2010-02-24_REVISION - C1996083 (2)

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2.04.6 40 A sample of run of mine coal, from the nearby Bowie No. 1 Mine D -Seam, was analyzed to determine if the D -Seam coal in the area has sufficient lime to neutralize its acid producing characteristics. The D -Seam coal has a carbonate equivalent of 0.22% which equates to 4.4 pounds per ton of coal or 4,400 pounds of lime per 1,000 tons of coal. This means the coal contains adequate lime to neutralize coal bearing 0.07% iron pyrite (4,400 ) 625). The laboratory report is presented in Volume III, Exhibit 6. Other evidence the area D -Seam coal does not have acid producing characteristics is the old Oliver Mine No. 1 located east of Somerset, CO which mined in the D -Seam in the 1940's and 1950's. This mine is discharging water that is monitored by Oxbow Carbon & Minerals as spring 8. This Aspring@ water consistently has a pH in excess of 7.0 (ref. OCM 1994 Annual Hydrologic Report). Based on the above discussion, it is likely lime is present in ample quantities to neutralize the acid forming component in the coal. Therefore, the acid produced would react with the lime to produce gypsum, water and carbon dioxide. In addition, some soluble sulfates may be formed upon reaction with other base minerals. The reaction is: H2SO4 + CaCO3 - - -> CaSO4 + H2O + CO2 Since gypsum is a relatively insoluble material, the acid produced by the oxidation of pyrite would be effectively neutralized. The contribution of organic sulfur to acidity is considered negligible since organic sulfur is only slowly oxidized from the organic form to the sulfate form and may be tied up in other organic forms almost immediately. Since no inorganic sulfate exists in these drill hole samples, it too may be disregarded with respect to acidity concerns. Two drill holes from the B -2 Seam were cored and analyzed for forms of sulfur. See Exhibit 6 for a tabulation of the laboratory reports and the locations of the drill holes. The results of the analysis follows: 0 PRA 2 2.04-22- 02/10