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M4. <br /> ©URAY SILVER MINES RECEIVED <br /> MAY1I2018 <br /> May 14, 2018 DIVISION OF RECLAMATION <br /> MININGAND SUETY <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: 15t Quarter 2018 groundwater exceedance in GW-213 <br /> Ouray Silver Mines Inc. (OSM)owns and operates the Revenue-Virginius approximately 6 miles south <br /> west of Ouray Colorado under the Colorado Division of Reclamation, Mining,and Safety(DRMS) permit <br /> number M2012-032 (Permit). OSM performs quarterly sampling at monitoring wells and in surface <br /> water according to Technical Revision number 9 of the Permit.This letter describes a dissolved copper <br /> result(0.0102 mg/L)above the Permit limit(0.009 mg/L)in well GW-26 during 1st quarter 2018 <br /> sampling. Sampling locations are presented in Figure 1.As mentioned in the notification call voice mail <br /> message to Travis Marshall on May 10, 2018.The well is being resampled this week of Monday May 14, <br /> 2018. <br /> The significance and cause of the exceedance was evaluated. Associated with the copper result is a <br /> slight increase in dissolved lead,as seen in the timeseries charts for both constituents below. All other <br /> constituents remain within historic norms. Well GW-2A also saw higher than usual copper <br /> concentrations.The measured value is an order of magnitude above the highest dissolved copper <br /> concentration observed in GW-213 to date. No mining or waste rock deposition activity occurred near <br /> well GW-26 and it is far upgradient of infiltration from the passive treatment system, making <br /> operational influences unlikely. However,field notes from 15t quarter 2018 surface sampling indicate <br /> that Sneffels Creek experienced ice damming,and no flow,at upgradient location SW-15. Ice damming <br /> may have altered the hydrogeologic balance at GW-26 resulting in a different water quality or, it may <br /> have forced surface water to flow through subsurface pathways in the pre-law Atlas tailings which are <br /> known to contain and leach copper and lead. The correlations observed between GW-2A and GW-213,as <br /> well as lead and copper, make a lab error an unlikely but still plausible cause for the observed elevated <br /> copper and lead concentrations. <br /> PO Box 564, 1900 Main Street, Unit 1, Ouray,Colorado, USA 81427 <br /> Tel. 970-325-9830— Fax. 970-325-9824 <br />