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2.04.6 Geology Description •The attached cross section (exhibit III-B) was drawn from drill hole data extending up-dip from drill hole SL-2 located in the NW corner of the permit area to .drill hole SL-20 above the present 02 Mine,. This data represents the interrelationship of our coal reserves in each of the three fault blocks. The absolute elevations of the seams will, naturally, vary due to the displacement introduced by faulting. Three mineable seams, (4' or thicker), outcrop on the 240 acre lease that Sunland •Mining Corporation holds. The upper seam, which is termed zone U3, is lenticular and split by rock bands. These irregularities will make mining this seam in our area extremely difficult. A considerable portion of the zone U3 reserves are burned in the fll fault block overlying the present Apex ~2 Mine. Approximately 200 feet below the zone X13 seam(s), the upper Pinnacle seam is encountered. This middle seam is also lenticular and split, except for one area on the lease. In fault block 93 (see attached maps), this seam appears tobe fairly consistegt. Approximately 50 feet below the upper Pinnacle lies another 4' seam - the lower Pinnacle. This is the seam in which the present Apex ~2 and the old Apex /F1 mines are located. Tha lower Pinnacle appears to be of similar thickness and quality laterally above the rock split in the unmined areas of the lease as is encountered in the present mine. A rock band appears in the middle of this seam and this parting thickens to the northwest (down dip). Only the higher areas of thls seam are mineable with present equipment and processing facilities. About 160' below the lower Pinnacle is a 4th mineable coal seam (the Blacksmith) which does not outcrop on our leased lands. Access, therefore. will be difficult, and our present plans do not call for our mining the Blacksmith. From our somewhat limited drilling into the Blacksmith, the seam appears to be of mineable thickness under fault block 41 and probably a portion of fault block 02. Several unnamed thin seams and various rider seams occur in the section. The nature of these seams can be determined by refering to the drill hole data for SL-21 and the cross section (Exhibit III-B) contained in this section. The Mesa Verde group is characterized by prominent massive sandstone members. The more notable of these being the Twentymile, Trout Creek, and Tow Creek sandstones. The lower coal group, which contains the seams being developed by Sunland Mining Corporation, lies above the Tow Creek sandstone and below the Trout Creek sandstone. The Trout Creek sandstone is entirely eroded off the permit area and first outcrops approximately 2'.5 miles down dip and several hundred feet atratigraphically higher than 24