2013-09-03_REVISION - C1981014 (4)

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energy fuels coal, inc. southfield mine • post office box 459 • florence. colorado 81226 • (719) 784 -6395 August 27, 2013 The Corley Company 2605 Constellation Dr Colorado Springs, CO 80906 RE: RESPONSE TO LETTER OF OBJECTION CONCERNING TR -40, MW -NW MONITOR WELL Dear Corley Company: if The Division of Reclamation Mining & Safety (DRMS) has forwarded to Energy Fuels Coal, Inc (EFCI), your email dated August 21, 2013, concerning your objection to Technical Revision No. 40 (TR -40) pertaining to the monitor well MW -NW located at the Southfield mine. As you acknowledge, Energy Fuels is using Bishop, Brogden & Associates ( "BBA ") to assist us in the evaluation of the MW -NW situation. The Division's staff has also evaluated issues addressed by TR- 40. We would like to make a few clarifications with regard to your letter of objection emailed to the Division. Regarding the monitor wells and the drill holes you reference, monitor well MW -65, Drill Holes SF87 -07 and SF87 -09 had reported water level elevations ranging from 4.9 feet to 6.7 feet in comparison to each other. However, other comparisons differ. Monitor well MW -23 compared to MW -65, SF87 -07 and SF87 -09 ranges from 136.8 feet to 143.5 feet lower for water level elevations. Water levels in Monitor well MW -16, although now dry, ranged from 78.6 feet to 85.3 feet lower than MW -65, SF87 -07 and SF87 -09 and 58.2 feet higher than MW -23. EFCI does not have an elevation of the point in Second Alkali Creek that you reference nor a water level for the Corley Mine Well. The Division's Hydrologic Review of Southfield (the " Boulay Report ") generated by Mike Boulay, concludes that Second Alkali Creek is not interconnected to the Southfield mine workings. Concerning your statement about Drill Hole SF87 -07, EFCI believes that because SF87 -07 was mined through and pillared, the resultant caving action crushed and or broke the PVC casing above the mine workings thereby pinching off (or "plugging "off) the casing's continuity to the mine workings. This conclusion is based on the fact that the same thing previously occurred at monitor wells MW -8 and MW -10 which also had been mined through. Such breakage to the PVC casing allows water in. This type of impact on wells is an expected and normal aspect of a monitoring program in most if not all underground coal mines. Your letter states that you tested SF87 -07 in a similar water test as EFCI used on MW -NW in order to demonstrate that the well is open to the Southfield mine workings. We understand that the