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Tract Delineation Report - 2003 The MCC WFT LBA Page 2 <br />• production) would serve for the life of mining on the WFT. MCC holds federal lease COC56447 in <br />good standing and should be able to make a smooth transition from mining there to mining in the <br />WFT if they were the successful bidder. <br />Production from the MCC West Elk mine approximates 6.5 million tpy using the longwall mining <br />method, and is capable of peaking a 7.0 million tpy rate. An MCC operated mine on the WFT could <br />also operate at the 6.5 million tpy rate. MCC projects a production rate between 6.5 and 7.0 million <br />tpy rate. <br />III. General Description. MCC=s projected West Flatiron Tract is located in the Paonia coalfield <br />on the Southern flank of the Pieeance Creek structural and sedimentary basin. The area tis bounded <br />by Larimide structural and physiographic features as follows: On the East by West Elk and Elk . <br />mountains; on the South by the Gunnison Uplift; on the West-SW by the Uncompaghre Uplift; and <br />on the North by the Grand Mesa~Piceance Basin. The local structure dips 4 to 7 degrees NE with <br />minor rolls and faults offsetting this trend in certain azeas. Coal in the Paonia field is found as six <br />identified seams (generally by alphabet starting with A as the lowest seam) within the Mesaverde <br />Group of late Cretaceous age. In the mine permit azea the B, C, D and E seams have hosted . <br />producing mines. <br />Access to the WFT coal is not limited, but would be easily achieved from the present MCC West Elk <br />surface and mine facilities near Somerset Colorado. A federal coal lease held by MCC and currently <br />• being mined, lies directly east of the delineated WFT. The 2,300 feet overburden limit lies in the <br />southwest end of the WFT and, although it is not a strict limitation to mining, it does pose a <br />constraint to economic recovery. About 320 acres ofthe west and southwest side of the WFT are at <br />or beyond the 2000' overburden..The western edge of the WFT was decided by existing federal lease <br />COC56447. The southern and eastern end is bounded by unmineable coal while the north is bounded <br />by the North Fork of the Gunnison and possible unrnineable coal. The unmineable coal is <br />determined by the M2 parting (mentioned above). <br />Opportunities to enhance the competitiveness of the WFT during tract delineation rely on the <br />economic value of the recoverable reserves. These reserves are strictly potential bypass, and may not <br />constitute mineability. If there were a successful bidder other than MCC they would likely need to <br />sublease back to MCC (because they would not have the advantage of existing coal handling <br />facilities or control of adjacent coal reserves as does MCC). Subleasing would be a high-risk <br />business proposition for an outside bidder because MCC may refuse any such sublease agreement. <br />The coal does not outcrop on the WFT, therefore no portals could be located, and there is no <br />reasonable shaft location. <br />The WFT surface topography varies in elevation from about 6,300 ft. on the north boundary to just <br />over 7,800 ft. on the southwest boundary. Figure 1 shows the relationship ofthe WFT to the features <br />described. As noted above, the WFT is not likely to have competitive interest and if the potential <br />reserves are not recovered as part of the MCC mining operation, they would almost certainly be <br />• bypassed, <br />