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... '~-_ <br />Page 2 <br />which varies in thickness from 4.3 l0 6.2 feet. It lies immediately <br />below tiie Cliff House Sandstone. The upper seam is overlain by <br />a few inches of interbedded sandstone and coal; and in turn by <br />more than 300 feet of massive sandstone. <br />The lower seam lies 45 to 100 feet below the upper seam and <br />varies in thickness from 2.2 to 6.8 feet. The lower seam has not <br />been developed. <br />The LaPlata No. 1 mine caitrols approximately 1,808,600 tons <br />of underground minable, recoverable Menefee reserves. Table 1 <br />below provides a summary of the reserves according to the current <br />permit and land status. Recoverable tons are based on a 65$ coal <br />recovery factor. Coal reserves are controlled by private fee and <br />lease and LaPlata County lease. <br />TABLE 1 -COAL RESERVES <br />Seam Thickness In Place Recoverable <br />Upper Menefee 5.5 ft. 1,238,400 805,000 <br />Lower Menefee 6. 0 ft. 1, 544.000 1, 003, 600 <br />TOTAL 2, 782, 400 1, 808, 600 <br />Mining Operations <br />The mine is located in T35, R11E, NMPE in LaPlata County, <br />Colorado. Conventional room and pillar mining method has historically <br />been used to produce coal at the mine. Coal Is transported from <br />underground to surface by conveyor belt where it is stockpiled <br />and loaded into trucks for transport to market. <br />The mine is sized and permitted to produce approximately 60,000 <br />tons per year. The permit has been approved by Colorado Mlned <br />Land Reclamation Division and it is currently in force. The permit <br />area for the mine includes 193 acres which 7 acres are considered <br />disturbed area. <br />Marketing <br />The current demand for this coal will focus on the local industrial <br />market and domestic sales. Tf~e industrial market includes 2" x <br />0" product and stoker product (1~" x t") . The domestic market <br />Includes: lump (t4"), stoker, nut (4" x 1}"), and slack (-~"). <br />Coal Quality <br />Table 2 illustrates the anticipated coal quality for both the <br />Upper and Lower Menefee coal seams. Tha quality is on a run of <br />mine as Received Basis with a 6$ dilution adjustment. <br />1 <br />