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OURAY SILVER MINES INC. <br />PO Box 564. 1900 Main Street. Unit I. Oura. Colorado. USA 81427 <br />Tel 970-325-9830 - Fax 970-325-9824 <br />April 1.2016 <br />VIA U.S. Mail and Email <br />Travis Marshall, Environmental Protection Specialist <br />Colorado Division of Reclamation. Mining, and Safety <br />1313 Sherman Street. Room 215 <br />Denver, CO 80203 <br />RE: Activity and Monitoring Update <br />RIECOVOI <br />APR p o ZO15 <br />pMS10N OF� �ETY ATION <br />MINING <br />The Revenue Mine (the Mine), located 5 miles sout f Ouray, CO, is owned and operated <br />by Ouray Silver Mines Inc. (OSMI) under pe •• M2011032 Permit). On January 21 2016 <br />OSMT informed the Division of Reclamation • , .n Safety (DRMS) in writing that the <br />Mine had been in a period of reduced activity for six months. The January 22"d letter stated that <br />the site was under care and maintenance, summarized the current site status. and provided the <br />regulatory notice elements required under DRMS Rule § 1.13.5 for temporary cessation. <br />However, because OSMI was planning a drilling campaign and metallurgical process <br />improvements for 2016. a decision on temporary cessation was postponed until June 30. 2016. In <br />late February 2016. the Mine began its planned drilling and metallurgical work. including some <br />waste rock removal. As a result, no decision on temporary cessation will be needed. <br />DRMS approved a reduced sampling program on November 13, 2016. Sampling at upgradient <br />wells GW -IA and GW -1B was eliminated based on sufficient baseline data and no immediate <br />plans to disturb the Atlas tailings. Sampling at GW -2A, GW -2B, GW -3A, and GW -3B continues <br />on a quarterly basis. Underground stations UG -2 and UG -3 were removed from the sampling <br />program because of a long-term lack of mining in the Atlas and Cumberland drifts. Sampling at <br />UG -1. UG -4. and UG -5 was reduced to an annual frequency because of reduced activity. <br />However, under the current water management scenario, with Yellow Rose water being routed to <br />the Yellow Rose Mine Pool to increase residence time, there is no flow at UG -4. The water <br />leaves the Yellow Rose Mine Pool via pipe, entering the mine effluent before UG -5. Therefore, <br />no sampling can occur at UG -4 while this mine water management system is in place. UG -1 and <br />UG -5 annual sampling occurred in late March 2016, subsequent to the initiation of the current <br />drilling campaign. Underground activity is expected to stop temporarily in late Spring 2016 <br />while a prefeasibility study is completed and evaluate; therefore, OSMI proposes that the no <br />additional underground sampling be required until that evaluation has occurred. <br />OSMI is invested in bringing the Mine to production, and is actively working towards that goal. <br />We look forward to continuing to work with DRMS in achieving production. <br />Sincerely, <br />Clinton L. Fletcher <br />President, Ouray Silver Mines Inc. <br />