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Continuance of Active Permit <br />In accordance with Rule 1, Paragraph 1.13.1, Temporary Cessation, General Provisions, Calais <br />maintains that since April 6, 2009 (date of SOO permit transfer to Calais), the permit granted <br />pursuant to the Mineral Rules and Regulation of the Colorado Mined Land Reclamation Board <br />for Hard Rock, Metal and Designated Mining Operations should continue in effect as an active <br />permit for the following reasons. <br />1) The Leadville Mill is actively engaged in refurbishing the facilities for startup production <br />that will commence this fall/winter, following completion and resolution of outstanding <br />permit conditions. Concurrently, Calais' Cross Mine is actively engaged in <br />preproduction mining activities for initial production within 120 days. Additionally, the <br />Hopemore Shaft is actively engaged in refurbishing both surface and underground <br />facilities for operations as a tourist mine this August. <br />2) The mineral reserves supporting the Leadville Mill operations, since April 6, 2009, <br />currently exist in Calais' Cross Mine under active permit M-1977-410, with an estimated <br />life of 3-4 years. Additional in-fill drilling is expected to result in additional resources. <br />The mineral resources/reserves supporting the Hopemore Shaft operations require <br />additional geologic work to currently classify the Hopemore Shaft mineralized material. <br />3) Heretofor there has not been Board action to declare temporary cessation of the Leadville <br />Mill and Hopemore Shaft operations, and even though the previous operator's declared or <br />undeclared temporary cessation of operations may have made the operation eligible for a <br />Board designation of temporary cessation of operations, the activities presented below <br />indicate that the Leadville Mill and Hopemore Shaft operations are currently active and <br />pursuing resumption of production. <br />Mitigation of Temporary Cessation Indications <br />Today, the Leadville Mill facility is currently incapable of processing material and the Hopemore <br />Shaft, as a tourist mine, does not intend to bring ore to the surface. However, this alone is not <br />indicative of cause for a temporary cessation of operation designation at this time. As with the <br />startup, commissioning, or rehabilitation of any facility, there are likely periods exceeding 180 <br />days where no production is occurring but extensive efforts are being made towards completion <br />of the facility to commence operations. <br />a. The mill facility requires a minimum of 120 days reconstruction and <br />rehabilitation. <br />b. Concurrent with the mill reconstruction, tailings facility reconstruction and the <br />placement of the low grade stockpile within the reconstructed tailings facility <br />requires a minimum of 120 days. <br />c. The Hopemore Shaft requires 30-45 days of additional rehabilitation and capital <br />improvements in order to operate as a tourist mine. As a tourist mine, no <br />significant material will come to the surface, however, development rock will be <br />mined and backfilled. <br />The following activities have been and currently are moving the mill towards production of ore <br />from the Cross Mine and moving the Hopemore Shaft towards opening as a tourist mine. Sale or <br />processing of material can recommence following completion of these activities. These <br />activities are occurring in currently permitted/disturbed areas, involving re-disturbing currently <br />disturbed lands.