SRK Consulting (US) Inc. Suite 520 - 1250 Lamoille Highway Elko, NV 89801 T: 775.753.4151 F: 775.753.4152 [email protected] www.srk.com Memo To: Kevin Hurrell Date: May 23, 2018 Company: Bureau of Land Management, BMDO From: Carrie A. Schultz Copy to: Val Sawyer, SRK Project #: 465900.090 Subject: Prospect Mountain Project – Water Resources Report 1 Introduction Gullsil, LLC (Gullsil) is proposing to conduct mineral exploration and underground mining activities on patented and unpatented mining claims in the Eureka Mining District, located about 3.5 miles southwest of the town of Eureka in Eureka County, Nevada. The proposed Prospect Mountain Project (Project) would be located on public land administered by the U.S. Bureau of Land Management (BLM) Battle Mountain District and on private land controlled by Gullsil as shown on Figure 1. Gullsil submitted to the BLM and Nevada Division of Environmental Protection (NDEP) Bureau of Mining Regulation and Reclamation a plan of operations entitled the Prospect Mountain Project Plan of Operations and Reclamation Permit Application (NVN-092893) referred to herein as the Plan (SRK 2017a). The claim block, shown on Figure 1, has been used as the Assessment Area for soils. 1.1 Existing and Authorized Operations Gullsil is presently authorized by the BLM to conduct mineral exploration activities on the Fourth of July claims under a Notice (NVN-094784) as shown on Figure 2. Up to seven drill hole locations and about 3,300 feet of new/bladed 12-foot wide drill roads have been identified for exploratory drilling on claims administered by the BLM in Section 34 of Township (T) 19 North (N), Range (R) 53 East (E) and Section 3 of T18N, R53E. Additionally 3,900 feet of the running surface of an existing access road on public land were maintained within the existing disturbance width. Table 1-1: Presents a summary of authorized disturbance. Table 1-1: Summary of Authorized Disturbance Disturbance Type Dimension (feet) Acres (Public) Drill Site Within drill/access road disturbance 0.0 Drill Road 12 x 3,300 0.9 Access Road 1.0 Total 1.9 Gullsil plans to conduct similar exploration activities on patented claims controlled by Gullsil under this notice; the total disturbance on patented and public land would not exceed 4.5 acres. Existing and authorized operations are described in greater detail in the Plan. 1.2 Proposed Action Gullsil is proposing exploration and underground mining. Gold and silver as well as other economically viable mineral resource exploration would be conducted using both surface and underground techniques to estimate the in-situ mineral resources and reserves. Gullsil would also develop the Diamond, Berryman, and MacIntosh tunnels to modern standards and mine oxide resources. Activities proposed under the Proposed Action are described in the Plan. The proposed disturbance is shown on Figure 3 and includes: • Construction of surface exploration roads, drill sites, and sumps; CAS/VS 465900_090_ProspectMtn_WaterRep_CAS_20180524 May 2018 SRK Consulting Page 2 • RC and core drilling using truck- and track-mounted equipment with support vehicles; • Reopening and upgrading to current standards the existing underground workings at the Diamond, Berryman, and MacIntosh tunnels; • A cemented rock fill plant with a crusher and screening plant and a cement silo; • Drilling geotechnical boreholes for siting assessment of future potential mine facilities; • Collecting drill hole and ore samples for metallurgical testing and geochemical characterization; • Construction of a contained ore transfer stockpile pad; • Construction of two waste rock disposal areas; • Construction of ancillary support facilities (e.g., vehicle parking areas, equipment laydown yards, office space, worker change room, assay laboratory, underground explosives storage, etc.); • Construction of infrastructure (e.g., developing Einar Spring, water pipelines, water storage, hydrocarbon storage, connection to grid power, haul roads, monitoring wells, fencing, communications, and security); • Construction of growth media stockpiles; • Upgrading existing access/haul roads and constructing new roads; • Installing a solar array as a secondary power source; • Establishing stormwater controls; and • Incorporating authorized notice-level disturbance of 1.9 acres on public land. Gullsil estimates that about 83 acres of public and private land would be disturbed under the Proposed Action. Table 1-2 presents the surface disturbance estimates, and Figure 3 presents the proposed disturbance. Table 1-2: Summary of Authorized and Proposed Disturbance Authorized (acres) Proposed (acres) Total (acres) Component Public Private Total Public Private Total Public Private Total Drill Site 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Drill Road1 0.9 0.0 0.9 -0.9 0.0 -0.9 0.0 0.0 0.0 Exploration Area 0.0 0.0 0.0 3.2 23.0 26.2 3.2 23.0 26.2 Access Road1 1.0 0.0 1.0 -1.0 0.0 -1.0 0.0 0.0 0.0 Haul Roads 0.0 0.0 0.0 12.1 0.8 12.9 12.1 0.8 12.9 Rock Disposal Areas 0.0 0.0 0.0 11.3 0.0 11.3 11.3 0.0 11.3 Ore Transfer Pad 0.0 0.0 0.0 2.3 0.0 2.3 2.3 0.0 2.3 Ancillary2 0.0 0.0 0.0 21.0 1.0 22.0 24.1 1.0 25.1 GMS 0.0 0.0 0.0 0.5 0.0 0.5 0.5 0.0 0.5 Portal 0.0 0.0 0.0 1.9 1.3 3.2 1.9 1.3 3.2 Yard 0.0 0.0 0.0 1.2 0.0 1.2 1.2 0.0 1.2 Total 1.9 0.0 1.9 51.6 26.1 77.7 56.6 26.1 82.7 1 0.9 acres of authorized notice-level Drill Road would be incorporated into the proposed Exploration Area, and 1.0 acres of authorized notice-level Access Road would be incorporated into the proposed Haul Road and Portal disturbance areas. 2 Includes laydown areas, solar arrays, parking and fuel storage areas, stormwater controls, fencing, growth media stockpiles, well pads, spring development, power lines, and septic system. 1.2.1 Surface Exploration Overland travel would be used for Project activities, where possible, to minimize the need for new road construction. New roads would be constructed utilizing standard cut and fill techniques to a running width of up to 16 feet. The depth of cut would be kept to a minimum, and growth media removed during construction CAS/VS 465900_090_ProspectMtn_WaterRep_CAS_20180524 May 2018 SRK Consulting Page 3 would be stockpiled as the fill slope to be used during reclamation. Road construction within drainages would be avoided whenever possible. When drainages must be crossed with a road, Best Management Practices (BMPs) established by the NDEP Handbook of Best Management Practices (NDEP 2008), would be followed to minimize surface disturbance and erosion potential. Culverts would generally not be installed in exploration roads but would be used as needed. Roads would be constructed with a Cat D-7 dozer or equivalent and would occur intermittently throughout the life of the Project. Specific road locations would be determined in the field based on geologic information collected during the exploration program. Maintenance of exploration roads would include minor seasonal grading as needed. Erosion controls would be monitored in the spring and fall. Road maintenance would consist of smoothing rutted surfaces and holes on existing access and drill roads. Maintenance of existing roads would be conducted only on an as-needed basis. New drill site disturbance would be kept to the minimum necessary for safe access and a safe working area for equipment and crews. Surface disturbance would vary based on the slope of the terrain where the sites are constructed. Sumps, typically one per drill site, would be constructed, as necessary. A laydown yard would be located within the drilling area as needed. The surface exploration program would consist of drilling bore holes utilizing track- or truck-mounted RC and core drill rigs and support equipment. Cuttings not bagged and removed during sample collection or remaining in the sumps would be used as a source of backfill and placed back down the borehole. Holes would be both vertical and angled with average drill depths of 1,500 feet bgs. More than one drill hole may be drilled from each site. Gullsil anticipates that up to 300 holes would be drilled during the Project including holes approved under Notice NVN-094784 and exploration drilling on patented. No more than four holes would be open at any one time. Water or non-toxic drilling fluids may be utilized, as necessary, during drilling. Gullsil would obtain water from the proposed Prospect wells 1, 2, and 3 and Einar Spring and/or Eureka County, pending arrangements, or other legal water sources. Sediment traps and sumps would be incorporated into each drill site to collect drill cuttings and manage drill water. The mixture of drill cuttings and drill water from the drilling operation would be managed in the sediment traps. The drill cuttings would be settled and remain in the sediment traps. A maximum of four drill rigs (both RC and core) are expected to be in operation at the Project area at any time. Each drill crew includes approximately three contract personnel, plus a Gullsil-employed geologist. Up to 24 individuals may be working at any time on the Project. Drilling activities would continue for up to 24 hours per day for some drill rigs. 1.2.2 Underground Exploration and Mining Gullsil proposes to conduct underground exploration and mining activities using the Diamond, Berryman, and MacIntosh tunnels to access existing workings.