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June 18, 2012 X- 2010 - 232- 00/New Elk Mine 2010 Exploration Program KAG <br />it was not clear how much of this was related to the pad site development. The operator should confirm <br />whether the land manager (CPW) would like any of the tree debris removed or mitigated in any way. <br />Site NE -5 -10 was found on the ground at 37'9'15.5"N 104 055'46.8 "W. This site is along the railroad <br />grade owned by New Elk Coal Company. A small reclaimed area exists immediately adjacent and north <br />of the rail grade. It was found well vegetated with straw bales on the northeast corner to treat any small <br />amount of storm runoff that might occur from this area. <br />Site NE -1 -10 was found on the ground at 37 °9'30.5 "N 104 °56'48.9 "W. It was completed as a single <br />monitoring well, as reported. It was found capped, locked, and marked accurately. <br />On the morning of June 19th, I met Mr. Arehart and Mr. Massaroti at the New Elk Mine site to continue <br />the inspection. A number of drill locations were done in close proximity to what is now the Bates Portal <br />and the active mine site facility prior to expansion of the permit boundary <br />Site NE -14 -10 is located along the railroad grade at coordinates 37 09'31.8 "N 104 057'21.4 "W southeast of <br />pond 7. It was found satisfactorily reclaimed. <br />Site NE -15 -10 is located further east along the railroad grade at coordinates 37 09'33.5 "N 104 057'5.9 "W. <br />A small amount of concrete was found at the location, evidence of sealing efforts. The site was well <br />vegetated with no problems noted. <br />Sites NE -16 -10 and NE -17 -10 are both located at approximate coordinates 37 09'26.6 "N 104 057'34.4 "W. <br />Both of the locations were visible on flashearth on remote imagery taken in at some point after drilling but <br />before construction of the Bates Portals had begun. Ground inspection found no obvious evidence of <br />these locations other than a possible drill location along the clean water diversion ditch behind the now <br />existing Bates Portals. <br />Site NE -6 -10 was found along the road up Santisteven Canyon and is now the location of two monitoring <br />wells, NE- 06a -10 and NE- 06b -10. Wells were found capped, locked, and marked. The site is heavily <br />vegetated. Coordinates are 37010'10.5"N 104 055'32.1 "W. <br />Site NE -7 -10 was found adjacent to an active gas well at 37 010'33.9 "N 104 054'26.2 "W. It was well <br />vegetated and stable. <br />Site NE -11 -10 was found at coordinates 37 °11' 14.3 "N 104055'12.2"W near a residence. Vegetation was <br />excellent on the site with no sign of erosion or damage. <br />Site NE -9 -10 was found at coordinates 37 012'0.5 "N 104 054'24.6 "W within about 500 feet of a relatively <br />recently drilled gas well. The site was found reclaimed in excellent condition. <br />Based on this inspection, all reclaimed drill locations can be bond released. If wells are currently bonded <br />Number of Partial Inspection this Fiscal Year: 0 <br />Number of Complete Inspections this Fiscal Year: 0 <br />Page 3 of 7 <br />