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STATE OF COLORADO <br />' DIVISION OF RECLAMATION, MINING AND SAFETY <br />Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866-3567 <br />FAX: (303) 832-8106 <br />/June 1, 2009 <br />Mr. Richard E. Blubaugh <br />-4OPowertech (USA) Inc. <br />5575 DTC Parkway, Suite 140 <br />Greenwood Village, CO 80111 <br />COLORADO <br />D I V I S 10 N O F <br />RECLAMATION <br />MINING <br />DOUTA WRFIDENTAL SAFETY <br />Bill Ritter, Jr. <br />Governor <br />Harris D. Sherman <br />Executive Director <br />Ronald W. Cattany <br />Division Director <br />Natural Resource Trustee <br />RE: Acceptance of Modification Withdrawal, Notice of Intent Modification MD-02, <br />Centennial Uranium Project, File No. P-2008-043 <br />Dear Mr. Blubaugh: <br />This letter is the response of the Division of Reclamation, Mining, and Safety (DRMS) to Powertech's letter <br />dated April 14, 2009 and the letter from Powertech's counsel Fognani and Faught dated April 15, 2009. <br />1. Based on Powertech's letters and request, DRMS acknowledges that Powertech has withdrawn its <br />proposed modification MD-02 to prospecting notice P-2008-043 from DRMS consideration. <br />2. Powertech's April 14, 2009 letter outlines in general terms Powertech's plan to use Baker tanks to <br />contain pumped ground water generated during aquifer testing. DBMS hereby notifies Powertech that the <br />plan will require approval of a modification to prospecting notice P-2008-043. Powertech's plan to <br />subsequently re-inject the stored water also requires a modification to the notice as DRMS and EPA have <br />separate jurisdiction over underground injection in this matter. These issues were discussed in a meeting <br />between DRMS and Powertech at the Powertech Wellington office on April 30, 2009. <br />3. Page 5 of Powertech's April 14, 2009 letter states that the information DRMS had requested was <br />provided in MD-02 and that from Powertech's perspective, based on DRMS's March 31, 2009 MD-02 <br />review letter, "there was a misunderstanding about what was required." To clarify, DRMS had discussions <br />with Powertech prior to submittal of MD-02 in which DRMS stated that in order to approve surface pit <br />disposal of pumped ground water, Powertech must demonstrate that such disposal would minimize impacts <br />to the uppermost aquifer. In those discussions, there was agreement that a mixing model including the pit <br />disposed water and the uppermost aquifer ground water would be one acceptable way of making the required <br />demonstration. The details of how a mixing model would be constructed were not discussed. When <br />Powertech submitted MD-02, DRMS determined that the mixing model provided included overly simplistic <br />assumptions of how the waters would mix that had no basis in hydrologic principles. Therefore, the March <br />31, 2009 review letter laid out in detail that information necessary to construct an acceptable mixing model. <br />4. The April 15, 2009 Fognani and Faught letter states and describes Powertech's position that <br />prospecting activities that have occurred and that are ongoing at the Centennial and Indian Springs Uranium <br />Project are not Baseline Site Characterization, as that term is used in the Colorado Mined Land Reclamation <br />Act, 34-32-101 et seq. C.R.S. (Act). The DRMS has made the determination that many of the subject <br />Office of Office of <br />Mined Land Reclamation Denver • Grand Junction • Durango Active and Inactive Mines