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PERMIT #: P- 2013 -002 <br />INSPECTOR'S INITIALS: TCW <br />INSPECTION DATE: August 7, 2013 <br />OBSERVATIONS <br />This was a partial warranty release inspection to evaluate the reclamation progress and potential for partial <br />bond release for the N0L Present with me during the inspection were the operator representative, Ms. <br />Angela Bellantoni, and Ms. Stephanie Carter of the USBLM. The NOI site is located on the north - facing slope <br />of Dawson Mountain in the southern half of 514, T19S, R71W about 4.5 miles south of Canon City. The site <br />was accessed via a gated road off of Temple Canyon Road. <br />Thirteen borings were drilled from 4 drill pads as part of the mineral exploration for this N0L Borehole <br />abandonment logs were submitted to DRMS in the surety release package, dated July 15, 2013. Ms. Bellantoni <br />indicated that no water was encountered in any of the holes. There was minor soil staining from oil /grease <br />likely from the drilling operations noted in several of the drill sites. Additionally, minor trash /debris was <br />noted. <br />Three of the drill pads are located in an existing primitive road. The upper pad was accessed by a new road <br />extending from the northern end of the upper switchback in the old roadway. The road appears to have been <br />put in using a cut - and -fill system. <br />The slopes are moderately to very steep, and there were areas noted where rocks had fallen off the upper <br />slopes into the roadway. The upper part of the new road construction had minor tension cracks that are likely <br />associated with fill settlement and recent rain in the area. The roadways and drill pads have not been graded <br />or reclaimed. Ms. Bellantoni indicated that the Operator will likely apply for a mine permit, and the roads will <br />be included in the permit boundary as disturbed area. <br />No trenching or blasting was done as part of the prospect work. <br />The area east of the prospect drill locations, known as "The Pad" was not disturbed during the NOI activities. <br />As mentioned in the pre- operation DRMS inspection dated February 7, 2013, the USTs located in this area <br />should be removed should this area not be included in a future mine permit, or in the event that DRMS does <br />not issue a mine reclamation permit, or as part of the final reclamation after prospecting /mining is <br />terminated. <br />RECOMMENDATIONS: <br />A bond calculation was done in February 2013. Based on the site observations, this estimate is current and <br />adequate. <br />DRMS recommends a surety reduction for this site, based on the abandonment of the boreholes and that no <br />trenching occurred. There are some areas of stained soil and trash that needs to be removed from the site. If <br />these areas are cleaned up and photographic documentation submitted to DRMS prior to August 22, 2013, <br />DRMS can release the financial warranties for the drill hole abandonment ($15,579) and trench backfilling <br />($90) reclamation activities. <br />Page 2 of 8 <br />