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Ouray Silver Mines Inc. <br /> Technical Revision 09 February 1,2017 <br /> These structures will eliminate snow accumulation on top of the propane tanks,protecting both <br /> the tanks and eliminating the tedious work of locating and removing the snow for required <br /> maintenance or inspection work. The sheds are non-permanent structures,without a foundation, <br /> that can easily be disassembled and removed from site. They will be built to withstand the harsh <br /> winter conditions and snow loads. Propane sheds are to cover existing bonded tanks. <br /> Administration Building <br /> The proposed Administration Building will expand existing bonded square footage (2350 sq. ft.) <br /> associated with the existing Administration and Miner's Dry with an addition to the south. <br /> Because the proposed building is larger, there will be an additional 1410 square feet of building <br /> foundation and footprint(Table 7, Map 3),the expansion will be of a similar style as the existing <br /> structure. Designs are not yet available. <br /> Switch Yard Building <br /> The proposed expansion of roofing in the Battery Building area will be referred to as the Switch <br /> Yard building (Map 3). OSMI proposes to expand the roofing to cover the existing bonded <br /> structures associate with the battery building, switch yard, and the mine locomotive charging and <br /> fueling area, as well as provide bulk materials covered storage. The building will protect the rail <br /> yard,mining equipment, and rail tracks,preventing icing and damage from snowfall and major <br /> storm. The Battery Building(previously bonded)and surrounding previously bonded structures <br /> will have a warehouse structure to house the rail yard, locomotive charging, fueling area and <br /> bulk storage.No new foundation is proposed. <br /> 4.5 Sale of Waste Rock and Tailings Blend <br /> Waste rock at the Mine is generally inert with high quality leachate, as is evidenced by the lack <br /> of acidic mine drainage over the Mine's 140-year history. Existing waste rock at the Revenue <br /> Mine was analyzed by SVL Analytical in Kellogg Idaho prior to 1999. Four samples were taken: <br /> One from the north end of the waste rock pile, one from the south end and two other samples <br /> from the low-grade stockpile that existed at that time. This leachate analysis was submitted to <br /> DRMS, and shows that the waste rock is inert. The pH of the waste rock samples was 8.33 and <br /> 8.22,respectively and zinc levels were low. More recently, June 2014 and June 2016,waste <br /> rock samples were subjected to a synthetic precipitation leachate procedure(SPLP) at ACZ in <br /> Steamboat Springs. Results(Table 8) are consistent with previous work. Waste rock SPLP <br /> leachate was circum-neutral with nondetect cadmium(<0.001 mg/L), low lead concentrations <br /> (0.0018 mg/L), and low zinc concentrations(0.01 mg/L). <br /> Tailings from the existing mill were subject to SPLP during mill commissioning. Results from <br /> mill commissioning in February 2015 (Table 9) demonstrated the ability of the existing to mill to <br /> produce benign tailings. With the planned mill improvements,tailings are expected to be more <br /> inert because of the increased efficiency in sulfide ore removal. Unfortunately,not enough <br /> tailings were generated during recent metallurgical testing to support leachate studies. Once the <br /> mill is operational the Mine will perform a leachate study of waste rock and tailings blended at <br /> varying ratios. OSMI proposes to sell desirable, inert,waste rock-tailings blends as aggregate. <br /> Page 10 of 14 <br />