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Twentymile Coal, LLC (TC) Geologic and Engineering Data Report Lease by Modification Application — Wolf Creek Reserve April 2014 sequence. The lithology consists of mudstones and claystones, siltstones, and very fine-grained interbedded sandstones. The combined thickness of these sequences range from sixty to ninety feet. These rocks directly overlie the Wadge Seam, which has previously been mined within the mine plan area. The Wadge Seam thickness averages 11.0 feet in this area, and overburden depths to the Wadge seam range from 1,200 feet to 1,400 ft. Directly below the Wadge Seam in the planned mine area is a persistent and laterally continuous layer of material of clay -sized particles. Beneath this clay is a zone of alternating thick shales, claystones, siltstones, and intermittent lenticular sandstones. The shales are generally continuous and the sandstones discontinuous. Near the base of this zone of alternating beds is the Wolf Creek Seam. Within the planned mining area, the Wolf Creek Seam splits into four distinct benches. The seam thickness ranges from zero to twelve feet and displays good consistent lateral continuity only in certain delineated areas. Exploration holes drilled within and near the planned mining area are identified on Plate 3. Drilling operations encountered ground water within the Twentymile Sandstone, the strata immediately above and including the Wadge Seam, and in the Trout Creek Sandstone, however no significant ground water flows were encountered in either the Wadge/Wolf Creek interburden or in the Wolf Creek Coal Seam. Some major lineaments in the underlying Precambrian units are projected to occur within the area and may have some association with possible faulting within the Mine Permit Area. As indicated on Plate 2, faulting has been identified in the area to the west of the mine plan area, paralleling the mains. Structure data was modeled on both the top and bottom of the Wadge and Wolf Creek Seams and there was virtually no difference in trend. The structure drawing illustrated on Plate 4 is drawn on the bottom of the Wolf Creek Seam. Underground mining operations in the Wolf Creek Seam within the planned mining area are expected to encounter similar geologic conditions and hazards to those that TC encountered and successfully dealt with in the overlying Wadge Seam. Known faults form the boundaries of the planned mining area to the east and west, and are not expected to impact the proposed operations. The Wolf Creek Seam does contain splits and partings, which will limit mining in certain areas, however, the occurrence and extent of these features is well delineated by drilling operations, has been considered and addressed by the proposed mining plans, and the parting materials can be effectively separated from the coal in TC's existing Washplant, based on washability testing. Similar to the previously mined Wadge Seam, the Wolf Creek Seam does not contain or release any significant quantities of methane gas (based on methane desorption testing). Given drilling results which indicate no significant water in either the Wadge/Wolf Creek Interburden or the Wolf Creek Coal Seam, mine water inflows are not expected to be a significant concern. As previously noted, there is an accumulation of water in a portion of the overlying Wadge Seam workings which will need to be drained prior to undermining this area. TC plans to drain this water and transfer it to other areas of sealed mine workings in the Western Mining District. Recommendation of the District on company data None. 4. Verification provided by the State Office that the coal requested by the company does not exceed the regulatory allowance when leasing by application. Colorado State Office function. Mining Sequence Refer to Plate 7 — Mine Plan Map. WCR BLM Lease App Geologic & Engineeering Data Report 0414.docx Page 4