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• Victory No. 3 <br />• Victory No. 2 <br />• Victory No. I <br />• Peerless Mine <br />• OK #1 Mine <br />• Sunshine <br />• Superior <br />CONTRACTS AND CUSTOMERS <br />Peerless Resources is working with a variety of potential coal customers <br />for the low sulfur, high quality lump and stoker coal from the Durango <br />area. An exploration permit application has been filed such that some <br />limited quantities of coal can be shipped to potential customers. <br />Unlike other coal operators in Colorado, Peerless Resources does not have <br />any other coal mines or vast amounts of coal reserves which can be <br />• produced while the company awaits the approval of this mining and <br />reclamation plan. The expedient approval of mining is imperative if <br />Peerless Resources is to develop a cash flow in order to sell coal to <br />local customers. Coal production at Peerless Resources can be sold with <br />a portion also being dedicated to use for heating by local residents. <br />SIZE AND CONFIGURATION OF OPERATIONS <br />Peerless Resources plans to begin coal production from private coal <br />leases. The majority of the coal mined will be from a lease with the <br />State of Colorado. The coal mined by Peerless Resources will be <br />transported from the underground workings through the Coal Gulch portals. <br />Peerless Resources plans to produce approximately 200,000 to 250,000 tons <br />of coal per year from a room and pillar method of underground mining. <br />The surface area necessary to facilitate underground mining will only be <br />approximately ten (10) acres. The extent of the underground workings <br />• will on the order of about 30 to 40 acres per year. <br />-3- <br />