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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 />August 29, 2011 <br />Mr. Jim McFarland <br />Hall Irwin Corporation <br />301 Centennial Drive <br />Milliken, CO 80543 <br />Re: Baseline Resource, Permit M- 1997 -058, Financial Warranty Reduction Approval, Revision SR03 <br />Dear Mr. McFarland: <br />On August 29, 2011 the Division of Reclamation, Mining and Safety approved your request for a Financial Warranty <br />Reduction to $711,750.00. This reduction is based on the SEO approval of the completed slurry walls for the Walker <br />Reservoir Phase 1 and Walker Reservoir South. The reduction of $301,750.00 is comprised of the combined 20% <br />bonds posted for these two slurry walls. This decision reduces the amount of the financial warranty, and does not <br />approve any release of reclamation responsibility for the tasks associated with this request. <br />Please provide a rider to the current Financial Warranty, or submit a new Financial Warranty reflecting this reduction. <br />If you wish to submit a different type of Financial Warranty, please contact our office for the applicable form. <br />If you have any questions, please contact me. <br />Sincerely, <br />Eric C. Scott <br />Environmental Protection Specialist <br />cc: Danna Ortiz, Planit, LLC <br />Office of <br />Mined Land Reclamation <br />STATE OF COLORADO <br />Denver • Grand Junction • Durango <br />COLORADO <br />D I V I S I O N O F <br />RECLAMATION <br />MINING <br />—&— <br />SAFETY <br />John W. Hickenlooper <br />Governor <br />Mike King <br />Executive Director <br />Loretta Pineda <br />Director <br />Office of <br />Active and Inactive Mines <br />