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Tim Cazier <br /> Page 2 <br /> October 16, 2014 <br /> 1. The Mineral Mountain Project analysis excluded sulfate from the calculation of Acid Base <br /> Potential. Although the exclusion of sulfate in the analysis is consistent with standard acid- <br /> base accounting procedures, a portion of the sulfate in the samples may be an oxidation <br /> product of pyritic sulfur(rather than from non-acid producing sulfates such as gypsum or <br /> barite), resulting in the analysis underestimating the amount of pyritic sulfur that will be <br /> exposed during mining and will be available for generating acid. Therefore,the analysis <br /> may underestimate the acid generation potential of mined rock. <br /> 2. Sample MH-3 is a spot sample from a 1-inch wide vein. DRMS considers it difficult to <br /> predict with a high level of accuracy the number and widths of such veins that will be <br /> exposed during mining. If the mining operation exposes a large volume of rock that has the <br /> composition of sample MH-3, the overall acid-generating potential of the operation may be <br /> much greater than indicated by the Acid Rock Report. DRMS considers that, although the <br /> results of the 11-day water-bath leach evaluation of MH-3 may provide a first-order <br /> approximation of the acid-producing potential of vein material, the results are not sufficient <br /> to conclude the vein material is not significantly acid producing. <br /> A general consideration when determining DMO status is that mining activities can be managed to <br /> reduce acid generation by mixing buffering materials with acid-generating materials, and by preventing <br /> exposure of acid-generating materials to oxidation and water. In a bond-forfeiture scenario,however, a <br /> significant period of time can elapse between cessation of mine operations and reclamation. During this <br /> passage of time, acid reduction measures may not be conducted; therefore, the acid and heavy metal <br /> generating potential of a mine without considering active management of materials is appropriate in a <br /> determination of DMO status. <br />