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Addendum to the Collom Area Geology Pre - Feasibility Report <br />• 5.2 Collom Resource and Reserve Areas <br />Figure 5.1 illustrates the areas HGC used to estimate coal resources and <br />reserves within the Collom Mine Area. <br />HGC calculated Collom Inventory coal within the extent of the "Collom Mine <br />Area" defined in Table 4.2. Inventory coal estimates include all seams within <br />the model area that satisfy the parameters listed in Table 5.1. <br />Technically, tonnage estimates within the Collom LBA area are classified as <br />Inventory Coal. The lease sale for the Collom LBA is currently schedule for <br />December 2006. At the present time, indications are that RTEA will be the <br />only bidder for the Collom LBA. Therefore, tonnage estimates in the Collom <br />LBA are highly qualified Inventory coal. <br />Marston and Marston, Inc, (Marston) designed a pit -shell for the Collom Mine <br />• Area based upon the geological models created for the "August 2005 Report ". <br />Based upon time and budget constraints, Colowyo has not employed Marston <br />or others to re- design the Collom Pit Shell. Therefore, HGC compiled <br />resource and reserve estimates using existing mine designs. <br />The Collom Mine Area covers both leased and non -lease coal areas. By <br />definition, non - leased coal cannot be reported as resources or reserves. <br />Therefore, reported coal resource and reserve estimates only include leased <br />coal. <br />HGC calculated estimated Collom Mine Area coal resources using the crest <br />polygons from the Marston pit design and applied vertically (cookie cutter) <br />through the coal section, see Figure 5.1. <br />HGC also estimated coal resources a 3- dimnesional pit shell over the Collom <br />Mine Area The 3- dimnesional pit shell accounts for highwall configuration in <br />. resource calculations. These resources could geologically be classified as <br />September 2006 Page 15 of 25 <br />