2013-01-25_INSPECTION - M1977410

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OBSERVATIONS PERMIT #: M -1977 -410 INSPECTOR'S INITIALS: MAC INSPECTION DATE: January 17, 2013 The inspection was conducted by Michael Cunningham of the Division of Reclamation, Mining and Safety (Division). Tom Hendricks of Calais Resources Colorado, Inc. was also present for the inspection. The Cross Gold Mine is located 5 miles west of Nederland, CO at an elevation of 9,700 ft. The site is permitted for 2 acres and the post- mining land use is residential. The weather was sunny and 6" - 12" of snow covered the ground at the time of the inspection. The inspection was conducted in response to a Notice of Temporary Cessation (TC) received by the Division on January 4, 2013. The purpose of the inspection was to verify that there are no reclamation or performance standard issues or problems that would prevent the site from entering into a five year period of TC. According to the Notice of TC, the site has been inactive since April 4, 2012 due to financial constraints. The Notice of TC maintains that the financial warranty is in good standing and that maintenance activities at the site are ongoing; however, the Notice did not provide a plan for resumption of mining. Pursuant to Rule 1.13.6(1), the Division notified Boulder County and the Town of Nederland of the request for TC; the notices were mailed on January 17, 2013. Hydrologic Balance: Coon Track Creek bisects the site and drains the entire watershed that surrounds the Cross Gold Mine. Coon Track Creek is a tributary of Beaver Creek, which flows into Middle Boulder Creek. The Coon Track Creek flows throughout the year due to discharges from the Cross and Caribou mines. The discharge from the two mines is regulated under a National Pollutant Discharge Elimination System (NPDES) Permit. The water from the Cross Mine reports to a lined pond (Pond 1) located on the north side of the office building. The Operator adds lime to Pond 1 on a daily basis to drop out zinc in order to meet discharge standards. The water from Pond 1 reports to another lined pond (Pond 2) located immediately east of the office building. The water from the Caribou mine does not require treatment and reports directly to Pond 2. The water in Pond 2 discharges into an elevated pipe and into Coon Track Creek; the average discharge rate is 19 gpm. The Division reviewed the daily water quality logs and found everything to be in order. The Operator will submit the 4th Quarter water quality report to the Colorado Department of Public Health and Environment in the near future. Tom Hendricks keeps the daily water quality logs and adds lime to Pond 1 on daily basis and will continue to do so throughout any period of TC. Gen. Compliance With Mine Plan: The Cross Gold Mine is an underground mine with limited surface facilities; no processing of ore occurs on site. The Cross Mine portal is located on the west side of the office and dry room building. The Operator has removed several structures in the past year including the snow shed for the Cross Mine Portal and a boarding house located on the south side of the warehouse /core storage building. The explosives are now being stored in a blasting cap magazine and a powder magazine, which are located on the south side of the warehouse; both of the magazines were locked and secure. The Operator has stockpiled approximately 300 tons of waste rock from the Apache cross -cut along the east side of the access road and immediately south of the warehouse. On April 9, 2012, the Division approved Amendment No. 1 (AM -01). The approval of AM -01 increased the affected area from 2 acres to 9.35 acres. In addition, the amendment revised the Mining Plan to allow for the development of a new decline portal. The approval of AM -01 resulted in a financial warranty increase of Page 2 of 5