2011-10-17_PERMIT FILE - P2011012

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A subsidiary of Red Metal Limited [www.redmetal.com.au] October 13, 2011 Bob Oswald Colorado Division of Reclamation, Mining and Safety Department of Natural Resources 1313 Sherman St. Denver, CO 80203 by e -mail Dear Mr. Oswald, 5515 Nuthatch Road, Parker, Colorado 80134 Phone [303] 805 2502 Fax [303] 805 2503 P - -ova RECEIVE OCT 17 2011 DIdiolofl of Reclomat/on, Mining & Safety This letter is our first response to the Second Technical Adequacy Review received from your office. I phrase this as "first response" as we are not complete in our planning for the drill holes for which we have filed the NOI. As you are well aware, there are considerable technical issues to be explored before these holes can be drilled. We are going need an additional 60 days to complete our planning, and final response to your 2 letter. I trust that this will be acceptable. I shall follow with our progress on each of the questions from your letter, in numerical sequence. 1. Affected acreage: In consultation with the BLM and our environmental consultant, JBR, we have increased the size of the drill pads to 200 x 200 ft, resulting in larger affected acreage. The following is from an e -mail from Greg Brown, JBR Environmental 9 /7/2011. "If we go with an approximate 1 acre drill pad area (200' x 200') for each site, total maximum disturbance if all 6 sites were drilled would be approximately 9.4 acres (5.5 acres for the 6 drill pads and 3.9 acres for possible road improvements)." So, the total possible affected acreage is greater than we anticipated earlier, at 9.4 acres, for all 6 drill sites. However, we have not yet selected the two sites that will be used for the Phase 1 Proof of Concept holes. If necessary we will bond for all six possible drill sites, although I think we should wait until the final site selection to set the bond amount for the affected acreage. Can we make the bond amount calculation pending on the final selection of drill sites? 2. Groundwater protection: In plugging the drill holes to prevent contamination of any groundwater aquifers, the following procedure will be used: a. Set an inflatable packer (mechanically inflated in the annulus of the bore hole to press tightly against the formation) about 50 feet below the bottom of the aquifer to be protected; this packer will support cement while it hardens; b. pump sufficient cement into the bore hole to fill the hole to 50 feet above the top of the aquifer to be protected; c. fill the intervening space in the bore hole (between the first cement and the next aquifer) with a heavy bentonite mud to support the integrity of the hole;