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Facilities in SR -05 Bond Reduction Request <br />PERMIT #: M -1977 -300 <br />INSPECTOR'S INITIALS: TAK <br />INSPECTION DATE: April 17, 2012 <br />Based on observations made during this inspection and past inspections, it is evident the sumps have been <br />constructed as approved in TR -15 in October 2010. <br />TR -12 was approved on August 9, 2010, with an increase in required bond of $990,219. Most of this amount <br />was based on the cost to construct the 100 -gpm ion exchange water treatment plant and its <br />operating /maintenance costs for 5 years. As mentioned in the introduction of this report, the SR -05 bond <br />reduction request is for completion of three items: purchase of water treatment system equipment, <br />mobilization and installation of the equipment, and the operation and maintenance of treatment plant for the <br />first eight weeks. These items are line items in the TR -12 reclamation cost estimate, and the dollar amounts <br />requested for financial warranty reduction in SR -05 are the same as those in the TR -12 estimate. <br />Operation of the treatment plant has been observed on various occasions by DRMS inspectors, indicating the <br />plant has been constructed as approved in TR -12, and it has operated for at least 8 months (the period for <br />which bond reduction is requested for operational costs). <br />SR -04 and SR -05 Decision <br />The operator requests a reduction in required bond for specific completed work. Based on the observations <br />made during this inspection and previous inspections, this work has been completed. Although the work has <br />been completed, DRMS cannot reduce the required bond for the Schwartzwalder Mine because reduction of <br />the required bond by the requested amount of $413,218 would increase the Schwartzwalder Mine's current <br />deficit of bond on deposit with the State (see Table 1, below). <br />Financial warranties must be sufficient to ensure that the Division can complete reclamation in the event of <br />forfeiture. See C.R.S. § 34- 32- 117(4)(b)(I); Rule 4.2.1(4). Rule 4.2.1(1) requires that a financial warranty be <br />maintained at a level which reflects the actual current cost of completing the reclamation plan and <br />environmental protection plan. The current bond deficit is a result of required environmental protection <br />facilities not yet constructed. DRMS notified the operator of the need to construct these facilities in an RTB <br />letter issued May 21, 2010. Following litigation, the operator submitted the design for most of the facilities <br />on May 1, 2012 in the application for Amendment AM -04. DRMS is hopeful that the deficit will be eliminated <br />if it can approve AM -04, after adequacy review and revision, in June or July 2012. Nevertheless, the current <br />bond is less than required to complete the required reclamation. Based on the current deficit of bond on <br />deposit with the State, DRMS denies the SR -04 and SR -05 applications. <br />Page 3 of 8 <br />