2010-12-17_REVISION - C1981019 (129)

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Collom Area Geology Pre - Feasibility Report • • • Estimation and Modeling Detailed Stratigraphic models for the CCC coal reserves was performed using the StratModel application in MineScape developed by Mincom, Inc. The modeling procedures and CCC specific modeling parameters have been outlined as part of the 2004 Collom Exploration and Evaluation project. The Outline of Modeling Procedures is included on the CD -ROM of this report. Cut -off grades and Cut -off coal quality values are dictated by various coal parameters delivery contracts held by CCC. CCC Mine management personnel or KEC marketing personnel can provide access to these documents to authorized personnel. In -situ Bulk Density Historically and analytically the density (Apparent Specific Gravity) of CCC coal has been set to 1.317. This value is based upon current mining operations and is consistent with measured density values. Others No specific issues regarding the ability to obtain mining leases and mining permits currently exist for the CCC resources and reserves. Classification Classification of Measured, Indicated and Inferred resources and Proven and Probable reserves was reviewed by KEC geologists and contract geologists for the CCC resource areas. Based on spatial distribution of the drilling data the resource classification distances for the CCC resource areas were set to 750, 1,500 and 3,000 feet for the measured, indicated and inferred classes, respectively. Proven and Probable reserve distances were set to 750, and 1,500 feet, respectively. Of all the CCC resources, only the coal within the West Pit, and East Pit Highwall met all the criteria (mine planning and financial) to be converted from resources to reserves. Detailed descriptions of the classification of CCC's resources and reserves exist in the text of this report: 2004 Year -end Resource and Reserve Report for the Colowyo Mine. Audits or Reviews KEC and Rio Tinto technical management personnel have reviewed CCC's resources and reserves numerous times over the history of the Colowoyo mine. Most notably, KEC performed a high level geological audit of CCC in January 2003. This report resides in the KEC corporate office in Gillette, Wyoming. Rio Tinto performed a review of the 2004 Collom Exploration and Evaluation Project in October 2004. The draft report of the review is entitled: AR2262 Collom PFS Interim Review Report (Draft).doc A draft copy of this report is on the CD -ROM of this report. Estimation and Reporting of Reserves Resource to Reserve Only those resources where complete engineering and Conversion marketing assessments have been converted from resources reserves. At Colowyo only the West Pit surface Mine and East Pit Highwall Mine resources meet these criteria and were converted from resource to reserve status. Cut -off Grade Parameters The primary cut -off parameter for Colowyo is an 8:1 overburden to coal stripping ratio. Although other parameters also dictate reserve cut -off parameters. These parameters are full addressed in the "2003 Cost Ranking Study" performed by KEC and CCC. This report is available at the Colowyo Mine Administration building. Page 3 of 4