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DIVISION OF RECLAMATION, MINING AND SAFETY <br />V Department of Natural Resources <br />1313 Sherman St., Room 215 <br />Denver, Colorado 80203 <br />Phone: (303) 866 -3567 <br />FAX: (303) 832 -8106 <br />August 10, 2011 <br />Brian Morris <br />Rio Grande Silver, Inc. <br />PO Box 610 <br />Creede, CO 81130 <br />STATE OF COLORADO <br />RECENSO <br />MO 16X911 <br />Dmeion of Reclamation <br />Mihing and Safety <br />Re: Notice of Intent to Conduct Prospecting for South Upper Rat Creek, DRMS File No. P- 2011 -023, <br />Approval to Commence Prospecting. <br />Dear Mr. Morris, <br />Sincerely, <br />Bob Oswald <br />Environmental Protection Specialist <br />Office of <br />Mined Land Reclamation <br />COLORADO <br />D I V I S I O N O F <br />RECLAMATION <br />MINING <br />SAFETY <br />John W. Hickenlooper <br />Governor <br />Mike King <br />Executive Director <br />Loretta E. PirSeda <br />Director <br />The Division of Reclamation, Mining and Safety received your Notice of Intent to Conduct Prospecting Operations <br />(NOI) on July 19, 2011, and the non - confidential items were posted to the Division's website on July 22, 2011. The <br />NOI was reviewed by our office, and approved on August 9, 2011. The reclamation costs associated with this project <br />have been estimated to be $16,435.00. (The reclamation cost estimate packet is enclosed herewith. Please contact <br />me promptly if you notice any errors or omissions.) Rio Grande Silver, Inc. has posted statewide prospecting bond <br />(corporate surety no. 6575235) in the total amount of $269,318, which was reviewed and accepted by our office. <br />There are several other NOIs currently bonded by this statewide prospecting bond, but the amount of the financial <br />warranty available is sufficient to cover this project. The NOI is considered to be bonded as of this date. <br />Therefore, final approval for this Notice of Intent to Conduct Prospecting at the East Upper Rat Creek project <br />is hereby granted and you may commence operations. <br />Also, in accordance with Rule 5.6, an Annual Report and associated fee of $86.00 must be submitted on your notice <br />approval anniversary date for each year following the filing of an NOI until reclamation responsibility release is <br />granted. In addition, Rule 5.3.4 requires the prospector to notify the Division of completion of prospecting <br />operations and Rule 5.7 requires the submittal of a final report for drill holes within 60 days of completion of the <br />abandonment for artesian flow holes and within one year of completion of the abandonment for any other drill holes. <br />(Form enclosed and also available on DRMS website at http: / /www.mining.state.co.us/) <br />Thank you for the opportunity to meet and discuss this project, and for the quality of the NOI materials. If you have <br />any questions I may be reached at the Division's Durango field office: 691 CR 233, Room A -2, Durango, CO <br />81301; telephone 970 - 247 -5193, or you may contact the Division's Denver office at the address found in the <br />letterhead above. <br />Office of <br />Denver • Grand Junction • Durango Active and Inactive Mines <br />