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September 19, 2012 C- 1981 - 018 /Deserado Mine <br />Inspection Topic Summary <br />NOTE: Y= Inspected N =Not Inspected R= Comments Noted V= Violation Issued NA Applicable <br />R - Air Resource Protection R - Roads <br />R - Availability of Records R - Reclamation Success <br />N - Backfill & Grading N - Revegetation <br />N - Excess Spoil and Dev. Waste N - Subsidence <br />N - Explosives N - Slides and Other Damage <br />N - Fish & Wildlife N - Support Facilities On -site <br />R - Hydrologic Balance R - Signs and Markers <br />N - Gen. Compliance With Mine Plan N - Support Facilities Not On -site <br />N - Other N - Special Categories Of Mining <br />R - Processing Waste R - Topsoil <br />COMMENTS <br />ZTT <br />This was a complete inspection of Deserado Mine conducted by Zach Trujillo on September 19, 2012. Juff <br />Dubbert of Blue Mountain Energy, Inc. accompanied myself on the inspection. <br />AIR RESOURCE PROTECTION — Rule 4.17: <br />No signs of fugitive dust were observed. <br />AVAILABILITY OF RECORDS — Rule 5.02.4(1): <br />All compliance records are located at Deserado Mine. Please see the Division's Availability of Records form at the <br />end of this inspection report for more details. <br />HYDROLOGIC BALANCE -Rule 4.05 <br />Drainage Control 4.05.1, 4.05.2, 4.05.3, Siltation Structures 4.05.5, 4.05.6; Discharge Structures 4.05.7, 4.05.10; <br />Diversions 4.05.4; Effluent Limits 4.05.2; Ground Water Monitoring 4.05.13; Surface Water Monitoring 4.05.13; <br />Drainage — Acid and Toxic Materials 4.05.8; Impoundments 4.05.6, 4.05.9; Stream Buffer Zones 4.05.18: <br />Culverts along the facility area were clear of sediment. No surface runoff control issues were noted during this <br />inspection. <br />Ponds SS -1, SS -2, RR -1, RP -1, RP -4 and RP -5 were all dry. Embankments were stable and well vegetated. <br />Pond RP -2/3 held minimal water in southeast cell. Other two cells were dry. Embankments were well vegetated <br />and stable. Pond RP -2/3 was not discharging at the time on inspection. <br />Ponds DP -1, PP -1 and PP -2 held water. None of the ponds were discharging at the time of inspection and <br />embankments were stable. The ditches along the facility area and to the Pond DP -1 were stable and established <br />allowing for proper drainage. <br />Number of Partial Inspection this Fiscal Year: 2 <br />Number of Complete Inspections this Fiscal Year: 1 <br />Page 2 of 6 <br />