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I;O A.ND rvr -‘11 low s A ua Silver M%w%wgJotvk VevLti tre August 29, 2011 Bob Oswald Colorado Department of Natural Resources Division of Reclamation, Mining and Safety Durango Field Office 691 CR 233, Suite A -2 Durango, CO 81301 1.0 INTRODUCTION Dear Mr. Oswald, Rio Grande Silver Inc. (RGS) is preparing a Plan of Operations Amendment for the USDA Forest Service (Forest Service). The purpose of this amendment is to set forth the plans to re- enter the Bulldog Mine through a new decline constructed adjacent to the 9360 level, which was the previously- disturbed Homestake Mining Company (Homestake) portal pad and mill site area, located approximately 1.5 miles northwest of the town of Creede, Colorado. See Figure 1, Site Plan Overview. With the promising results from the last several years of surface exploration work and the continued robust nature of the silver market, RGS wants to initiate underground exploration work to both confirm surface results and to target specific vein structures. The attached plan amendment will serve to update and modify RGS's Stage 2 District -Wide Exploration Plan was submitted July 2009 and approved April 2010. With this proposed underground exploration program, RGS will obtain valuable data regarding vein structures adjacent to the areas where Homestake mined. This information is vital for RGS to assess the technical and economic feasibility of possible future development and mining. RGS proposes to develop the new decline with a portal face -up area at the 9400 -foot elevation level, which is 40 feet higher that the Homestake 9360 portal. The new decline will extend for about 1,800 to 2,000 feet at a slight downward grade (approximately 1 %) until it intersects the old Bulldog Mine workings. With this new decline, RGS will not disturb the historic Homestake portal plug, which was installed to prevent water drainage to the surface. Page 14