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la) The clave of cessation <br />The period of reduced activity began on July. 22. 2015. as marked by the end of drift <br />development. The last underground blast, used to create a ventilation shalt, occurred on <br />September 9. 2015. <br />(h) The reasons for non -production or cessation Of the alining operation <br />Mining ceased largely because of lower metal prices: however. OSMI believes that mine <br />improvements can lead to profitable production. <br />(c) .1 plan for resumption (f !mining <br />OSMI is currently budgeting for a 2016 drilling campaign and a metallurgical process <br />evaluation. It is anticipated that this work would begin in the Spring of 2016. OSMi anticipates <br />that extractixc metallurgical processing will commence in February 2017. <br />(d) The measures to he taken to comply with reclamation requirements and/or other activities <br />related to the per/ormance .standards of Section 3.1 while the mine is in !emporurt' C'essatioll <br />OSMI continues to maintain the Mine and perform all required sampling and reporting. as <br />required by the Mine permits. In addition to site maintenance. OSMI personnel perform <br />stormy%ater. surface eater. drinking water system. outfall. groundwater and underground water <br />quality sampling as required by applicable permits. On November 13. 2015. DRMS approved a <br />reduction in underground water quality sampling and reporting requirements based on reduced <br />site acti\ it) . While water quality is improv ing «ith the reduced acti\ ity. OSMI continues to <br />evaluate water management and treatment options under a Toxicity Reduction Evaluation Work <br />Plan. <br />(e) De111o11S1ralion that the existing Financial JI''arralllr is adequate to corer the reclamation <br />liahilily <br />The existing financial warranty was established to cover reclamation ofa producing mine under <br />Amendment 1 to the Permit. Because OSMI has not initiated production under the amended <br />permit. there has been no placement of tailings or ‘iaste rock under the permit. The financial <br />warranty was deemed enough to account for work that has not yet occurred: therefore. it is more <br />than adequate for the current state of work at the Mine. <br />Sincerely. <br />Clinton L. Fletcher <br />President. Oura) Silver Mines Inc. <br />Page 2 of 2 <br />