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Sunnyside 04 SGC-005809 MLR Permit Bond Reduction

Sunnyside 04 SGC-005809 MLR Permit Bond Reduction

/ STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources

1313 Sherman St., Room 215 Denver, Colorado 80203 Phone: (303) 866-3567 FAX: (303) 832-H106 DEPARTMENT OF NATURAL March 31, 1998 RESOURCES

Roy Römer Larry Perino Governor Sunnyside Gold Corporation James S. Lochhead Executive Director P.O. Box 177 Michael B. Long Silverton, CO 81433 Division Director

RE: Reduction in Financial Warranty and Permit Area, SR-02, Approved, Sunnyside Mine, Permit No. M-77-378.

Dear Mr. Perino:

On 2/1/98, DMG approved SR-02, request for reduction in financial warranty and reduction in permit area.

Financial warranty was approved to be reduced from the existing $2,197,000 to not less than S 1,250,000, representing a reduction of $947,000.

Permit area was approved to be reduced to a total area of 243.65 acres, as described within the text of the release request and depicted on the three maps submitted with the request.

Please contact me at the DMG Durango Office, 484 Turner Drive, Building F, Suite 101, Durango, CO 81301, phone (970) 247-5469, if you have any questions or require additional information.

Sincerely, MAR-31-90 TUE 04:21 PM DMG DURANGO FIELD OFFICE FAX NO. 970+247+5104 P. 01

STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY tJqwiment of Nomral Resources H U Shermon St., Room 215 Denver, Colorado 00203 Phone: (30Ï) aiìb -m r fAX: <103)1)12-8106 DEPARTMENT OF March 31, 1998 NATURAL RESOURCES Roy Riiirn'r Larry Perino C u v v rto r

Sunnyside Gold Corporation jM iciS, Lochhaid P.O. Box 177 EaCfulivC fîucil«» M ich.iet B. Lon« Silverton, CO 81433 Division Oiftuor

RE: Reduction in Financial Warranty and Permit Area, SR-02, Approved, Sunnyside Mine, Permit No. M-77-378.

Dear Mr. Perino;

On 2/1/98, DMG approved SR-02, request for reduction in financial warranty and reduction in permit area.

Financial warranty was approved to be reduced from the existing $2,197,000 to not less than $1,250,000, representing a reduction of $947,000.

Permit area was approved to be reduced to a total area of 243.65 acres, as described within the text of the release request and depicted on the three maps submitted with the request.

Please contact me at the DMG Durango Office, 484 Turner Drive, Building F, Suite 101, Durango, CO 81301, phone (970) 247-5469, if you have any questions or require additional information.

Sincerely 5TATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources 1313 Sliorman St., Room 21 5 Denver, Colorado 80203 Phone: (303) 866-3567 FAX: (303)812-8106 DEPARTMENT OF NATURAL RESOURCES

Roy Römer February 10, 1998 Governor Juntos S. Lochhe.id Executive Director

Mie h.iel B. Look Division Director Mr. Larry Perino Sunnyside Gold, Corp. P.O. Box 177 Silverton, C O 81433

HE: Sunnyside Gold Mine, Financial Warranty Reduction Approval, Permit No. M-77-378, Revision No. SR-2

Dear Mr. Perino:

O n February 1, 1998 the Division of Minerals and Geology approved your request for a Financial Warranty Reduction to $1,250,000.00. This is a reduction of $947,000.00.

Please provide a rider to the current Financial Warranty, or submit a new Financial Warranty reflecting this reduction. If you wish to submit a different type of Financial Warranty, please contact me so I may send you the applicable form.

If you have any questions, please contact me.

Sincerely,

UJa£l

CERTIFIED MA I L NO. Z 130 090 655 Return Receipt Requested

cc: Barbara D. Chiappone, D M G

M:\OS.S\DU KANG O \M f;W l 1378. W! It; SUNNYSIOE GOLD CORPORATION AN ECHO BAY COMPANY

P.O. Box 177 .Silverton, CO 81433 Phone (303) 387-5533 .Telecopy (303) 387-5310 November 25, 1997

Mr. Wally Erickson Division of Minerals and Geology Department of Natural Resources 484 Turner Drive, Bldg. F, Suite 101 Durango, C O 81301

RE: File No. M-77-378, San Juan County Bond Reduction Request and Permit Area Reduction Request

Dear Mr. Erickson:

Sunnyside Gold Corporation (SGC), after reviewing ML R permitted acreage, reclamation progress, and existing bond, has concluded that; 1) the permit acreage should be reduced because some acreage has not been and will not be disturbed and these areas will not be needed for operation in the future. 2) some acreage may be eligible for release due to successful implementation of the reclamation plan and if not, S G C needs to know any deficiencies so they can be corrected. 3) the cost of completing reclamation will be significantly lower than the bond amount due to reclamation plan implementation from 1991 to the present without a corresponding bond reduction for work completed. The bond should be lowered to reflect the actual completed work.

Therefore, SG C submits this request for permit acreage reduction, acreage release due to successful reclamation according to the reclamation plan, and reduction of bonding requirements to reflect the actual remaining costs of site reclamation.

Attached are revised Exhibit A - Legal Description, Exhibit L - Reclamation Costs sections of Permit M-77-378 that reflect the requested changes and area maps showing existing permit boundaries and proposed boundaries. These are the only permit sections affected by this submittal.

Following is an area by area summary of; 1) requested acreage reduction. 2) description of activity creating disturbances to be reclaimed. 3) completed reclamation. L AK E E M M A / SUNNYSIDE BASIN

Proposed acreage changes: ( see attached land map for detail)

Existing Permit Acreage 215.33 Permit Area Reduction Proposed 148.83 Proposed Permit Area 66.50

Most of the permit area reduction involves undisturbed land. The exception being the borrow area slopes on Bonita Peak and the reclaimed roadway northeast of the Lake Em m a hole.

Activity:

This site was included under the Permit in AM-002 (1987). Inclusion under the permit was deemed necessary due to the surface disturbance created by the pre- Sunnyside (1978) collapse of Lake Em m a into the underground mine workings and S G C ’s desire to mine remaining ore in this area. Prior to the collapse, all disturbances in this area were historic and pre-law.

Gravel extraction for use as road base material was permitted under TR-02 (1987). The source was in the “Washington Vein” area later disturbed further as part of the Washington pit and Washington Vein underground mining projects.

In 1988, open pit mining on vein surface outcrops was included under the permit (AM-003). This amendment was written to cover all of the Sunnyside Basin area. Actual activity only occurred on two small outcrop areas, the “Washington Vein” pit and the “Sunnyside Vein” pit.

In 1989, several near surface ore blocks were permitted for mining from underground with access by portaling in from surface in Sunnyside Basin (TR-07). These access portals were on the “Washington Vein”, “Sunnyside Vein”, and “No- N a m e Vein”. The “No-Name Vein” underground mining utilized an existing portal. The portals were the only surface disturbances resulting from this project.

Reclamation:

The surface portals created for the underground mining project were backfilled and the old wagon road used for access to the No-Name portal was reclaimed and planted. Backfilling of the Lake Em m a hole and contouring of the areas disturbed by the activities listed above according to the reclamation plan was completed in 1991 and 1992 with the exception of placement of a clay cap over the Lake Em m a collapse area. This work was not completed because of anticipated fill material settlement. Ice, that was in the hole when it was filled, was expected to melt from increased ground temperatures, causing a surface subsidence as the fill material filled the void left by the melted ice. This predicted subsidence has occurred annually since 1991 and each year, the surface subsidence has been filled back to grade with material stockpiled for this purpose. When this fill stabilizes, the lake sediment cap material can be placed for reclamation plan completion.

All contoured areas have been planted with the high altitude seed mix approved for this area and while establishment of vegetation at this high altitude site has been slow, it is now fairly well established with minimal signs of erosion.

Remaining reclamation required for this site, includes capping of the subsidence area with lake sediment material and overburden material after the area ceases to subside and grade can be established to allow the area to drain towards the former outlet of Lake Emma.

TERRY TUNNEL

Proposed acreage changes: (see attached land map for detail)

Existing Permit Acreage 7.12 Permit Area Reduction Proposed 0.00 Proposed Permit Area 7.12

Activity:

This site has seasonal access due to its location. During operations, it was used for a secondary escapeway, ventilation, seasonal usage to take larger supplies and equipment underground, and for seasonal treatment of mine drainage water.

After active mining stopped in 1991, the area was used similarly until placement of the tunnel bulkhead in 1994 and subsequent valve closure in 1996 as approved in T R - 014 and the reclamation plan for the area. In 1996, the area was used for mixing and pumping of alkaline material into the mine pool through the bulkhead (TR - 019). Reclamation:

Refuse and trash has been removed from the site or buried on-site. Some of the slopes have been regraded, amended with limestone and/or topsoil, and seeded with the alpine mix. Vegetation is starting to become established on some of these slopes. The mine waste dump in Eureka Creek was graded so that the creek could flow freely without backing up against the historic waste dump. The tunnel bulkhead has been placed to prevent mine drainage from flowing to surface via the tunnel.

Pond removal, portal backfilling and final site contouring remains to be completed at this site. Upon determination that water treatment at this site will not be required in the future, these items can be completed for final site reclamation.

EUREKA STAGING AREA

This area was released from the permit area in 1994. A corresponding bond reduction was not requested.

AMERICAN TUNNEL

Proposed acreage changes: (see attached land map for detail)

Existing Permit Acreage 28.01 Permit Area Reduction Proposed 5.96 Proposed Permit Area 22.05

Activity:

The American Tunnel site, during operations, served as the main entry into the Sunnyside Mine workings. Ancillary surface facilities included warehouse and office facilities, change room, maintenance shops, ore storage area, waste dump, and water treatment facilities. After operations ceased in 1991, these ancillary facilities were reduced to the level required to provide support for reclamation activities and water treatment. After construction of the American Tunnel bulkhead in 1995 and subsequent valve closure in 1996 (TR - 014), a diversion was constructed to facilitate diversion and treatment of Cement Creek for an interim period of time while performing projects in the Animas River Basin (TR - 019). This interim treatment of Cement Creek is a condition in the voluntary Consent Decree agreement between Sunnyside and CD P H E - W Q C D (TR-014). The Consent Decree agreement was entered into to expedite final reclamation by providing a way, other than through legal proceedings, to address W Q C D ’s objections to the reclamation plan which uses bulkheads to block drainage pathways from the Sunnyside Mine, allowing an end to water treatment and reclamation of the facilities required for water treatment (A M - 002 and TR - 014).

Reclamation;

Surface facilities have been reduced and all ore stockpiles removed. The mine waste dump has been removed as well as thehistoric tailings that were under the waste dump and the area contoured and planted. The historic tailings pond within the permit area was removed and the area revegetated. The Cement Creek bank slope through the upper portion of the permit area has been stabilized by resloping and placement of rip-rap material. The American Tunnel bulkhead was constructed in 1995 and its valve was closed in 1996 to eliminate drainage through the American Tunnel from the area of the Sunnyside Mine workings (TR - 014).

MAYFLOWER MILL AND TAILINGS AREA

Proposed acreage changes: (see attached land map for details)

Existing Permit Acreage 208.80 Permit Area Reduction Requested 60.82 Proposed Permit Area 142.98

Activity:

The Mayflower Mill is a historic mill built in 1928 and operated by Sunnyside Gold Corporation from 1986 through 1991. The active tailings facility during this period of operations was Tailings Pond No. 4. Water treatment sludge generated from operation of the Terry Tunnel and American Tunnel water treatment plants were placed in Tailings Pond No. 3 until 1992 when the deposition site was changed to Tailings Pond No.4 (TR - 012). In 1994, an interpretive sign area was constructed for public education on mine reclamation. It was located on an overlook area in the vicinity of Boulder Creek and Tailings Pond No. 2 (TR - 017). In 1995, the historic Mayflower Mill and old Powerhouse areas were deeded to the San Juan County Historical Society for preservation and conversion of the mill to a museum and public tour facility (A M - 004). Reclamation:

Tailings Pond No. 4 In 1989, the method of depositing tailings into the pond was changed to increase stability and allow for reclamation concurrent with usage (TR - 09). Exposed tailings on the slopes were capped with subsoil material and planted. Portions of the top of Tailings Pond No. 4 have been brought to final reclamation grade with mine and mill waste material from other projects (TR - 012). These areas have been capped with subsoil and planted according to the reclamation plan.

Tailings Pond No. 1 In 1992, the reclamation plan was changed (TR - 013) from direct revegetation of the tailings material to a plan that included; 1) movement of the tailings back from Boulder Creek and Hwy. 110. 2) slope reduction to increase stability and usage of the removed material to create a sloping top to eliminate ponding of water. 3) capping with subsoil material and planting. This work was completed in 1992.

Tailings Pond No. 2 In 1991, the reclamation plan was changed (TR - Oil) from direct revegetation of the tailings material to a plan that included; 1) movement of the tailings back from Boulder Creek. 2) slope reduction to increase stability and usage of the removed material to create a sloping top to eliminate ponding of water. 3) capping with subsoil material and planting. This work was completed in 1991.

Tailings Pond No. 3 This pond was capped and planted according to the reclamation plan in 1992.

Engineering Office Site Area This area, excluding buildings and access road, was capped with subsoil material and planted in 1993. The area was deeded to the San Juan County Historical Society in 1995 for preservation of the historic buildings onsite and conversion to other uses than for mining by the Society (A M - 004). This amendment approval eliminates the requirements for removal of buildings from the reclamation plan.

Borrow Area and Haul Roads The haul road used to haul sub-soil for capping Tailings Ponds No, 1 and No.2 was reclaimed in 1994. The borrow area behind Tailings Pond No. 4 and between Tailings Pond No. 4 and Tailings Pond No. 3 is still active although, areas where borrow source material has been exhausted have been reclaimed by contouring, seeding, and fertilizing. For some areas, this occurred as early as 1992.

Settling Pond Area below Tailings Pond No. 4 This area was used when Tailings Pond No. 4 was actively used as a tailings pond during operation of the Mayflower Mill. Excess water was discharged through its permitted discharge point that fed secondary settling ponds located in this area. The discharge from Tailings Pond No.4 has not been active since 1990. The ponds were cleaned, area recontoured and planted in 1993. Some areas in this vicinity had been planted since 1978.

BASIS for PERMIT AREA and BOND REDUCTION REQUEST:

S G C has completed reclamation according to the ML R permit reclamation plan on all inactive sites within its ML R permit area. This includes Lake Emma/Sunnyside Basin, (with the exception of the active subsidence area), Tailings Pond No. 1, Tailings Pond No. 2, Tailings Pond No. 3, Mayflower Mill Area, the Engineering Office-Site area, haul roads between Tailings Pond No. 2 and the borrow area, portions of the borrow area behind Tailings Pond No. 4, the settling pond area below Tailings Pond No. 4, the borrow area at the American Tunnel, and the old tailings pond area at the American Tunnel. These areas have established vegetation with no significant signs of erosion.

In addition to D M G site inspections, SG C submits the following supporting documentation.

AMERICAN TUNNEL 1. Site pictures 2. Letter from Salem Minerals Inc. (July 18, 1996). Supports the removal of the borrow area from SG C ’s permit area and states that the area is adequately reclaimed for their purposes. Salem Minerals Inc. is the current owner of the borrow area.

MAYFLOWER MILL 1. Site pictures 2. D M G inspection report for A M -004 (November 17, 1995). The report summary indicates that the Mayflower Mill building and associated facilities can be released from SG C reclamation responsibility provided that the San Juan County Historical Society will address outstanding health and safety concerns. 3. Letter from the San Juan County Historical Society addressing outstanding health and safety concerns. The society has made improvements to the facility since the November 17, 1995 inspection and operated the Mayflower Mill museum/tour actively during the fall of 1996 and summer-fall of 1997. 4. Letter from the San Juan County Historical Society (November 17, 1995). The Society, in this letter, notified D M G that the Mayflower Mill and associated properties meets clean-up and reclamation requirements for their purposes, The society is the current owner of the property.

TAILINGS POND NO 1, TAILINGS POND NO. 2 AN D TAILINGS POND NO.3

1. Site pictures. 2. Site inspection letter (November 3, 1995) from the United States Department of Agriculture - Natural Resources Conservation Service.

ENGINEERING OFFICE SITE

1. Site pictures. 2. Applicable documents previously cited are the D M G inspection report, San Juan County Historical Society letters, and Natural Resources Conservation Service letter. The Society is the current owner o f the property.

BORROW AREA BEHIND TAILINGS POND NO. 4 AND HAUL ROAD FROM BORROW AREA TO TAILINGS POND NO. 2

1. Site pictures.

SETTLING POND AREA BELOW TAILINGS POND NO. 4

1. Site pictures

LAKE EM M A / SUNNYSIDE BASIN

1. Site pictures. O WN E RS OF AFFECTED LANDS

LAKE EM M A / SUNNYSIDE BASIN

1. Sunnyside Gold Corporation 2. B L M

MAYFLOWER MILL - ENGINEERING OFFICE SITE

1. San Juan County Historical Society

INTERPRETIVE SIGN AREA

1. Sunnyside Gold Corporation

BORROW AREA BEHIND TAILINGS POND NO, 4 AND HAUL ROADS BETWEEN BORROW AREA AND TAILINGS POND NO. 2

1. Sunnyside Gold Corporation 2. B L M

SETTLING POND AREA BELOW TAILINGS POND NO. 4

1. Sunnyside Gold Corporation 2. B L M

AMERICAN TUNNEL

1. Sunnyside Gold Corporation 2. Salem Minerals Inc. 3. Joy Manufacturing

S G C has notified the Board of San Juan County Commissioners and owners of record of affected lands (not owned by SGC) that an application for bond reduction and/or release of reclamation responsibility has been submitted to DM G . Copies of these letters are attached. Proof of mailing will be submitted as soon as all return receipts are received by SGC. R EC L AMATION COSTS:

Attached is a proposed reclamation cost estimate- Exhibit L to complete reclamation according to the Reclamation Plan in File No. M-77-378.

Please contact me if this submittal is not complete, if you have any questions or if there are any submitted changes that D M G cannot approve.

Sincerely:

Larry Perino Reclamation Manager ¿ L SUNNVSIDE GOLD CORPORATION AN ECHO DAY COMPANY

P.O. Box 177 .Silverton, CO 81433 Phone (303) 387-5533 .Telecopy (303) 387-5310

December 3, 1997

Mr. Wally Erickson Division of Minerals and Geology Department of Natural Resources 484 Turner Dr., Bldg. F., Suite 101 Durango C O 81301

UE: File No. M-77-378, San Juan County Proof of Notification - Bond and Permit Area Reduction Request

Dear Mr. Erickson:

Attached are copies of the certified mail return receipts to provide proof that notification was sent to owners of lands affected by Sunnyside Gold Corporation’s bond and permit area reduction request and the San Juan County Commissioners as required by the Mineral Rules and Regulations Section 4.16.1.

Please contact me if this submittal does not complete Sunnyside’s application for bond and permit area reduction (through release of reclamation responsibility and deletion of undisturbed lands).

Sincerely,

, Larry Perino Reclamation Manager PS Form 3800. April 1995 Do not use (or International Mail (or InternationalDouse not Provided. Insurance Coverage No ServicePostalUS Receipt for Certified Mail Certified for Receipt V ITOjKLlPostage^tFees''^ Da^iAcklrejsee's R e t j r n £ e e * i f l t S h oWhom w i n & g Date l o Delivered W h o m , Spedal Dolivery Fee Certified Fee Street 4 Number Postage Posi Office, State, & ZIP Code Return Receipt Showing to Restricted Delivery Fee S L u ta Z w ti ti w Z ta u L S ^ VO — v ___ O. I COY. .Tufl/J x i s u y bH CTii. C o $ $ hli^wfUAA/ ~ / % . O D - Z ■J ■ (See reverse) 5 3 ID DC UJ K D CC Z < Q o | cc UJ <0 >» O 3 o o E a O) : R E D N E S PS Form 3 8 1 1 , December 1994 December , 1 1 8 3 Form PS 6. Sigrtafute: Sigrtafute: 6. 5. Receive^By: Receive^By: 5. 3. Article Addressed to: Addressed Article 3. ■Completeandtor ftemsl ■ Write ■Attach this form to the front of the mailplece,■ Print or /our onname the■Complete and back address If spaceItems on ,4a, 3 does theand reverse 4b.not of this form so that we can returrvtNs ■The Return Receipt willshow to whom the article was delivered and the date V IVRO C 81433 CO SILVERTON PRESIDENTRICH,BEVERLY delivered. permit. card to you. OBX 154POBOX HISTORICALSANJUANCOUNTY X U P i s Y J ‘Return Receipt Requested’ Receipt ‘Return (A'ddresSee o r Agent) r o (A'ddresSee Part a e) Nam t r a {P 2 for additional services.

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SUNNYSIDE GOLD CORPORATION AN ECHO BAY COMPANY PQ BOX 177 SILVERTON CO 81433

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¿ep|S esJ9A9J eiu uo peiaiduioo SS3ÜQQV f t u n l i S jnoA 6I Thank you for using Return Receipt Service. Is your RETURN ADDRESS completed on the reverse side? SENDER: PS Form 3811, December Form 3811, PS U •The Return•The Receipt will show to ■Writewhom thearticle was delivered and the date 6. Receive5, AddressedArticle3. to: •Complete items ,4a, and3 4b. •Complete Items 1and/or 2 for additional services. ■Attach this form to tha front ■Print your name and address on the reverse of this delivered. permit. card to you. Signature: nited X WALLY ERICKSONWALLY u ac o O 81301 Durancro CO DEPTRESOUP,CNATURAL DMG 484 #101TurnerDRBDGF 'Return Receipt 'Return S tates (Addressee o r r Agent) o (Addressee P • Print Print • ostal flaguesied" on the mailpiece below the article number. of S the mallplece, or on the back If space does not your ervice 1994 name, address, and ZIP Code In this box • box this In Code ZIP and address, name, S U N N Y S I D EG O L DC O R P O R A T I O N A N E C H O B A Y C O M P A N Y SILVERTON CO 81433 form so that we can return this PO BOX 177 ,4b. Service Type ,4b. Rgsee Certified Registered ^ 87A^drssseeyAddress' 87A^drssseeyAddress' 4a.Number Article xrs al Insured □ COP Return Receipt □ for Merchandise □ Express Mall □ and fee is paid) is fee and 155 380265P Domestic Return Receipt Return Domestic following services (for (for servicesan following Consult postmaster for Consult postmaster fee.for extra fee): Ialso receive wish the to 2. □ Restricted Delivery Restricted □ 2. 1. □ Addressee's Address Addressee's □ 1. (OnlylfTequesidd^ I S P IIS Permit Permit No.Q-to Postage & FeesPostagePaid & First-Ciass Mai)

Thank you for using Return Receipt Service. U Î I + Is your RETURN ADDRESS completed on the reverse side? SENDER: SENDER: ■ Print your name■Complete items 3,and 4b. 4a, and address on the reverse■Complete of this items form 1and/or so that we can 2return for additional this services. ■¡Each ■¡Each 3. Article3. Addressed to: ■The Return Receipt will show■Writs to whom the article was delivered and the date 5. Received delivered. JOY MANUFACTURING C/OHORISHFEGUR TFANI W 53235 STFRA.NCIS WI 36 00 SOUTHLAKE DRIVE nited 'heturn Receipt Requested" Receipt 'heturn form f to the frontf of the mailpiece, or on the back if space does not S tates By: By: PrntNa e) am N t rin (P P • Print your name, address, and ZIP Code in this box • box this in Code ZIP and address, name, your Print • ostal S on the mailpiece below the article number. ervice , , S U M N Y S I D E G O L DC O R P O R A T I O N A N E C H OB A Y C O M P A N Y S1LVERT0N CO 81433 P0 BOX 177 4a. ArticleNumber4a. 4b.Service Type eitrd 1 Certified K1 Registered O xrs al Insured □ 7 Return Receipt□ COD for Merchandise ExpressMail □ □ 8. Addressee’s Address 7 ? 7 X - feI ai ) id pa Is fee d n a 155 380P following services (for (for an services following extra fee): Ialso wish receive to the. Consult postmaster Consult for fee. .□ RestrictedDelivery □ 2. 1. □ Addressee’s Address Addressee’s □ 1. 260 Onl f equested re if ly n (O Permit No.G-10 USPS FeesPostagePaid& First-ClassMall " 4 - . co CC 1 .E e 0) E 3 0) o> I c First-Class Mai U n h e d States Po stal Service Postage & Fees Paid USPS Permit No. G-10

• Print your name, address, and ZIP Code in this box • zc m-»

S'Jtt-iYSiuc GOLD CORPORATION AN ECHO BAY COMPANY PO BOX 177 SILVERTON CO 81433

First-Class Mail Postage & Fees Pad U nited States P o s t a l Service USPS Permit No. G-10

• Print your name, address, and ZIP Code in this box •

SUNNYSDE GOLD CORPORATION AN ECHO BAY COMPANY PO BOX 177 SILVEHTON CO 81433 Is your RETURN ADDRESS completed on the reverse side? SENDER: U ■ Complete items 3,■ 4a, and 4b. ■The Return Receipt will show to whom the article was delivered and the date ■Write ■Attach this form to the■ front Print of your the mallplece,name and address or on onthe theback reverse if space of doesthis not form so that we can return this 3.Addressed Article to; 6. Signature: Signature: 6. Received 5. Complete Items 1 and/or 2 for additional services. DIVISION OFDIVISION MINERALS MR. WALLY ERICKSONMR. WALLY DEPTNATURALRESOURCES card to you. UAG C 81301 CO DURANGO 101SUITE delivered. permit. nited X 484TURNERP DR.BDG ‘ Return Receipt Requested' Receipt Return ‘ S tates (Addressee or Agent) P • Print your name, address, and ZIP Code inbox this Code ZIP and address, name,Print your • ostal \ S ervice

on the mailpiece below the article number. S U N N Y S I D E G O L D C O R P O R A T I O N A N E C H O B A Y C O M P A N Y SILVERTON CO 81433 & PO BOX 177 GEOL 4b. Sen/ice 4b. Type Number4a. Article 7. Date Delivery of 7. eitrd Certified Insured □ Address 8. Addressee's Return Receipt□ COD for Merchandise ExpressMail □ □ Registered □ and fee Is paid) 155 380264P extra extra fee): (for an following cervices Consult Consult postmaster for fee. 1 a l s o w i s h t o r e c e i v e t h e . RestrictedDelivery □ 2. 1. □ Addressee's Address Addressee's □ 1. (Only If requested Permit No. G-10 No. Permit S P S U Postage & Fees Paid Paid Fees & Postage Mail First-Class

m CC cc Jt t> « £ 3 S 8 a O 3 3 c ) O S >. P I E 5 9fi0 a tl p iss 3ao ata

US Postal Service US Postal Service Receipt for Certified Mail Receipt for Certified Mail No Insurance Coverage Provided. No Insurance Coverage Provided.

Sj%\l .Tan/J ¿ni. t o e w i . TbÜMCotMfânh\m> Street il Number W f f i y 4 5 5 ffe Bdk 154 Post Office, State, 4 ZIP Code _ , " PostOffice, State, & ZIP Code S t h ) e O d k ) Æ ¿/..iMpTTltó ¿0 Postage Postage $ .5 5 * . 5 5 Certified Fee Certified Fee I. 3 5 I ■ 3 £ > Special Delivery Fee Special Delivery Fee

Restricted Delivery Fee Restricted Deliver/ Fee Return Receipt Showing to Return Receipt Showing to Whom & Date Delivered Whom & Date Delivered ■ ID h i ù Return Receipt Showing to Whom, RetufnBe«ftShowir\fljo Whom, Dale, & Addressee’s Address i DatrffA^e&eeVAtJcfojs AJ9JAL Postage & Fees | nOyfCPostaae^Beas» $ 3 , 0 0 $ %.DO

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u •a rfi a 'f5 a.

Sent to , , . y, Sonito , IW ó - tn/WM-f IdtóO A J uifuj/./a&iôK&fiJ' D M é ££ Street & Number Street & Number 1 ^ 4S4m/eA)ftD£ ^/£>j t i m & l i c i Posi Office, State, & ZIP Code _ - Post Office. State, & ZIP Cone T M M U f o O (D «1301 nueM ôD r o s/3£>i Postage Postage $ ife.co $ Certified Fee Certified Fee I.3S / . 3 5 Special Delivery Fee Special Delivery Fee

Restricted Delivery Fee Restricted Delivery Fee Return Receipt Showing to Return Receipt Showing to Whom & Date Delivered / , / o Whom &£frtB'T)Citvyed !■ io Return RegiiftShovmgtoWhoni, Oats, ¿’tf&tossee's Address e. ymosseeV^idr$s » TOxfiyPostage^^aee $ ¿>.“45 * 5 . 0 / 9 Fto^ijarkc^,D^V j > k fô m & irô i Date / J ! J j 3

P 1SS BAD 2b3 P 15 5 3fl0 25*1 US Postal Service Receipt for Certified Mail US Postal Service No Insurance Coverage Provided. Receipt for Certified Mail Do npt use for International Ma» io»« i*v « o w No Insurance Coverage Provided. smiiL'7%)h S^ a I ê M MmntALZ Ttid Street & Number * , post Office, State. & ¿IP MM n\n f>u,,-te/n Posi Office, State, 4 ZIP Code -, , 7y! s m in ò .Cl toDLTyTÒ Co W o t Postage v $ M3 Postage $ . 5 5 Certilied Fee . l/ò£ Certified Fee ) • 3 5 Spedai Delivery Fee Spedal Delivery Fee Restricted Delivery Fee Restricted Delivery Fee 2 Return Receipt Showing to *- whom &Datgr Delivered __ MR ______Return Receipt Showing lo 5 RoturnlW!^0%i^gtoVVhoin Whom & Date Delivered / . 10 pjs'trnarklatjiata ■ 0 3 CO jPostirujji^oMiate J -,

I ' \ " ^ J?J CL • \ Ç.^yT N',^ .______,V* ? tt'ïs* r^Mbi ' ' » ■ ;. ,<*'"■*»____ ' > / -t i ’W

COLORADO DIVISION OF MINERALS AND GEOLOGY / *** MINERALS PROGRAM INSPECTION REPORT PHONE: (303) 866-3567 - ■ ,

r > I f ' \ *\ » k>? fi'i) I !" J * The Division of Minerals and Geology hits „conducted aninspection of the fining .^pferation noted below. -.This report documents observations "c&ncerning compliance of the mining operation with the permit and the regulations vof the Mined Land Reclamation Board. The report notes: ■;%.

1) Areas of successful compliance; 2) Problems and suggested corrective actions; 3) Possible violations to be considered for possible enforcement action by the Mined Land Reclamation Board.

OPERATORS.SHOULD READ THIS REPORT CAREFULLY BECAUSE IT MAY REQUIRE CORRECTIVE ACTION AND/OR RESPONSES TO THE DIVISION IN ORDER TO AVOID CONSIDERATION OF POSSIBLE ENFORCEMENT ACTION BY THE MINED LAND RECLAMATION BOARD. .

MINE NAME: StfhhtyStdc M îtIS* O P E R A T O R : SuftftySïofo* G lpléL C otp. C O U N T Y : 5 c th ______M I “ j P t> TYPE OF OPERATION: C/to*3iyM /H^4rlL INSPECTOR(S) : Tofri GtfLCl$ MINE ID # OR PROSPECTING ID ft: INSPECTION DATE //-V?"’ 9 S DATE OF COMPLAINT MA. INSPECTOR' S INITIALS TÙG ______TIME OF DAY (MILITARY) f l : o p INSPECTION TYPE CODE0) SX ______POST INSP. CONTACTS** US. JOINT INSP. AGENCY CODE® MO ______REASON FOR______INSP. CODE® XE WEATHER CODEw Q ß _ OP. REP. P R E S E N T ¿flTH-fj ßtLi G oodlairT

1) INSPECTION TYPE CODE - [CL-IN: DL«Illeg*l Operation, MI*Monitoring, MP«Mineral Prospect, Sl-Surety-related, PR=Pr*-operation] 2) POST INSPECTION CONTACTS AND JOINT INSPECTION AGENCY CODE - fCL-AO: NO « None, B L=BLM , CH “ Colo. Dept. Health; CL*= Land Board, CT=Citizen; C W » Wildlife, FS=Forest Service, HW =Hwy. Dept., LG«Local Government, SE=State Engr.) 3) REASON FOR INSPECTION CODE - (CL-RS: AG= Other Agency Request, CT=Citizen Complaint, IE= Normal I&E Program, HP= High Priority, PY«° Priority] 4) WEATHER CODE - [CL-WE: CL«Cloudy, CR« Clear, IN »Inclement - prevented inspection, RN=Raining, SN=Snowing, WD=WindyI

This list identifies the environmental and permit parameters inspected and gives a categorical evaluation of each. IF PB OR PV IS indicated. YOU SHOULD READ THE f o l l o w in g PAGES CAREFULLY IN ORDER TO ASSURE COMPLIANCE WITH THE TERMS OF YOUR PERMIT AND APPLICABLE RULES AND REGULATIONS7 If PV is indicated, you will be notified under separate cover when the Mined Land reclamation Board will consider possible enforcement action.

GENERAL INSPECTION TOPICS

(A R )R E C O R D S ...... y (FN)FINANCIAL WARRANTY . X- (R D )R O A D S .... y _ (H B )H Y D R O L O G IC B A LA N C E ; . . y (BG)BACKFILL & GRADING . UL (EX)EXPLOSIVES uk (PW)PROCESSING WASTE/TAILINGS (SF)PROCESSING FACILITIES y ( T S )T O P S O IL . . . (MP)GENL MINE PLAN COMPLIANCE y (FW)FISH & WILDLIFE . . . y (RV)REVEGETATION y _ (SM)SIGNS AND MARKERS .... (SP)STORM WATER MGT PLAN j l (SB)COMPLETE INSP x (ES)OVERBURDEN/DEV. WASTE . . *_ (SC)EROSION/SEDIMENTATION X. (RSiRECL PLAN/COMP y _ (AT) ACID OR TOXIC MATERIALS . X- (OD)OFF-SITE DAMAGE . . . _y_ (ST)STIPULATIONS ttà

Y *= Inspected and Found in Compliance PV « Inspected and Possible Violations Noted PB = Inspected and Problems Noted N = Not Inspected NA = Not Applicable

WHITE - PUBLIC FILE YELLOW * OPERATOR PINK - CORRESPONDENCE FILE af ' £ ' ■ ') (Page 2 ) 1 ^ MINE-ID^ OR PROSPECTING lb tt 77«*37ff I / * / ? - < ! $ ______■ INSPECTION DATE __ INSPECTORA S INITIALS T¿ > S ; • ■ ■; ' \j ’/ ,*s* o’ -V.-/'.v:' V ■*/->*-O'1

OBSERVATIONS ' '

¿M?s lo awtuct'feL. hhe Cotefrfrcfa o f líe. 'Mayffótueir- hftiLL butldwGy t i e o l d p o w er PCgua! hm ldm i) atvl tk& olsd rio/Ct. lourh xo r PossrLLe -fulure. release. fro** recLcttoafttm re&Pomtkjlriy. ALihwsk tie, operador kct% hoi y e t Stíkmífad a reW eCb for frniL release.^ SutMVSrda. (hold CotP. anticipates a. r&Ceasz. tezue s f fn t’ke. near falure Ctncl tit &P€ rotor tA/a^fed "to have* an 7íñSP£cfroñ o f Ike- Site cotoPléfed Ptror to ibe. onset o f U/ínter u/keh r / s iMpozsrbLa, to conduct ah aJe<%udtz tn^Pecfjoh o f the. structures*

Mavílou/er Ml¿¿ S u t Lo /t u I ónoí TMmec/'aíe. ^ u n r o l/ n d U 9 k a r Z a . i D u rr« 6 tie. insPect~pv\$ alL -ícccrZrTres coMPtrsinS like Mayflower* iÁili fátflxtv u/are observed and euaíuorfed for Possible. future. ratease* These, fací¿the. i ~wcíuded i'ie tnam m ¿ L hctr¿c/in%y crushes burLdrü9b . that* bitstus j conveyor housing admlY\7SJrdf:oA m íídtnS, chance ¡\ouse íh¿tTÍcr} clemreaL staraQC hu:ldjp% cóo¿ ¿g^% iS -fac7¿77yy 4tiahdsb&dc^ ¿fepí/e g rou\\cl PoujQrLifie.5 a\\d eUchícaL Sübs&iTon > vuctier suwlvtyi/MPrn^ siaíión dt\cd zlora^e. 'tañ^y ouidoor G.%ü7fi>mé*ct siorciSt ccreu^ accéss toóds ahei Pctrkn 19 arcas, Qñd tke. slormu&Ter draWQQe. confróL?SYsfeM +

f\LC p ortion s a i t ie . Ma?/\ m iL L h ¿4 rL c / íñ 3 u/£r^Jfts¥etfgV íhp a¿L srenrírcanT , SUQ irft'lte . s o f hazardous avd/gr Poíe^naUy kaiQtJom ftocessrtíS r e a s e if its * ^ K a T í j c / í / stxtaL 'ckemctLLS from tirs m r L d ít f S anda¿¿ other átsTLcAnas &nd / zfoM se areas, comPtTsms tíe,4ac7¿:"fy* Tie oftív tÍcms rcm arñp^ C£>n$TsH~ o i a i/Sry minor tuahfí'fv o f ívPrcaL koUtekoLot fv/>e Prodt/aí sack as de~7C7ftS aéerífs^ 9 Lue$> seaCa^fs^Sropfp u / a £ Íe a 7¿) cte¿mlM% /enís. Aítkoush tkz u/osie orL attdsoLías^s c¿ré &e7n9 P r o p e r ty s t o r e d it\ confar/\er$ cfeS7Shtéed for tla 'f Pur Pose> Qhd tie. proposed neur ou/ners o-f tieJ nir¿ ¿ (Sán Tuar\ C¿>uhlv H istorical. Socxely /

I & E Contact Address cc: □ CE . O t I o D bl-js, míL7am K. Jones. N flM E ------— lf rr-y '^ ‘"o , .------— •° KK P-O. B o X 116 O P E R A T O R ______JtfiMySTae. UtoLcL Cotp«______□ HMWMD (CH) Ñ[af\ttát¡ C D E/POZ.

S T R E E T ______P. o . B o * u y ______.□ W Q C D (CH) ^ MINE V ID^Í ÒR PROSPECTING #_ M-77-Ì9S INSPECTION DATE ‘ /'/*" I 9 ^ 5 ______INSPECTOR'S INITIALS 106,

■ ’ V 1 .;jì';ìi':■'‘/'’'r-./'-■■r'-sS'MÌ/' OBSERVATIONS jmdtofeA. jtetf..so.m* ,er o,U tGMci.W Tnsf ckemcaiis'iyxLi . '■2ü-|¿ y , ¿<í§ p 3 Me DmsTon tCcoMMehch removing He maLi

f\LL ptocessmZ ~tamkiy accessible. P1P& w orks, avd fhe. L u tLcJ ta^ s 1hicrmetL chraim°iZ./%amP Svsiem u/erc ihttecizd at¡d íoard io ¿ e ¡ essetifia.¿¿Y -ftec o$ srenrfrcctof cancerifaofioHs a% Msti&uies '-: *•

caked, ató** r ^ e h o ffo M 0+ Tapks cum a/irnrfr Pipcuhzs. The..oPehufor- nchcdiecL fk a i fie. fanks kodheea cleaned o u t fn recent years rh óreles io recover av\Y miaL values retmmws ra H e tocrfetraL. T he e t i f i r t m 'LL karlc/w^.rests an av\ w lbcf conc.r¿ft *íLoor CompleJe. u/rtk am In ie rh a C o/t

Re^ard'h^ vevi&faL i ta tf k and s.a4efy concerns, a. sight's te a n ' t . concentration o f rodent droPPTnQ^ was observed f(i hie?)}y á re a s o r H e mrli burlc/ms. MofiftoMLLy^ cl i/anety o itfi>hnT;aC physical scdefy hazards a/tre. oíseti/cd, cofórstm** o± trifPinQ hazard s , bur overhead cLea+ancc - hazadsj ^aUm^Uazards^ ah¿¿ ¡Possúie: ¿oadhearín^' capacity on sour stoc/ps. fie tttmtKAl Sccxefv■ iAouíd-proirde, j h .m tm % r:K ¡h te a S o M U c '■ assurance* io lie Owsu>* Ptior io ímaC reíevse. k our these. poÍe»fra¿ health and serféfy PH>é¿ems'$#(££':'hc • ( ^ ^ u á f e C jK>- ■, ■ adcltesied otñct ií■ ■ ' V , •‘■■k *^!.;-,i - , j * ' w*’ A «1*7 7 ‘t ' A (Page 2 ) * ' . . '<■'■■■•*** . . . _... ■ •^Mlire jpjT OR PROSPECTING’ID # : -^V;V'

INSPECTION DATE : 7 f w 7 - 9 S _ INSPECTOR'S INITIALS T/>6 a ; : 1* : # « ;:■■ ■■ r : , . •'"'.;7 v ’ OBSERVATIONS . >; ;; • ■' -

i l * a t aLC cketM7cai maieti^Cs have k e e n '^ o i n siora&* huilc/fms^ a ih e r aftOrlCair y ib(AlLd:n sis^ and, irotv\ ourj&or e.

The eiccfticaL transfortoefrs Covitamzd u/T'Mrn "tie. StfktjciftM T&cr/r7y . ¿¿¿r< WSPccted and 'ioutid ic> hairt. "PCfi Free"¡e/wMccettton Lcthois oh

PtiL hrlC zioP£$ u/j-f/irn "the. m il Sift cowPoahd faav£jJ>eew hecen'//y k^ciroscec/ed. $ touLaked- T ie fernams a, watfe. $>ck Pile SrlaccTed to 't k a tio r fk m s ^ o$ ike. mxLL ktfiicJiM * ka%-¡¿fiSMk ^ h ^ ^ d p fd i eecfeot a s u/eiC» Ik^m tBcu ma^i ¿e uzeA as a. Parking’¿o f ¿y M&MrdorTcai .Surety*

fLL tctrilHQi cinficsaL areets Hmnec/rafei-y ac/)ace^'f "ft> f/ic m y L t^ 3 'SaaLt'fy appear fo have Lee^\ comptcfeCy tccLcemec/ ih g^ac/rn^ The. P&hd emioahkmCiAis^ cctPPlflQ ~ftie 'faitmQS McrftirXaL) afad c t 4 4 t o i e c ( areas u/~lk PerebfiraL Grasses aac/asreh ’ft&e seGcf/rHsss.

? TAe' ilarMMtfev- c/kirnase' cokiroL SYsTem asiocijCteci ut't'ik j' l t m jCI'W^ 1; " •facrL-wf Mas ThSfecUet anet •found io be IhiaiJ and isr«6/S9fl7)i3 y<: . Pro'PeHv erf" fk& i'm& o - f ike inspection, ^ 1 f

O ld Pouer fegywf Ba'ldtn^ thuie. Rctrft* and 'iM m edlaieiy SavtoUhJlh3 A rea S

Th%AhS:d& ,M d Qul$id& siriiciufret u/ere.

I &’E Contact Address cc: □ CE □ b l : N A M E ______;______;______'______" 0 FS?'- □ HW ; O P E R A T O R ______D H M W M D (CH)

S T R E E T C A M ^ O WQCD (CH) ~ 'IQ O T H E R C I T Y / S T A T E / Z I P ______INSPECTION DATE - ■■r?"'- I J* I 5 ■■■■■ =■■■• ■■ INSPECTOR'S .INITIALS 7 M

^ *5 .•«.**. >r ( ; x. i ■ : *.*. . *ï -.: . ..''¡y*.?' : /v^y. ■ ... « ;• . ■.- * i . , ;• .

OBSERVATIONS 'Jum s- 4he-'miFèctm.' No 'PoÎMp<*ùy-wi <-j<- •••■ énwt&ùtoèütd'ttfïietictrets™wert, ■ ok>srLL kc adeoc~efv. y . „

SUMMARY

The May^ioCf/e^ MrLL lo&illo/rhB and asiociatcA^acjiffrCS^ ptus ih t oLcl PavotY P lan't hu'tLc/iv\Q cihcL M ttieÜ ary\ 5 c a t i be, r6*(JÊz$ca■ w-;;D^rdTy m L L address ■'fke. ■''ottisiabdws ■"h&iC'fk'Qnci sc&zrŸ,,.¿onc&M £ d i s c u s s e d rti Ü i z IqoJ ^ o ï fhrs Import. J f rs Hc Dwsjom^ ttâitcfifi-heQÙÏA a t e d S c r ( & T v concords w rLL becotoi*. ïkç. rcsfahsikùïry% £$M $ov\7t*ûh G>uniy WisteKcei S aa^ty o/?ce fh t sï'fes a rt reCeoïeJyand fia i iho.Se, coftceriii a/ïLL Le. ac/eyuaTôiy faker\ carC o j' hv fk c Hruorxcnt S o cie ty , d i A r l b k V ^ e Process o4 C onvertît 9 '/ ' / e bûri&/rvt%$ oi/et* fo h r s io r r e ^Wl\rzfri Ù/rVl ‘Les ïh Sont tiwii att -iv r & L & & < ü ( £ f U Drt/fcron • ;~

j - . ■ : ■ M-.V.

--1 : .V

■ ■ ■ 5'';’ I & E Contact: Address c c : □ CE P B L N A M E • ■______O I S □ H W O P E R A T O R ______j . ______□ H M W M D (CH) S T R E E T ______/ km*'______□ WQCD (CH) fi OTHER SAN JUAN COUNTY HISTORICAL SOCIETY INC. PO BOX 154 SILVERTON, COLORADO 81433 Mr Tom Gillis, Reclamamtion Specialist Division of Minerals Si Geology 1474 Main Avenue, Room 207 Durango, Colorado 81301 Dear Tom: This letter is to address health and safety issues raised in your recent inspection report on the Mayflower Mill. In general terms, upon acquiring ownership of the Mayflower Mill and

President SAN JUAN COUNTY HISTORICAL SOCIETY INC. PO BOX 154 SILVERTON, COLORADO 81433

Mr Tom Gillis, Reclamation Specialist November 14th 1995 Division of Minerals & Geology 1474 Main Avenue Room 207 Durango, CO 81301 Fax 970-247-5104

Dear Tom:

IS«»!? ^or.c^?ir J4me yeste^tiay to review our proposed acquisition of the historic Mayflower Mill in Silverton. thflF°f»iihM«Ffi'S.C*US9i??i th^S lett?r is to notify the Division that the Mayflower Mill and associated properties proposed S u? by Sunnysi?e Gold corporation uaeta the reclamation and clean up requirements of the Historical b o c i s t y *

t^at a f*-nal inspection by yourself is the next step in this process, we are ready for such inspection and Friday, November 17th would be convenient for us. Either Beverly Rich or myself or both will attend.

Sinao?nG??5?ci Beve^ y at 387-5488 or my office at 970-249-5366 to confirm a time for this inspection. Again thank you for your assistance in our efforts to preserve these significant historic properties.

Sincerely yours,

SAN JUAN COUNTY HISTORICAL SOCIETY Inc.

Willianyi^ Jones Treasurer

Post-It™ brand fax transmittal memo 7671 # of page$ ► (

From % x 19 S i t u S ' t w y i X i Copy? B Goodhard Co' C a ‘ t ~ B Rich Dept. * fa*» l( t[ S H t > UNITED ST'AIES NA I URAL RESOURCES 3 i SU f I Li; STREET DEPARTMENT OP CONSERVAT ION SERVICE DURANOGCO 8X30.1 AQR1CUI. T URE (9 70 )259 -3289 FAX (9 70 )2A7-9318

La f ry Peri no .1 1 - 3 - 9 1:.. S u n n y s .1 d e (;i o J d (; o r p,. Itl Qiaclstone PO Box 1.7 7 Si Ivertoru CO ill433

J„P.. Pannel I „ Soil Scientist, and I evaluated I';he reclamation work done in the Mayflower Mill. area on September „U1,, .1,995.. We of ter the following comments and observations for yoi.tr cons iderat: ion.. Please feel f ree to copy this cor respondance as y o u d © e m n e c e s. s a r y

Grass stands in all. locations was excellent,. Older stands (oJder than 1. year of establishment ) were in excel lent condition with greater than 30?. ground cover (that is the maximum anywhere on these range site areas) Grass stands younger than 1 year of establishment were established to the extent that spread of the root crowns was ai ready occurring- Again., 1 saw no area needing to be reseeded.. Your- work with liquid fertilizers^ mulch,, lime,, soil replacement: and soil stabilisation exceeded our highest expectations., Erosion on the sites was minimal and much less than what would occur on native range sites in the same vicinity.

Trees planted on the sites were of varying success.. We discussed t h a t t h e s i z e o t t h e a s p e n t r a n s p 1 a n t e d ( t o o b i g ) m ,i g h t h a v e b e e n a problem as well as easily damaged by dees'- and elk but the spruces and pines were doing quite well,. You added many forb and shrub species to the site stabilization mixes and all were very evident: and doing well.. t do not see the need to add the forb and shrub seed to future plantings due to the fact that these evidently Invaded the planting sites immediately upon soil replacement,.

1 have reviewed rec lamation sites for over 20 year s tor NRCS (formerly the Soil Conservation Service).. Your particular site is extremely difficult to reclaim due to excessive slopes, lack of soil material, extreme altitude., short growing season,, wildlife destruction,, etc,. 1 personally feel this is the single best reclamation job I have ever witnessed and I heartily endorse your ef f or i.s ,.

(hank you for inviting us to evaluate your mine reclamation activities.. 1 hope we can be of assistance to you in the future,. SALEM MINERALS INC. 717 12th Street, Suite 117 Golden, Colorado 80401

Phone/fax (303)715-0641

Sunnyside Gold Corp. P.O. Box 177 Silverton, CO 81433

Attn: Mr. Larry Perino

Dear Mr. Perino:

Per our discussion with yourselves regarding the Big America, Holy Cross, and Black Cat patented lode mining claims in Gladstone owned by Salem Minerals Inc., Salem is desirous of using these lands for purposes other than mining. We ultimately hope to place several cabins on this group of claims, with roads, water system and electric service, and have started working towards this end.

The area that Sunnyside Gold used as a borrow pit is part of these plans. The steep bank at the bottom of this area actually leaves a nice level area for us to park vehicles off State Highway 110, and we hope to use this area as the base for a roadway behind the round-roof cabin to the other existing cabin on the property. We expressly do not want this level area filled in. We also hope at some point to put back in place the road to the top of the mill foundation, that the borrow pit obliterated a section of; this road would connect the existing road segments on the upper sides of the borrow pit.

We understand that Sunnyside Gold has included this area in your mine permit and are responsible for reclamation. Due to the future planned grading work, we feel that the borrow pit area is suitably reclaimed and request that you work to have the claims removed from your mine permit area.

for Salem Minerals Inc. Todd C. Hennis, Pres. . _ ^ ¿ -. Z J L & l ------1 - —

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V 5 7 . 2 . & Mayflower Mill/Tailing Pond Area

The M ayflow er Mill/tailing ponds permit areas occupies approximately 202.8 acres. Lat.— Between approx. 37°48'56" and 37°49'46" Long.— Between approx. 107°37’32" and 107°38'57" Jlams^™11 8163 COvers Port*ons or ° f the following patented and unpatented mining i -cj? ~t Q cl I ^ ^ t h /) V3 c7 /3 S8rK » NS> ///?-€ H I p r> *Oold, Buena Vista Lodes 14012 hj$ ou/ f

unpatented o 2 ft { < ¿Polar Star Mill Site 7608 2.% yV'JL M t'K ç i t f Bend, Peters, Ann Harris, •¿ÖtiJLrj-fQW M lI1 ? Jeanette Roux Placers 11596 ^ MD Thatcher 17699 /.K arla Mill Site Amended unpatented A Marge Mill Site Amended unpatented lair Placer ; 841 “S" Mill Site 20407 Surprise Mill Site unpatented

American Tunnel

The American Tunnel affected area occupies approximately 28.8 acres. Lat. — Between approx. 37°53'18" and 37°53’28" Long.— Between approx. 107o38’5(r and 107°39,13" 4’J f . )‘ IX* ,( > IIS r ^ ! > „ 7 , , 'y

Thepennit area covers portions or all of the following patented and unpatented mining

Survey No. h Herbert Placer 13562 ^Harrison Mill Site 14710B Anglo Saxon Lode 14875 V Lead Carbonate Mill Site 20726 X American Tunnel No. 1 Lode unpatented ^ Gladstone Mill Site unpatented Big American 17472 Black Cat 17975 Holy Cross 17976 * M/tl S fT i .... „ „ ...... „ c/ Terry Tunnel

The Terry Tunnel permit area occupies approximately 4 J acres. Lat.— Between approx. 37°53'32" and 37°53'36" Long.— Between approx. 107°36'02" and 107°36'15" S ? ™ ' arCa C°VerS P0"10"8 ° r al‘ of the Allowing patented and unpatented mining

S urvey No. \f( Last Chance 17901 5C Thunder Berg 1395 K Adventure 1443A A McCarty No, 3 unpatented McCarty No. 4 unpa tented f\ Protected unpatented

Lake Emma

The Lake Emma permit area occupies approximately 56.9 acres, Lat. Between approx. 37°53'58" and 37°54'18" Long. Between approx. 107°37W and 107c36'45" The permit area covers portions or all of the following patented and unpatented mining claims: ^

Survey No. Northern Pacific unpatented LittlcMaiv S 2038 Republic / 12724 Goat unpatented Oregon S 17233 Belle Creolpy \ 2021 P r o n t o / unpatented T 2027 -Oracle ^ 1 ^ 8 1 2 Terry 179fc. Buck unpatenteo\ Pearl 5975 12723

Access Roads A ll roads are public access, including the road serving the Terry Tunnel and Lake Emma sites— County Road 25.

Existing Permitted Area; 140.0 acres Additional Acreage Per Amendment: 153.0 acres Total Permitted Area: 293.0 acres. The amended areas lie within a region of a suspended survey. A legal

description giving the i,£ sections of the affected area cannot thus be

given. The affected lands may be approximately described in terms of the

claims and their Mineral Survey number (where patented), and by the

approximate latitude and longitude as extrapolated from the U.S.G.S Handies

Peak Quadrangle, 1955.

Lake Emma /Terry Tunnel Areas

The Lake Emma and Terry Tunnel permit area amendment contains approximately 167.05± additional acres.

Lat. - Between approx. 37°53,28" and 37054’25" Long.- Between approx. 107°36'02" and 107°37'06"

The current and amended permit area for the Lake Emma and Terry Tunnel areas covers portions or all of the following patented and unpatented mining claims:

Survey No.

X Northern Pacific unpatented* * Little Mary 2038* •¿Republic 12724* XGoat unpatented* Goat Annex unpatented ^ Oregon 17233* Emma 484 X Belle Creole 2021* /Pronto unpatented* > Lake 2027* Oracle 17812* Terry 17986* p( puck unpatented* X Pearl 5975* * Climax 12723* No Name 2272 ? f t Kid unpatented Grand Duke 2020 7 Mountain Sheep 17432 ^ 'McGarty~No-i~3— -> unpatented* unpatented* ■p»r* Protected unpatented* Portland 18733A Independence 18733B Midway No. 31 unpatented Shoshone 17201 SM-15 unpatented yi SM-28 unpatented SM-58 unpatented SM-64 unpatented SM-65 unpatented SM-70 unpatented Webster 1659 Boundary unpatented Delta unpatented “t ^ l Adventure 14443A* 3 v Last Chance 17901# «■ - ^Thunderberg 1395* A Great Eastern 1691 Briggs 8400 Doctor 2093A Sunnyside No. 2 20003B Gold Prince 20003C Sunnyside Extension 1180 Quail 20003E Moultrie unpatented Moultrie No. 2 unpatented George Washington 2028 Orcus unpatented ^Sunnyside 438 Sunnyside Annex 16668 Joker unpatented Wedge 19160 unpatented unpatented XRaymond 18020E Ruby 18020C Butte City 18020A Silver Bow 18020B Anaconda 18020D Palos No. 1 18732B Palos No. 2 18732C Black Heath 465 Mother Goose 17234 Standard unpatented

* Previously included in the legal description of the consolidated permit application. Repeated here for reference. Eureka Ore Stockpile and Staging Area

The Eureka ore stockpile and staging area amendment contains approximately 25.84± acres*

Lat. - Between approx. 37°52'A4tf and 37°52'59" Long.- Between approx. 107°33'54M and 107°34!16"

The amended permit area for the ore stockpile and staging area covers portions or all of the following patented and unpatented mining claims:

Survey No.

Eureka 420 Roving Ranger M.S. 151B Somerset Lode 16977A Eureka Power 16977B Senator 16804A Tagner 16804B Walvoord unpatented Nasby 250B Townsite

Access Roads

All roads are public access, including the road serving the Lake Emma site — designated as County Road 25.

Permitted Acreage

Existing Permitted Area: 293.0 acres Additional Acreage Per This Amendment: 192.89 acres New Total Permitted Area for Operation: 485.89 acres. P ON D S Ul A N D U2

1991 - Covered and planted Pond #2

1992 - Covered, planted and seeded #1, Fertilized #2 (45-45-50)

1993 - Fertilized (7.17-5.38-8.96), Some reseeding

1994 - Fertilized (17-8-2)

1995 - Selective fertilization (32-0-0)

P O N P m

1992 - Covered, planted, fertilized and limestoned, break up crust 5 ton/acre limestone then planted

P O N P #4

1989 - Covered

1990 - Planted

1991 - Fertilized (20-20-40), seeded (tackifier, mulch)

1992 - Limestoned between 2-5 tons/acre, fertilized (40-45-50), seeded barren spots, and planted

1993 - Limestoned, fertilized (7.17-5.38-8.96), and seeded

1994 - Covered barren areas with topsoil, limestoned (17-8-2), and seeded

1995 - Top Northeast side planted and fertilized

1996 - Top South edge planted and fertilized

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Notations

Location Map sè-qie LEGEND

OBS OVERBURDEN STOCKPILE

TS TOPSOIL STOCKPILE

DIVERSION DITCH

STATIONARY POINTS

SUBSIDENCE POINTS

New Disturbance NNYSIDE GOU) RECLAMATION IN PROGRESS CORPORATION RMir AMMENDMENT LÀKE EMMA sV ». RECLAIMED

5CALE>. I INv = 20Q f EXISTING PERMIT BOUNDARY

PROPOSED PERMIT BOUND, AREA = 66.47 ACRES 1 0 6 7 5

¡0600

1 2 0 0 0 INI

EXISTING BOUNDARY

PROPO.

LEGEND

EXISTING PERMIT BOUNDARY PROPOSED PERMIT BOUNDARY

SUNNY Si DE CORPORATION Sunn vs id e Gold Coro ReAgent Storage Bldg, or row

Equipmen S t o n e Storage^ EXISTING

Refuse Disposal Area

BERM TAILING8S>PONO No.I

R«v«g*totion

BERM

EOWM-I Ê0WM-2

p t A T OCKPI

V 3 S POND

3 - 8 6 ^ p O'n*

featjres per Rjie 2 12 are plotted and labeled on map

p ro p osed Arc. 3

Permit Area - 202.8 ac.

STREAM MONITORING SITE

WELL

CONTROL POINT New Disturbance

RECLAMATION IN PROGRESS

RECLAIMED P L A T E 3

'NFC JNCmANGED c«0M C«lG APPLICATICI) »EFER TO ExhiBiT ■

DRAWN BY. rnds SUNNYSIDE GOLD MONITORING SITE LOCATIONS TRACED BY MILL , TAILINGS PONQ, AND OFFICE CORPORATION ÇH£ÇK£Q BY______SILVERTON , COLORADO DATE APRIL 1986______N 0 TE SUNNYSIDE MINE uSvM EVERGREEN S 50,0 0 0 REFERENCES H A ZC N RESE NORTH. 50,000 EAST 3R*D NORTH

ûSTOTNOMtC NORTh DETERMINED W O ?:?8B, SMC TP i ANG ü l AT >0N SILVERTON, COLORADO A T £ REVISIONS HORIZONTAL D STANCtS ARE projected to A * ■ .000 ^OOT MLRB Amendment 4/86, 11/86 nORfZOWTAL PLANE