2013-01-09_INSPECTION - M2007069

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PERMIT #: M- 2007 -069 INSPECTOR'S INITIALS: TC1 INSPECTION DATE: September 27, 2012 OBSERVATIONS This inspection was initiated by an application for succession of operator (SO). The focus of this inspection was to assess the operation status and determine what, if any activities might have an impact of the financial warranty liability. Mr. Joe Gagliano represented the new Operator (Tony J. Beltramo and Sons, Inc.). The Pheasant Run Pit is located in Pueblo County, approximately 7 miles west of Fowler, CO. The access road is 0.3 mile east of the intersection of U.S. Hwy 50 and County Road 721. The site entrance is located off the access road about 1/8 mile north of U.S. Hwy 50. Inspection: A permit sign was prominently displayed at the site entrance (see Photo 1). The permit boundary is marked in the form of a berm. The site was not active at the time of the inspection. Mr. Gagliano explained this is a dry operation; material is processed without washing (screening only). Mining is currently confined to the north side of the High Line Canal. Highwalls were observed to be between 6 to 10 feet in height and at approximately 1H:1V slopes. They appeared to be stable (see Photo 2). Several material stockpiles (see Photos 3 and 4) and a topsoil stockpile (see Photo 5) were observed. No exposed groundwater was observed, nor was any stormwater retained onsite. Note there was a significant rain the night before this inspection. No noxious weeds were observed, however the site entrance road is covered with Russian thistle. Site History: The permit file indicates a temporary bridge across the High Line Canal was planned to access the permitted area south of the canal. Mr. Gagliano explained the bridge is no longer being considered. The permit file documentation also references an agreement between the former Operator and the Rocky Ford High Line Canal Company that stipulated the former Operator was to commission a "geological study" for the purpose of determining potential hydrologic and geotechnical stability constraints necessary to protect the function and reliability of the canal. The Division has no record of this study being completed. This inspector contacted Mr. Dan Henrichs (High Line Canal Co. superintendent) to inquire as to whether the geological study was completed. Mr. Henrichs stated the study had not been completed and that in accordance with the aforementioned agreement and the complaint filed by the canal company on May 30, 2009 the easement granted for the temporary bridge was withdrawn by the canal company. Without the bridge to provide access to the material south of the canal, phase 1 of the mine plan could not be implemented. As the geological study was not completed, no piezometers were installed; and as the access easement for the temporary bridge was withdrawn, no bridge was installed. Therefore, the Division has determined that the inclusion of these two items (tasks 001 & 002) in the original reclamation liability estimate is no longer appropriate. File Review: • The previous inspection was performed on December 21, 2007. This was a pre- operation inspection. • The total permitted area is 92.70 acres of which 41.15 acres may be affected area. • Annual fees and reports are up to date through 2012. The 2012 annual report indicates mining activity has disturbed a total of 8.6 acres — all in the phase 2 area. • The current is a $65,000 financial warranty (corporate surety) is based on the original permit application. • A revised reclamation cost estimate for the site is enclosed. Unit costs are updated from the original Page 2 of 4