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November 5,2012 C-1981-022/Elk Creek Mine SLB Inspection Topic Summary NOTE: Y=Inspected N=Not Inspected R=Comments Noted V=Violation Issued NA=Not Applicable R -Air Resource Protection N -Roads N -Availability of Records N -Reclamation Success N -Backfill& Grading N -Revegetation N -Excess Spoil and Dev.Waste N - Subsidence N -Explosives N - Slides and Other Damage N -Fish&Wildlife Y - Support Facilities On-site R -Hydrologic Balance R - Signs and Markers N -Gen. Compliance With Mine Plan NA - Support Facilities Not On-site R -Other NA - Special Categories Of Mining N -Processing Waste R -Topsoil COMMENTS This was a partial inspection of the Elk Creek Mine conducted by Susan Burgmaier of CDRMS. Jim Kiger of Oxbow Mining,LLC was present during the inspection. Weather conditions were clear and warm; ground conditions were very dry. Coal from the D seam was being produced at the Elk Creek portal and was stockpiled at the lower facilities area. AIR RESOURCE PROTECTION—Rule 4.17: Ground conditions were quite dry,but fugitive dust was not apparent. HYDROLOGIC BALANCE -Rule 4.05 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; Diversions 4.05.4; Effluent Limits 4.05.2; Ground Water Monitoring 4.05.13; Surface Water Monitoring 4.05.13; Drainage—Acid and Toxic Materials 4.05.8; Impoundments 4.05.6,4.05.9; Stream Buffer Zones 4.05.18: Ponds A,B, and D held water; none of the ponds were discharging. The Sanborn Creek fan site and East Yard ponds were dry. Stormwater controls,berms and straw wattles,were in place at the active gob vent borehole sites observed(GVB- LW-18-OIB and GVB-LW-18-02B). The straw wattles at GVB-LW7-04,which is inactive but not yet reclaimed, needed to be replaced. Also, sediment control(approved measures such as berms, silt fence, straw wattles,bales, etc.) should be maintained at those sites that have been reclaimed but vegetation has not yet been established. Sediment control at the Bear Creek fan site was in place as required in the approved permit application package. Drainage from the stockpile area,between ponds D and B and draining to Pond B, appears to be blocked by the footprint of the coal stockpile. The stockpile extends across the entire drainage,essentially damming the drainage flow from the north,creating a pooling area around the manway into the stacking tube. At the time of the inspection,the area was dry;no water was impounded behind the stockpile. A review of the surface drainage plan in the permit application package (Map 2.05-MI)indicates that flow should be allowed to travel on the east and west sides of the stockpile through the facilities yard to Pond B, and that the topography is sloped downgradient Number of Partial Inspection this Fiscal Year: 5 Number of Complete Inspections this Fiscal Year: I Page 2 of 5