2012-07-13_REPORT - M1988044 (3)

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HYDROLOGIC CONDITIONS ENCOUNTERED: No groundwater was encountered in any of the mining pits operated in the past year. Flows in Coal Creek were generally weak except in early June. On the whole, moisture has been somewhat below normal over the last 24 or more months, on average, and this may have lowered the water table some. Changes in the riparian corridor were slight until about June 7 when an intense thunderstorm parked over lands to the south and produced a significant flood in the southern portions of the lease area. This flooding did not have a major impact on the northern portions of the stream corridor. It appears that the large wetland produced by mining many years ago attenuated the intensity of the flood and reduced the impact downstream. Unfortunately, the East Valley received intense rain and washed out the main road to the southern lands. Increased vegetation cover on the uplands that feed into the riparian corridor was unable to attenuate this intense peak flow and flash flooding occurred. Put simply, the improved management approach on the property undoubtedly helped to keep this flood from doing yet more damage. RECLAMATION PERMIT STATUS: Significant changes in the permit occurred in the last year due to removal of lands where oil and gas development has occurred and release of reclaimed land as a part of the bond reduction. These are detailed more later in this report. 404 PERMIT STATUS: The 404 permit requirements have now been met and approved by the U.S. Army Corps of Engineers. No further analysis of the bottomland vegetation within the exclosures is required. However, this should not be taken to mean that the requirements of the permit have been lifted and the site is now in a condition where anything anyone wants to do in the riparian corridor can proceed. Those requirements continue so long as there is a riparian corridor and a federal Clean Water Act. Any disturbances such a mining, drilling, or construction activities must first be approved by the Corps under the applicable and appropriate permit requirements. Because a limited amount of grazing has apparently been allowed, it is recommended that the fences stay in place to provide for a reference area to monitor the impact of any additional grazing impacts. It is important not to return to the condition prior to the construction of the exclosures and the removal of the cattle. Those times devastated the corridor which, although it has largely recovered, is still not in a condition that would allow for intensive grazing now, if ever. The riparian forests came very near destruction as a result of primarily cattle browsing on seedlings. At least one new generation of trees is now developing and another generation may develop locally where sand deposition in early June 2012 occurred as a result of flooding after an intense thunderstorm over Douglas and Elbert Counties. Furthermore, some degree of monitoring should continue in the flood damaged areas to see how those areas recover and what kind of vegetation develops in those areas and, to some extent, insure that these areas do recover. This is important information to help guide future management of the site. MINING ACTIVITY IN THE LAST YEAR: 1. Depth of mining - In the last year, mining depths were consistent and reached down to considerable depth. In many instances, mining depth was quite deep, but also very large amounts of overburden and waste (wash fines) were generated. The waste is mostly located Status report for 2012 due July 15, 2012 Page 3 of 8