (Board) August 11, 2010 Order ("Order").' On September 30, 2011 the Denver District Court resolved the suit by affirming the Order in its entirety. Although Cotter has since appealed the District Court's decision to the Colorado Court of Appeals, the review of the Order by the Denver District Court has concluded. Cotter has not sought a stay of the Order, and the Order remains in full force and effect. Accordingly, the Division will resume processing (approval, denial, or further review) of AM -02. Unresolved adequacy items in the AM -02 application are identified in Attachment A. In order to conclude processing of AM -02, the Division requests that Cotter choose one of the following two options: Option A — The Division immediately approves the AM -02 application, with approval limited to the submittal dated July 31, 2010 and excluding the section behind Tab 15 titled "Mitigation Options and Construction Schedule ", with the condition that Cotter submit by April 1, 2012 a new amendment application comprised of materials that resolve the items described in Attachment A. The limited and conditioned approval of AM -02 proposed in this Option requires Cotter's consent, pursuant to Hard Rock/Metals Rule 1.4.1(12) which provides that "[a] condition or limitation to approval of the application, unless consented by the Applicant, shall be treated as a denial." Option B — The Division resumes review of the AM -02 application in order to resolve the items described in Attachment A. The resumption of review proposed in this Option will require the Division to set AM -02 for a hearing before the Board in its March 14 -15, 2012 meeting. At such a hearing, the Division will recommend to the Board that the deadline for completion of the current AM -02, which includes the submittal of all information necessary to satisfy EPP requirements, as described in Attachment A, should not be extended later than April 1, 2012. Such a hearing is necessary to extend the AM -02 review period because the maximum 365 -day review time for an amendment, as specified in Hard Rock/Metals Rule 1.4.1(9), was exhausted on August 11, 2011 (365 days following the August 12, 2010 filing date of AM -02). 1 The Order required that Cotter, among other things, "reinitiate mine dewatering and water discharge treatment sufficient to bring the mine water table to a level at least 500 feet below the Steve Level, and sufficient to reestablish a hydrologic gradient away from Ralston Creek..." and "provide financial warranty pursuant to Hard Rock Rule 4.2.1(4), sufficient to assure the protection of water resources, including costs to cover necessary water quality protection, treatment and monitoring." Office of Mined Land Reclamation Denver • Grand Junction • Durango STATE OF COLORADO COLORADO D I V I S I O N O F RECLAMATION MINING — &— SAFETY John W Hickenlooper Governor Mike King Executive Director Loretta E Pineda Director .S Office of Active and Inactive Mines