2013-02-06_REVISION - C1991078 (6)

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Soil Loss Demonstration A soil loss demonstration for the reclaimed disturbed area was incorporated into Section 2.05.3(4) of the permit document with TR -10 and MR -11 in 2009. Sediment modeling indicates that there is no increase in sediment loading from the mine site, and that in fact sediment production from the reclaimed area is reduced in comparison to adjacent un -mined areas. The contribution of suspended solids to stream flow outside the permit area was evaluated by comparison of vegetation cover within the permit area to an adjacent undisturbed area. The Universal Soil Loss Equation was utilized to estimate the sediment loss from the two areas. The results indicate that the revegetated area may lose 0.31 tons per acre per year to erosion, while the baseline conditions may lose 0.35 tons per acre per year. The calculations also demonstrate that untreated drainage from the reclaimed area will contribute fewer suspended solids to stream flow outside the permit area than will untreated drainage from the natural surrounding area. In conclusion there are no offsite impacts resulting from the operations at the Hamilton Mine site. Permanent Sealing of Monitoring Wells and Completion of all Reclamation Obligations One bedrock monitoring well BW -2 located within the permit boundary has recently been properly plugged and abandoned at the Division's request. The other two bedrock monitoring wells BW -1 and BW -3 are located off the permit boundary on David and Terri Andrews property. The Andrews wish to retain these wells for future use and the Operator's consultant on behalf of the landowner filed for Well Permits with the Colorado Division of Water Resources. Well permits were issued for BW 1 (Permit No. 290175) and BW3 (Permit No. 290176). With regard to the 7 alluvial wells AW -1 through AW -7, AW- 1, 2, and 3 have been permanently sealed. AW -4 and 6 located offsite along Naturita Creek have been destroyed apparently due to their construction and location immediately adjacent to the creek. Wells AW -5 and 7 also located offsite along Naturita Creek will be retained for use by the landowner John Reams. Proper well permits for these wells were obtained by the Operator's consultant on behalf of the landowner (AW -5; Permit No. 289878 and AW -7 Permit No. 28922). Rule 4.05.14(2) requires the operator and the surface owner of the lands where the well is located to jointly submit a written request for approval of transfer to the Division. The requests were submitted to the Division on December 31, 2012. Honeywood Coal Company submitted abandonment reports to the Division for wells that were properly sealed and abandon including BW -2, and AW -1, 2, 3 on December 5, 2012. The only remaining structure at the site is Pond B located on the Andrews property which will be retained as a permanent post -mine feature as described above. The Operator has made the demonstration required by Rule 4.05.9(13) for permanent impoundments. Implementation of the Approved Post Mining Land Use The approved post mine land use of Rangeland and Wildlife Habitat is discussed in section 2.05.5 of the permit. The Operators reclamation plan and revegetation plan was designed to restore and improve the disturbed land for these uses. As discussed in detail above, the entire site qualifies for final Phase III bond release, the reclamation and revegetation plans have been implemented successfully and the post mine land use has been achieved. It has been noted in Division inspections that the reclaimed land has been utilized by cattle and wildlife throughout the reclaimed area providing evidence this land is currently being used in the designed capacity. Page 15 of 16