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Collom Area Geology Pre - Feasibility Report <br />In the central part of the CMA, many coals merge forming thick FAB and <br />G789 seams. In addition, the FAB, G789, GA, and GB seams lie in close <br />proximity to one another. As a result, the CMA contains some of the lowest <br />ratio and highest quality resources throughout the Collom Resource Area. <br />Additional coal resources below the GB exist to the south and east of the <br />CMA in an area called "Phase 4 /I- Pod ". Within this area, the H8, I3, I5, and <br />I7 merge forming a thick coal seam that attains a thickness of 44 feet in the <br />NEIA, SW1 /4, Section 12, T. 3 N., R. 94 W. The seam is approximately 560 <br />feet deep and appears burned in the south where it outcrops. However, <br />there appears to be an area where the seam occurs at depths similar to that <br />of the GB Seam at the northern end of the CMA (i.e. approximately 650 feet <br />depth). Heating value of the merged seams is approximately 10,900 Btu /lb <br />(in -situ, as- received basis). This area is a high priority target for the <br />exploration drilling in 2005. <br />3.3 KM Bed <br />A volcanic ash layer within the K -Seam sequence is locally known at Colowyo <br />as the KM (K Marker) Bed. The KM is regionally persistent. The USGS calls <br />the KM the Yampa Bed in the Yampa Coalfield to the north. Throughout the <br />Collom Resource Area, the KM is easily distinguishable in most drill holes <br />during drilling and on the geophysical logs and ranges up to 4 feet thick. <br />Colowyo had the Colorado School of Mines (CSM) analyze several samples of <br />the KM Bed during the 2004 Exploration Program. The analytical results <br />reside in Appendix 10 of the "Geological Summary of the 2004 Collom <br />Exploration and Evaluation Project ". X -ray diffraction analysis and SEM <br />showed that the clay is almost exclusively smectite clay with minor amounts <br />of kaolinite clay. CSM and Economic Geology Consulting also conducted <br />August 2005 Page 8 of 38 <br />