2012-04-03_GENERAL DOCUMENTS - C1991078

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Regional Geology The Hamilton Mine is located near the axis of the Nucla Syncline (San Miguel Syncline) in a shallow, broad synclinal fold running northwesterly for 65 miles. No evidence of faults has been observed in drill holes at the Hamilton Mine area. The Nucla Syncline is 10 -15 miles southwest of the major regional geologic feature of the area, the Uncompahgre Uplift. The region lies in the Dolores River Basin. The mine is located one and one half miles south of the San Miguel River. The mine is located in the Nucla - Naturita Coal Field. The coal is found in Late Cretaceous sediments. The youngest Cretaceous rocks in the area consist of Mancos Shale, a dark gray marine shale, present only on isolated hilltops south of the town of Nucla. Two hundred feet of Dakota sandstone outcrops extensively along the axis of the Nucla Syncline. This formation consists of a yellowish -gray, fissile sandstone and conglomeratic sandstone interbedded with dark gray shale and coal. There are nine coal seams within 100 feet of the base of the Dakota. The Lower Cretaceous unit in the area, the Burro Canyon Formation, is separated from the Dakota by an unconformity. The Burro Canyon is comprised of white, gray and light brown sandstones and conglomerates interbedded with green and purplish shales, siltstones, mudstones and thin beds of limestone. This formation has a maximum thickness of 200 feet and outcrops on rims of canyons northwest of the mine. This formation is difficult to differentiate from the Dakota in this area, and is commonly considered hydrogeologically similar. Five coal seams have been identified in the horizon that was mined in the permit area. They are identified, in descending order, as the Upper Dakota -1, (UD -1), Lower Dakota -1, (LD -1), Lower Dakota -2, (LD -2), Lower Dakota -3 (LD -3), and Lower Dakota -4, (LD -4). The LD -2 and LD -3 seams are of a minable thickness throughout the permit area. In the southern portion of the permit area, the LD-4 seam is of a minable thickness. The thickness of the LD -2 seam ranges from 1.6 to 3.5 feet thick, with an average thickness throughout the permit area of 2.5 feet and with depths from the surface to the top of the seam ranging from 7.2 to 28.7 feet. The LD -3 seam averages 1.6 feet thick and ranges from 0.8 to 2.9 feet thick. The LD -4 seam ranges from 1.2 to 3.1 feet in thickness with an average of 2.1 feet. The splits between coal consist primarily of thin, lenticular, dark, carbonaceous shales. The split between the LD -2 and LD -3 seam ranges in thickness from 0.3 to 1.0 feet with an average of 0.6 feet thick throughout the permit area. The split between the LD -3 and LD-4 seam averages a thickness of 1.1 feet and ranges from 0.7 to 1.7 feet in thickness. There are two rider coal seams identified in the permit area, referred to as the UD -1 and LD -1 seams. Neither rider seam is consistent in extent within the permit area and therefore were not considered for mining. Where identifiable, the UD -1 and LD -1 rider seams are as much as 1.2 and 2.0 feet in thickness, respectfully. Rider seam LD -1 overlies an average .08 feet thick dark shale layer. The stratum which overlies the LD -1 rider seam and underlies the UD -1 rider seam consists of an average 7.0 feet thick gray shale. The stratum overlying the UD -1 rider seam consists of a soft, yellowish, fine- grained sandstone that varies in thickness from 2.8 to 19.0 feet thick from the top of UD -1 to the ground surface. The stratum immediately below the lowest minable coal seam consists of a soft, gray to blue shale with sparse shaley siltstone lenses. This strata is generally 26 feet thick throughout the permit area. Below this strata are four coal seams that are not considered minable within the permit area. These coal seams are referred to as Naturita Seams 1 through 4, in descending order. April 3, 2012 RN4 5