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• SURFACE GEOLOGY <br />Only the upper two members of the Mesa Verde Group are exposed on <br />the property. The King II Mine is located on the north side of Hay Gulch <br />with entries to be driven into the coal bearing Menefee Formation. The <br />Cliff House Formation caps the higher ground on both sides of the gulch. <br />COAL GEOLOGY <br />Exploration drilling and analysis concluded that the two coal seams <br />exposed at the current mine coalesce into on "A" seam pod to the <br />northwest of the current operation. At the location of the King II Mine <br />there is one "A" coal seam pod with a thickness ranging from 5.9 to 11.7 <br />feet, with an average of 9.9 feet. <br />Bedding at the project site dips 2 -3 in a south - southwesterly direction. <br />COAL QUALITY <br />The coal within the "A" seam pod of the King II Mine is low ash, low <br />sulfur, and bituminous coal with a 5.0 free swelling index (blending <br />metallurgical coal). An average analysis of six samples as received <br />follows: <br />• <br />BTU <br />Moisture <br />Ash <br />Sulfur <br />12,743 <br />5.6% <br />7.5% <br />0.68% <br />Additional coal analysis as well as analysis of the immediate floor and <br />roof for the upper seam is included in Appendix 4. <br />GEOLOGIC HAZARDS <br />Geologist, David L. Gaskill, of the Conservation Division of the U.S.G.S. <br />reported no unusual geologic hazards are known that might adversely <br />affect mining in the upper or lower Menefee coal seams. He noted that <br />ground water tables were below the seams (See King I Mine existing <br />permit Appendix 4(3)). Mr. Gaskill's report was prepared in February, <br />1980, for the survey's consideration of National King Coal's application <br />for a new Federal Lease adjacent to the current lease holdings at the <br />current mine. <br />An inspection of the current King I Mine workings shows no significant <br />faults or strata displacements. The coal is strong and pillars are <br />structurally competent showing a lack of squeezing (crushing) or rib <br />. � /.® /Br ® /r / ® /� / ®u/ sip /.ar / ®/ Rio/ o% a/, aiw/® iwid/,®/ �/s/ w/ s►/ O/ m®/.® nr/ s/ oiu/®/®/®/®/ �/. e/ oir/ s/ s/ O/ s/ s/ w /ri ® / ® / ® /.a /.� /s / ® /s /s /w / ® /s /I /.sir /s / ® /w / ®ia► /r / ® / ® /r /a /� <br />GCC Energy, LLC King II Mine <br />Section 2.04.6 <br />Page 5 October, 2008 <br />7 -is <br />