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Menefee Formation <br />The upper part of this formation contains the coal seam to be mined at <br />the King II Mine. Sixty seven years of mining at the King I Mine two <br />miles southeast has not encountered any ground water in this formation. <br />Well Number 1, which is drilled in and draws water from the Quaternary <br />alluvium, has a static water level 76 feet below ground level. Ground <br />level at that point is at an elevation of 7,390 feet above sea level. The <br />coal seam being mined is at an elevation of 7,450 feet. Thus, the mine <br />will be located at least 136 feet above the potentiometric level. There is <br />no indication that the aquifer will be affected by the King I Mine. <br />An exploratory core drill hole located in the SE/4 NW/4 of Section 32 <br />was driven from the surface through all the overburden strata to the <br />base of the currently mined upper Menefee coal seam at the King I Mine. <br />No water was encountered. A well core hole was driven in 1978 on the <br />King I Mine bench near the water tank to a depth of ninety feet. The well <br />was dry. The collar of the well is below the upper Menefee seam outcrop. <br />These two holes along with the previously mentioned active water wells <br />indicate that the overburden strata, and strata at least to a depth of <br />twenty feet below the lower Menefee coal seam contain no aquifers. <br />The best evidence is, however, of no disturbed aquifers or no aquifers <br />and no ground water seepage in the mine workings themselves, except <br />for local perched aquifers. Water was be pumped into the King I and is <br />pumped into the King II Mine for dust and fire control. This is a normal <br />need for operating coal mines. Intake water used inside a mine is <br />typically not pumped out or discharged. <br />Point Lookout Sandstone <br />The Point Lookout Sandstone is below the formation to be mined and will <br />not be disturbed during the mining process. The upper 100 to 140 feet <br />is massive sandstone which may or may not contain significant amounts <br />of ground water. Wells have recently been drilled into this unit for real <br />estate developments in the area. Small amounts (max. pump rate of 30 <br />gpm) of water were encountered in some locations. <br />Searches of the records of the Colorado Division of Water Resources for <br />the King I Mine and personal observations of Fred M. Johnson, Certified <br />Professional Geologist, indicate that quality of water in the massive <br />sandstone member of the Point Lookout Sandstone is good. <br />GCC Energy, LLC King II Mine <br />Section 2.04.7 <br />Page 2 April 30, 2015 <br />