On April 16, 2015, about 2245 mountain daylight time, a Fairchild SA227-AC, twin-engine airplane, N2691W, operating as Key Lime flight 168, was substantially damaged after an uncontained engine failure during climb near Rifle, Colorado. The pilot was not injured. The airplane was registered to CBG LLC, Wilsonville, Oregon, and was operated by Key Lime Air Corporation, Englewood, Colorado. Dark, night, instrument meteorological conditions (IMC) prevailed at the time of the accident and an instrument flight rules (IFR) flight plan had been filed for the Title 14 Code of Federal Regulations Part 135 cargo flight. The airplane departed from Garfield County Regional Airport (RIL), Rifle, Colorado, at 2237 and was destined for Denver International Airport (DEN), Denver, Colorado The pilot reported that during a climb, when still well below the tops of nearby mountains, he heard a "bang" followed by a complete loss of power and engine fire indications from the right engine. After completing appropriate checklist items, the pilot declared an emergency and diverted to Grand Junction Regional Airport (GJT), Grand Junction, Colorado, for an instrument approach and landing at 2311. The airplane landed without further incident. A post accident examination of the airplane revealed the second stage turbine rotor from the right engine had separated. One portion of the rotor exited through the left side of the engine and nacelle structure, penetrated the right side of the fuselage, and came to rest inside the fuselage wall. Other portions of the separated rotor exited through the right side of the engine. There was thermal damage to the engine and the inside of the nacelle structure, but no evidence of a sustained fire in that area. The examination of the turbine engine noted fatigue cracks on the 2nd stage rotor disk. The rotor disk had a reported 3,901.4 hrs., and 4,143 cycles