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PERMIT #: M- 1978 -267 <br />INSPECTOR'S INITIALS: TCW <br />INSPECTION DATE: August 27, 2012 <br />OBSERVATIONS <br />This was a normal monitoring inspection conducted by TC Wait of DRMS. Mr. Brent White and Mr. Darren <br />Garcia from Otero County represented the Operator during the site visit. The site is located about 2.25 miles <br />west of Manzanola. Post -mine land use for this site is rangeland. The permit area is approximately 229 acres; <br />about 49 acres in Phase I of the permit appears to have been mined at this point. <br />At the time of the inspection, the site was dry and accessed by vehicle and foot. There was no ponding in the <br />pit, but the overburden slopes on the southeast side of the Phase I area were rilled and there was evidence of <br />sediment transport from the sides of the slope. The permit sign was posted, and the permit boundaries were <br />marked with fence lines. All mining activity appears to be within the marked boundaries. <br />The Argo pit is not currently active, but has not had any reclamation work done either. Mr. Garcia indicated <br />that Otero County would be having upcoming discussions about keeping the mine permit active or reclaiming <br />the site. <br />Availability Of Records: <br />Records are up to date. <br />Backfilling and Grading: <br />Site is generally graded to a 3:1 or flatter slope; however, the southeastern portion of the Phase I area <br />includes overburden that has been pushed out and has a nearly vertical slope. This edge is eroding and should <br />be graded to a 3:1 slope. <br />Excess Spoil and Dev. Waste: <br />Waste and overburden material has been pushed out along the southeastern edge of Phase I area. <br />Hydrologic Balance: <br />The site is dry. No evidence of groundwater was observed. <br />Gen. Compliance With Mine Plan: <br />Phase I area has been worked and includes stockpiles and some reserve materials. Phases 2 and 3 have not <br />been mined. <br />Reclamation Success: <br />No reclamation has begun at this point. <br />Revegetation: <br />No revegetation has taken place although some vegetation is establishing on its own. There are some weeds <br />growing on site, including some tamarisk. Operator reports that they do a mowing and spraying program for <br />weed management. <br />Sediment Control: <br />Page 2 of 5 <br />