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January 2,2013 C-1981-012/New Elk Mine LDS <br /> Inspection Topic Summary <br /> NOTE: Y=Inspected N=Not Inspected R=Comments Noted V=Violation Issued NA=Not Applicable <br /> N -Air Resource Protection N -Roads <br /> N -Availability of Records N -Reclamation Success <br /> N -Backfill& Grading N -Revegetation <br /> R -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 /> R - Gen. Compliance With Mine Plan N - Support Facilities Not On-site <br /> N - Other N - Special Categories Of Mining <br /> N -Processing Waste N -Topsoil <br /> COMMENTS <br /> This was a partial inspection completed by Leigh Simmons and Dan Hernandez of Colorado Division for <br /> Reclamation,Mining and Safety, (the Division).At various times during the inspection the inspectors were alone, <br /> or accompanied by Bobby Steele or Dennis Wilson of New Elk Coal Company, (NECC). <br /> The weather was fine,dry and cold throughout,with a small amount of snow on the ground. <br /> The New Elk mine continues in Temporary Cessation.As noted in previous inspections,a small amount of coal <br /> (-5-6 truckloads per day)continues to be sent to Lyons,CO. <br /> David Stone(Chief Operating Officer) and Louis Head(Financial Controller)remain optimistic that a contract <br /> with a new customer is imminent, and that the mine will begin producing coal again soon. In the meantime, <br /> additional funding has been secured from Marret Asset Management to ensure that the mine remains solvent in the <br /> short term. <br /> The mine continues to operate with a bare minimum of staff(on Wednesday 2nd January,just 13 staff were <br /> present,according to the sign in board). The Division is sympathetic to the difficult financial situation that NECC <br /> is attempting to manage,and has shown considerable flexibility to date in terms of ensuring that the mine is run in <br /> compliance with its permit.However, a number of issues that were identified in the last complete inspection <br /> (10/16/2012)have yet to be addressed. In the interests of constructive cooperation,this report will highlight those <br /> issues and categorise them into three levels of priority,where the most urgent are designated Level 1. It is critical <br /> that NECC allocates sufficient resources to make substantive progress towards tackling these issues before the <br /> next inspection in order to satisfy the Division that environmental compliance is being given the necessary <br /> attention. Generally,these compliance issues will be under the HYDROLOGIC BALANCE heading of this report. <br /> EXCESS SPOIL and DEVELOPMENT WASTE—Rule 4.09 <br /> Placement;Drainage Control; Surface Stabilization: <br /> Both the reclaimed Development Coal Waste Pile and the new DWDA appeared stable and well drained.The <br /> slopes were partially covered in snow making assessment of erosion and vegetative cover very difficult <br /> Number of Partial Inspection this Fiscal Year: 4 <br /> Number of Complete Inspections this Fiscal Year: 2 <br /> Page 2 of 10 <br />