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RECEi'~/ED <br />ENERGY, INC. <br />February 20, 2003 <br />FEB 2 y 2003 <br />Division of Minerals and Geology <br />ASubsidimp of <br />Desercl Gener~on & <br />Tnusmiesion cnnpenaive M[. Jim Stazk <br />Division of Minerals and Geology <br />1313 Sherman Street, Room 215 <br />Denver, CO 80203 <br />Deaz Jim: <br />Re: 2001 Annual Subsidence Inspection Report addendum <br />Blue Mountain Energy, Inc. <br />Deserado Mine ID No. C-1981-018 <br />As requested by DMG,this letter addresses surface observations over the B-seam mining area, <br />primazily Scullion Gulch, not identified in the 2001 report. <br />Surface cracking with mild visible subsidence was noted in Scullion Gulch at the Raven Park <br />Reservoir. Cracking appeared limited to the northern portion of the embankment at an elevation <br />well above the high water mark. Due to the location of the cracks and the infrequent and limited <br />filling of the reservoir it was felt that the cracks posed little risk of structural failure to the <br />embankment. <br />The attached photos show the magnitude of the surface expression of subsidence. <br />Sincerely, <br />Scott Wanstedt <br />Environmental Engineer <br />cc: Jeff Dubbert <br />File <br />3607 County RD #65 <br />Rangely, CO 81648 <br />970675-0300 <br />Faz 970675-0399 <br />