Interview with Rye Patch Gold (TSXV:RPM) CEO Mr. Bill Howald

SmallCapPower (SCP): On October 26th, 2012, Rye Patch Gold announced a new trial date to settle the legal dispute between the Company and its wholly-owned Nevada subsidiary Rye Patch Gold US Inc. Against Coeur Rochester, Inc. (“CRI”) a wholly-owned subsidiary of Coeur d’Alene Mines Corporation (TSX: CDM) (NYSE: CDE). The trial, which was originally scheduled for November this year is now set for September of 2013. Can you provide a quick update to our readers on why the trail has been postponed?

Bill Howald: The trial was postponed mainly because Coeur put in a motion to postpone the trial based on their thoughts that the trial was complex and there was a lot of information that had been provided to them by Rye Patch on the LH Claims. So they put together a motion. That motion was passed onto the Sixth District Court and the court agreed with Coeur d’Alene to postpone the trial. And then it was a matter of actually finding a two-week, consecutive two-week period, within the court calendar. That two-week period was based on the combined thoughts of both Rye Patch and the court that the trial would take two weeks. So that’s why the trial date is pushed back to September 16 of 2013. What Rye Patch is doing now is working with the court to seek an earlier date. The reason they can do that is because really what’s happened is you basically talk to the court clerk, who administers the court calendar. And we’re going to speak with the judge, Judge Montero, to see if there is some way he can postpone or move around some other portions of his calendar so that we can find an earlier consecutive two-week period.

SCP: So it is Coeur that asked to postpone the trial, not RPM. What were their main arguments to delay the trial considering that the trial date was set early this year and provided ample time to both parties to prepare?

Bill Howald: Well, Rye Patch is prepared to go trial. We think this case is straightforward. Coeur d’Alene did not pay their mandatory claim maintenance fee payment that was due on or before September 1 of 2011. They didn’t know they didn’t pay. And they didn’t know they didn’t pay for 90 days. When they were notified by Rye Patch Gold that they hadn’t paid, Coeur Rochester’s response was to overstake Rye Patch Gold with another set of claims. And hence, that’s the reason we’re in a lawsuit. The facts are very simple, and the law is very clear. Rye Patch is really ready to go forward and defend its claims, and we believe we have a very strong case. And, you know, it’s really quite ironic that for as much as Coeur believes that their case is strong, that they would want to postpone it.

SCP: One of the things that we hear is that RPM did not push back on Coeur’s request for the postponement of the trial. Is this true? If yes, why did RPM not fight back on having the trial in November?

Bill Howald: Well, what Rye Patch was doing was actually going to the Nevada Supreme Court to seek remedies for appointing the special master to the case. If you recall, Rye Patch had gone to the Nevada Supreme Court and had actually won a stay until the Nevada Supreme Court could review the scope and jurisdiction of the special master. So we felt that it was in our best interest to file with the Nevada Supreme Court rather than to go and pursue Coeur’s motion in the Sixth District Court.

SCP: There is a general concern that Couer is having its way with RPM in this case. Investors are getting wary that the case can drag on in that scenario it is RPM that will suffer more as Couer is financially so much stronger. What do you say about that and are you well financed to carry on this fight?

Bill Howald: As I see it, the company has underlying core value in the resources it has estimated. Rye Patch Gold US Inc. has 2.4 million ounces of measured and indicated resource and over a million ounces of inferred resource sitting in open-pit configurations – these are resource reported within a whittle open pit at $1,200 gold and $20 silver. That’s really underpinning the value of the company. Rye Patch also has mega upside potential along the Cortez Trend in its two projects at Garden Gate Pass and Patty. Now you could make all you want about the court case, but really, all the court case is is an option on the Rochester silver mine. And so from that point of view, Rye Patch is fundamentally a very sound company. It has ounces in the ground along the Oreana trend, and a fundamental upside that’s tied to some large deposits in eastern Nevada - the carlin-type deposits – along the Cortez trend. If you believe gold and silver are going up than the gold and silver resources have option value on the gold and silver price. Finally, we have an option on a portion of the Rochester silver mine. So either way, the company has a lots of value that’s not fully recognized in the market. Now your question to whether Rochester or Coeur d’Alene can have its way with RPM, I guess really is a question about what you believe in the American justice system. If you don’t believe in the American justice system, then you probably shouldn’t be trading RPM for the court case because as you’re well aware, you are going to have good days and bad days in the justice system. And what I can tell you is Rye Patch has a firm footing basing its case on the mining law of the United States. And Coeur d’Alene has a number of theories which they’re wrapping legal arguments around. So you just have to decide in your own mind what it is that you like about the company or dislike about Rye Patch Gold. But what I can tell you, it’s fundamentally sound. Its value is underpinned by gold and silver resources in Nevada along the Oreana trend, and it has tremendous upside with its exploration projects along the Cortez Trend.

SCP: Your press release related to the new trial date also mentioned that it is not just the trial that is important but there are some important motions pending for judgement before the district court. Can you shed some more light on that and what should investors be watching for in that regard?

Bill Howald: Well, again, as I said if you’re going to play Rye Patch for the lawsuit, then, you know, the court date is simply a date that’s out there where the trial will begin. But there are lots of other things happening on a daily basis with regard to the lawsuit. Several motions are awaiting judgment by the court. One motion waiting is the preliminary injunction against Coeur Rochester on the LH claims. That’s Rye Patch’s motion to keep the Rochester mine and employees off the LH claims. That is still pending before the Sixth District Court. In addition we’ve put forth a motion for partial summary judgement for the Sixth District Court to decide as well. There are a number of matters of law, again, not innuendo or theories, but actual law that the Sixth District Court can make rulings on with regard to the unpatented mining claims and federal land. So those are all sitting before the Sixth District Court. In addition, as I mentioned earlier, in the Nevada Supreme Court we have a motion or a writ of mandamus, which looks at the application of the special master. The special master is really not applicable to this case. The scope of the special maters duties exceeds what normally a special master is used for. So that’s what the Nevada Supreme Court’s looking into.

SCP: In light of the current status, what is your plan for the Rochester area senior LH claims? Do you plan to continue to follow your intended drill programs and continue to look for discovery?

Bill Howald: Let me set the record straight. We have a discovery on the LH claims and we met the standard of discovery as defined by the Nevada Supreme court from day one, and so we’re not worried about discovery on the claims because we already have them. And, in fact, we’re moving forward with our phase two-drill program which is gearing up in the next week.

SCP: What are your expectations going forward in this case and what are you doing to position your case?

Bill Howald: Rye Patch’s expectation is we have very strong case, as I said, our case is based on the mining law. It’s the law of the land. It’s not the law of Rochester. It’s not the law of Pershing County. It is the mining law of the United States of America. And if you believe in the justice system, and you believe that the United States has a rule of law, then these laws will be upheld and our position is Rye Patch should win this case.

SCP: Although investors have of late focused on this high profile legal case, there are several other important catalysts related to RPM’s different projects. We are particularly interested in getting an update on your Cortez Property, the Garden Gate Pass project and RPM’s Patty Project, a JV with Barrick Gold and McEwen Mining. What are you planning there next year?

Bill Howald: As I mentioned earlier, right now we’re drilling on Garden Gate Pass and at Patty. Those programs are going forward looking for similar types of mineralization as discovered by Barrick just immediately to our north. The programs are, as I said, in progress and those results will be coming out in the next four to six weeks.

SCP: Thank you very much for this update for our viewers Mr. Howald, and thank you for your time.

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