due diligence review - mt klappan anthracite resources

Due Diligence Review of

Mount Klappan Anthracite Resources

June 2002

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002

1.0 TITLE PAGE

Title of Report

Due Diligence Review of Mount Klappan Anthracite Resources

Project Location

The Mount Klappan property is located in northwestern British Columbia, approximately 160km

northeast of Stewart and 300km northwest of Smithers, see Figure 1.1, Mount Klappan Project

Location Map. A British Columbia Railway right-of-way between Prince George and Dease

Lake runs through the property. The sub-grade for this right-of-way has been completed,

except for a 24km section north of the Kluatantan River and a similar distance north of the

Stikine River. Ground access to Mount Klappan is via a connector road from Stewart-Cassiar

Highway 37 to the BC Railway sub-grade. The property is accessible by air to a 1000m

graveled airstrip built on the sub-grade, which is suitable for landing fixed-wing aircraft.

Authors

Richard R. Marston, P.E.

D. David Marston, P.E.

Effective Date of Report

June 2002

1-1

Certificate of Qualifications for

Due Diligence Review of Mount Klappan Anthracite Resources Name and Address: D. David Marston, P.E. Vice-President and Senior Mining Consultant Marston Canada Ltd. Suite 1000, 706-7th Ave. SW. Calgary AB, T2P 0Z1 Professional Affiliations:

• Registered Professional Engineer, Missouri, March 1990. • Member – Society of Mining Engineers, AIME • Member – National Society of Professional Engineers

Qualifications: David Marston, P.E., has nearly 20 years of experience in the mining and energy industries. Over the past decade David has been coordinating, directing and supervising mining projects and engineering, technical and support personnel within the Marston Group of Companies. He has considerable experience in performing feasibility analyses and due diligence on mining properties. Relevant Experience: A portion of the projects that David has been involved in has been included below. • Confidential Client, Due Diligence Review of Genesee Phase 3 – Alberta, Canada

Project Principal for the review of coal supply to the proposed Genesee Phase 3 power project, a new 400MW net load power generating facility to be built adjacent the existing power units in Leduc County, Alberta. Coal for the new plant was to be produced from the Genesee Mine, which currently utilizes dragline surface mining methods to provide the requirements of the existing units as a captive supplier. The review encompassed geologic and coal quality data review, estimates of coal resources and reserves, review of mine plans and compilation of mining cost estimates. Because the new plant was proposed to utilize a supercritical boiler, reviews of coal quality deliveries to the existing plants led to the formulation of different coal recovery methods while targeting lowest possible mining costs.

• Confidential Client, Due Diligence Review of LAUBAG – Germany

Project Principal for a due diligence review of Lausitzer Braunkohle Aktiengesellschaft (LAUBAG), a lignite mining, transportation and processing company located in the Lusatian District of Eastern Germany. LAUBAG currently produces about 50 Mtpy of lignite from four surface mines as a captive supply to three large power stations, using bridge conveyor and bucket wheel and bucket chain excavators in tandem with in-pit and

Certificate of Qualifications D. David Marston, P.E. Page 2 of 3

around-pit conveyor systems. The review included geologic and quality database assessment, review of mining plans, staffing levels, historic and projected mining costs, analysis of delivered lignite pricing requirements, and technical support for project valuation.

• National Australia Bank Ltd., Due Diligence Review of the Millmerran Feasibility

Study – Queensland Project Principal for the review of the Millmerran Feasibility Study, a coal supply plan for a proposed captive mine to a new 840MW coal-fired power generating facility in Queensland. The review included independent geologic and coal quality data review, estimates of coal resources and reserves, review of mine plans and generation of mining cost estimates for the proposed 3.4 Mtpy surface coal mine. Financial models were constructed for the base case, a 30- year 100% equity cash flow analysis, then for the proposed mine contracting method of multiple seven-year term contracts. Providing on-going project monitoring services for the lead arrangers for project finance to ensure timely execution of the project milestones.

• PT Indominco Mandiri, East Block Feasibility Study - Indonesia

Managed design and engineering efforts for the preparation of a bankable feasibility document for a proposed expansion of Indominco’s surface coal mining operations in East Kalimantan. The new mine is to utilize surface shovel and truck open pit methods to recover up to 2.5 Mtpy of coal from a moderately dipping, multi-seam reserve area. The feasibility study includes geologic modeling, coal resources and reserves estimates, pit design, mine scheduling, infrastructure design, operating and capital costs estimates, and financial analyses.

• Macquarie Generation, Due Diligence Review of Kogan Creek – Queensland

Project Principal for a due diligence review of technical and financial data regarding proposed surface coal mining operations at Kogan Creek, a proposed captive mine to a new coal-fired power station in Queensland. The review included preparation of geologic and coal quality models, estimates of coal reserves, mine design and block layout, operating range diagram analyses, compilation of a mine development plan and generation of mining cost estimates for the proposed surface coal mine.

• BHP Coal New Mexico, Mine Plan Review for San Juan and La Plata Mines – New

Mexico, USA Project Principal for an independent review of technical and financial data contained in the Base Case Mine Plan of BHP’s long-term development plans for the San Juan and La Plata Mines. The Base Case assumed that the dragline and shovel and truck surface mining methods historically used to provide 6.5 Mtpy of coal to the San Juan Generating Station were continued through the life of the surface reserves. The long-term development plans compared the Base Case to the option of installing a new underground longwall operation at San Juan. The review included verifications of geologic and coal quality models, coal reserve estimates, mine design parameters, mine cost parameters and estimates, and assessment of the mine development plans.

• Macquarie Generation, Due Diligence Review of Nardell – Queensland

Project Principal for a due diligence review of technical and financial data in support of valuation of a proposed underground coal mine Hunter Valley of New South Wales,

Certificate of Qualifications D. David Marston, P.E. Page 3 of 3

Australia. The mine was under consideration as an additional fuel source for the Bayswater and Liddell power plants. The review included preparation of geologic and coal quality models, estimates of coal reserves, mine development and production panel design, preparation of an underground hazard conditions map, determination of equipment selection (longwall or continuous miner configurations,) compilation of a mine development plan, estimates of mining costs and financial analyses over the life of the project.

Disclosure: The qualified person is not aware of any material fact of material change with respect to the subject matter of the technical report, which is not reflected in the technical report. The qualified individual (author) is independent of the issuer (Fortune Minerals) of this technical report. The qualified person has read Instrument 43-101 and Form 43-101F1. The technical report has been prepared in compliance with instrument 43-101F1. The qualified person is responsible for the preparation of all sections of the technical report. The above is adequate proof of the qualifications of the qualified person. Signed July 23, 2002.

D. David Marston, P.E. Vice-President and Senior Mine Consultant Marston Canada Ltd.

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Trail

Atlin

VernonFernie

Nelson

Golden

Nanaimo

Quesnel

Kitimat

Stewart

Skagway

Terrace

Lillooet

Smithers

Chetwynd

Hazelton

Invermere

Valemount

MacKenzie

Port Hardy

Revelstoke

Dease Lake

Vanderhoof

Bella Coola

Peace River

Fort Nelson

Watson Lake

Dawson CreekFort St John

Williams Lake

Grande Prairie

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Northwest Territories

AlbertaBritish

Columbia

Yukon Territory

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EW

S

Provincial ParkLakeNTS Grid SystemRiverProvincial BorderMount Klappan Project Area (1988)Mount Klappan Project Area (2002)Ferry

Major Highway - PavedMultiple Lane HighwayOther Highway - PavedOther Road - Gravel or Dirt

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eau

Stewart

TerraceHouston

Smithers

Hazelton

Dease Lake

Prince Rupert

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DuneZa

Keyih

MountEdziza

Alaska (USA)

Briti sh Col umbia

Mount Klappan

SpatsiziPlateau

Wilderness

50 0 50 100

Kilometers

200 0 200

Kilometers

PacificOcean

Legend

PacificOcean

Figure 1.1MOUNT KLAPPAN PROJECT

LOCATION MAP

Figure 1.1 Mount Klappan Project Location Map

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Vancouver

Calgary

Victoria

Juneau

Edmonton


2.0 TABLE OF CONTENTS

1.0 TITLE PAGE.....................................................................................................................1-1

2.0 TABLE OF CONTENTS...................................................................................................2-1

3.0 SUMMARY .......................................................................................................................3-1

4.0 INTRODUCTION AND TERMS OF REFERENCE...........................................................4-1

5.0 DISCLAIMER ...................................................................................................................5-1

6.0 PROJECT DESCRIPTION AND LOCATION...................................................................6-1

7.0 ACCESSIBILTY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY.............................................................................................................7-1

8.0 HISTORY..........................................................................................................................8-1

8.1 Exploration Programs .................................................................................................8-1 8.2 Coal Quality ................................................................................................................8-7 8.3 Resource Estimates....................................................................................................8-9

8.3.1 1988 Geologic Study Resource Estimates............................................................8-11 8.3.2 1992 Adjustment to Resource Estimates..............................................................8-12

9.0 GEOLOGICAL SETTING.................................................................................................9-1

9.1 Regional Setting .........................................................................................................9-1 9.2 Local Stratigraphy.......................................................................................................9-1 9.3 Coal Occurrences .......................................................................................................9-2

10.0 DEPOSIT TYPES ...........................................................................................................10-1

11.0 MINERALIZATION.........................................................................................................11-1

12.0 EXPLORATION..............................................................................................................12-1

13.0 DRILLING.......................................................................................................................13-1


2.0 TABLE OF CONTENTS 14.0 SAMPLING METHOD AND APPROACH......................................................................14-1

15.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ............................................15-1

16.0 DATA VERIFICATION ...................................................................................................16-1

16.1 Drill Hole Data Review..............................................................................................16-1 16.2 Review of Lost-Fox Cross Sections..........................................................................16-1 16.3 Resource Estimates – Lost-Fox Area .......................................................................16-1 16.4 Resource Estimates – Hobbit-Broatch Area .............................................................16-6 16.5 Resource Estimates – Summit and Nass Areas.......................................................16-7 16.6 Resource Estimates – Mount Klappan .....................................................................16-7 16.7 Review of Ash and Environmental Issues ..............................................................16-10

17.0 APPENDIX A – CONOCO DATA ROOM INDEX ..........................................................17-1

18.0 APPENDIX B – 1988 SAMPLE PREPARATION PROCEDURES ................................18-1

LIST OF FIGURES

Figure 1.1 Mount Klappan Project Location Map .......................................................................1-2

2-2


LIST OF TABLES

Table 3.1 Summary of Mount Klappan Anthracite Resources ...................................................3-4 Table 3.2 Summary of Mount Klappan Resources – Paper 88-21 Format ................................3-5 Table 4.1 Review List of Gulf Canada Technical Reports..........................................................4-2 Table 6.1 Mount Klappan License Holdings...............................................................................6-2 Table 8.1 Summary of Mount Klappan Exploration Programs ...................................................8-2 Table 8.2 Summary of Exploration Programs – Mount Klappan ................................................8-2 Table 8.3 Summary of Exploration Programs – Lost-Fox Area..................................................8-3 Table 8.4 Summary of Exploration Programs – Hobbit-Broatch Area........................................8-4 Table 8.5 Summary of Exploration Programs – Nass and Skeena Areas .................................8-5 Table 8.6 Lost-Fox Area Coal Seam and Carbonaceous Zone Summary.................................8-6 Table 8.7 Summary of Selected Lost-Fox Seam Proximate Analyses.......................................8-8 Table 8.8 Summary of Selected Lost-Fox Seam Ultimate Analyses..........................................8-8 Table 8.9 Summary of Selected Lost-Fox Seam Ash Analyses.................................................8-9 Table 8.10 Summary of Selected Lost-Fox Seam Ash Fusion Temperature...........................8-10 Table 8.11 Summary of Anthracite Resources – Gulf 1988 Geological Report .......................8-12 Table 8.12 Summary of Anthracite Resources with 1992 Lease Adjustments ........................8-13 Table 16.1 Summary of Diamond Drill Hole Data Review .......................................................16-2 Table 16.2 Summary of Demonstrated Resources – Marston Review ....................................16-3 Table 16.3 Summary of Demonstrated Resources – Gulf 1998 Geologic Report ...................16-3 Table 16.4 Comparison of Resources - Marston Estimates and Gulf Reports ........................16-4 Table 16.5 Summary of Differences – Resources Review.......................................................16-4 Table 16.6 Summary of Lost-Fox Area Resources Estimates .................................................16-5 Table 16.7 Summary of Hobbit-Broatch Anthracite Resources ...............................................16-7 Table 16.8 Summary of Summit Area Anthracite Resources...................................................16-8 Table 16.9 Summary of Nass Area Anthracite Resources.......................................................16-8 Table 16.10 Summary of Mount Klappan Anthracite Resources .............................................16-9 Table 16.11 Summary of Mount Klappan Resources – Paper 88-21 Format ........................16-11 Table 16.12 Emissions Analysis from CFBC Test Burn of Mount Klappan Anthracite ..........16-13 Table 16.13 Mount Klappan CFCB Test Burn - Trace Elements Analysis.............................16-14

2-3


3.0 SUMMARY

Fortune Minerals Ltd. (Fortune), a publicly listed natural resource development company based

in London, Ontario, has tendered an offer to Conoco Canada Resources Ltd. (Conoco), as

successor to Gulf Canada Resources Ltd. (Gulf) for certain properties containing significant

anthracite resources in northern British Columbia. Collectively, the anthracite-bearing

exploration areas comprise the Mount Klappan anthracite deposit.

Fortune commissioned Marston Canada Ltd. (Marston) to perform due diligence review of Gulf’s

statements of anthracite resources at Mount Klappan. Historically, Marston’s involvement in

technical analysis of the Mount Klappan deposit includes surface mining feasibility studies and

addenda issued between 1986 and 1990.

The Mount Klappan property is located in northwestern British Columbia, approximately 160km

northeast of Stewart and 300km northwest of Smithers, see Figure 1.1, Mount Klappan Project

Location Map. A British Columbia Railway right-of-way between Prince George and Dease

Lake runs through the property. The sub-grade for this right-of-way has been completed,

except for a 24km section north of the Kluatantan River and a similar distance north of the

Stikine River. Ground access to Mount Klappan is via a connector road from Stewart-Cassiar

Highway 37 to the BC Railway sub-grade. The property is accessible by air to a 1000m

graveled airstrip built on the sub-grade, which is suitable for landing fixed-wing aircraft.

The studies completed by Marston all contemplated mining operations within the bounds of the

Lost-Fox exploration area, one of an original total of 5 contiguous exploration areas in

northwestern British Columbia. The mining plans were based on open pit mining methods using

electric shovels and hydraulic backhoes to excavate waste and coal, with haulage by 154

tonnes capacity rear-dump pit haul trucks to waste dumps and coal processing facilities. At that

time, Gulf planned to produce 5 different anthracite products, and had completed numerous coal

processing, handling, transportation and marketing studies.

The first licenses on the Mount Klappan property were acquired by Gulf in 1981. At its largest

extent, the Mount Klappan License Block area encompassed over 40,000 hectares, consisting

of 5 contiguous exploration areas designated as Nass, Summit, Lost-Fox, Hobbit-Broatch and

3-1

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 Skeena. Between 1981 and 1988, annual exploration programs were conducted by Gulf to

refine its knowledge of the regional geology, seam occurrence and physical characteristics, and

quality attributes of the anthracite resources. These programs included comprehensive rotary

and core drilling, adit driving, trenching and outcrop sampling, quality testing and initial

extraction from test pits.

By late 1990, Gulf had completed several iterations of feasibility studies targeting surface mining

of anthracite for subsequent processing into five distinct anthracite products. At that time, the

proposed project included a surface mine, coal processing plant, site infrastructure, a new haul

road and a port capable of handling the various products. The feasibility studies addressed

anthracite production from the Lost-Fox area, identified by Gulf as the primary initial mining area

and the location of the majority of the exploration efforts.

Marston completed a review of a representative quantity of technical data available in the

Conoco data room for the purpose of due diligence review of the anthracite resources reported

by Conoco for the Mount Klappan anthracite deposit. Based on its review of the available

material and its experience with the Mount Klappan project, Marston concludes that:

1. The Geology Type of the anthracite deposit of Mount Klappan generally conforms to the

definition for complex, as given in Paper 88-21 of the Geological Survey of Canada, “A

Standardized Coal Resource/Reserve Reporting System for Canada.”

2. There has been sufficient data obtained through sustained annual exploration efforts at

the Lost-Fox area of Mount Klappan to support the geologic interpretations of seam

structure and thickness as presented in cross-section format in the 1988 Gulf Geologic

reports.

3. The Lost-Fox area contains the majority of exploration data and has been the subject of

most of the feasibility work completed for commercial exploitation of the deposit.

Marston concurs with the opinion of Conoco that the Lost-Fox area presents the best

opportunity for initial development.

4. The estimates of anthracite resources as compiled in the 1988 Geologic Reports of Gulf

Canada Resources Ltd. for Mount Klappan reflect reasonable methodologies and

results, as stated under the generally accepted standards for coal resources reporting in

3-2


effect at that time. As detailed below, those prevailing standards do not necessarily

conform to current standards for the reporting of coal resources.

5. The methods for estimation of inferred anthracite resources in the Lost-Fox area of

Mount Klappan in Gulf’s 1988 Geologic Report do not conform to current standards for

reporting as given in Paper 88-21 of the Geological Survey of Canada, and have been

re-stated by Marston to conform to that standard.

6. The methods for estimation of measured and indicated resources as presented for the

Hobbit-Broatch area of Mount Klappan in Gulf’s 1988 Geologic Report do not conform

to current standards for reporting as given in Paper 88-21, and have been re-stated by

Marston to conform to that standard.

7. The format for reporting anthracite resources as presented for Mount Klappan in Gulf’s

1988 Geologic Report do not conform to current standards for reporting as given in

Paper 88-21, and have been re-stated by Marston to conform to that standard.

8. Based on the data reviewed by Marston, there is a substantial excess of acid-

consuming material available to any potential surface mining operation at Mount

Klappan as compared to acid-producing material. It is Marston’s opinion that suitable

engineering and operating practices can be implemented to mitigate any acid-forming

situations in potential surface pits and waste dumps.

9. With respect to the use of anthracite products from Mount Klappan as a potential boiler

fuel for power generation, the available data indicate that the ash characteristics of the

Mount Klappan coals give them a slagging and fouling potential of low to medium.

10. Based on testing of samples from potential boiler fuel, and appropriate ash and ultimate

analytic data, there do not appear to be significant toxic components of the coal and ash

constituents of the Mount Klappan anthracites to prove an insurmountable flaw for the

use of Mount Klappan anthracites as a thermal fuel. Based on prevailing British

Columbia and Federal emissions standards, current test work indicates that the Mount

Klappan anthracite as used as a boiler fuel produces emissions well within the

mandated limits. Such limits are continuously subject to review and modification, and

Marston recommends that any site-specific requirements be discussed with appropriate

regulatory agencies.

3-3

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 Based on its review, Marston has compiled revised statements of resources for the four

exploration areas currently contained in the Mount Klappan holdings. Table 3.1, Summary of

Mount Klappan Anthracite Resources, illustrates the evolution of the current statement of

resources from Gulf’s original reports from its 1988 Geological Report. Marston has re-stated

certain components of the resources to conform to the classification standards of Paper 88-21

of the Geological Survey of Canada, which is incorporated by reference into the reporting

standards of National Instrument 43-101. In addition, relinquishment of licenses in early 1992

by Gulf led to a sizable reduction in the speculative reserve base. These modifications are

reflected in Table 3.1.

Table 3.1 Summary of Mount Klappan Anthracite Resources

(All figures in millions of tonnes)

Measured Indicated Demonstrated Inferred Speculative

123.5 136.2 259.7 525.4 5,195.2

111.4 125.2 236.6 304.7 5,438.9

0.0 0.0 0.0 0.0 (3,176.9)

111.4 125.2 236.6 304.7 2,262.1

Mount Klappan

Gulf Canada 1988 Geologic Report

Adjustment to Paper 88-21 Reporting Standards

Speculative Resource Area Loss (February 1992)

Summary of Estimated Resources - 2002

Based on its review, Marston concurs with Conoco reports of total anthracite resources, as

adjusted for reporting requirements and license area relinquishment. Of this total, an estimated

236.6 million tonnes may be classified as demonstrated (measured plus indicated) resources.

This refers to the statements of resources provided by Gulf, which because of the timing of their

issuance, do not strictly adhere to the reporting requirements of Paper 88-21.

Marston compiled a revised statement of anthracite resources for Mount Klappan, designed to

comply with the requirements of Paper 88-21. The complete rationale for compiling the re-

stated resources is detailed in Section 8.3. This revised statement of resources is listed in 3-4

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 Table 3.2, Summary of Mount Klappan Resources – Paper 88-21 Format. Based on feasibility

work completed on the Lost-Fox area, Marston estimates that there are over 51 million tonnes

of Surface anthracite resources of Immediate Interest, along with over 46 million tonnes of

Surface resources of Future Interest. Marston estimates that the Mount Klappan area holds

another 46 million tonnes of Underground resources of Future Interest. These totals include

only the demonstrated (measured plus indicated) anthracite resource estimates.

Table 3.2 Summary of Mount Klappan Resources – Paper 88-21 Format

Measured Indicated Inferred Measured Indicated Inferred Speculative

Surface

Lost-Fox Complex Anthracite 40.5 10.9 0.8 17.7 25.2 9.0 199.7

Hobbit-Broatch Complex Anthracite - - - - 3.4 64.6 188.2

Summit Complex Anthracite - - - - - 2.4 127.2

Nass Complex Anthracite - - - - - - 50.4

Underground

Lost-Fox Complex Anthracite - - - 17.7 25.2 9.0 199.7




Non-Conventional





Sterilized There are no sterilized resources of immdiate or future interest

MiningMethod

/Area

DepositType

ASTMCoalRank

Resource of Immediate Interest(millions of tonnes)

Resource of Future Interest(millions of tonnes)

3-5


4.0 INTRODUCTION AND TERMS OF REFERENCE

Fortune Minerals Ltd. (Fortune), a publicly listed natural resource development company based

in London, Ontario, has tendered an offer to Conoco Canada Resources Ltd. (Conoco), as

successor to Gulf Canada Resources Ltd. (Gulf) for certain properties containing significant

anthracite resources in northern British Columbia. Collectively, the anthracite-bearing

exploration areas comprise the Mount Klappan anthracite deposit.

Fortune commissioned Marston Canada Ltd. (Marston) to perform due diligence review of Gulf’s

statements of anthracite resources at Mount Klappan. Historically, Marston’s involvement in

technical analysis of the Mount Klappan deposit includes surface mining feasibility studies and

addenda issued between 1986 and 1990.

The Scope of Work for the due diligence review of anthracite resources was designed to confirm

the presence and usage of data for the estimation of in-situ coal resources. The available

reports and narrative were reviewed both to compile and verify a description of exploration

efforts, and to identify any work completed since Marston’s previous involvement with the

project. Representative sample sets of exploration, analytic and modeling data, plan and

sectional mapping were selected and reviewed.

This report contains descriptive narrative of the methodology, findings and recommendations of

the due diligence review.

Marston based its review on information provided by Conoco in its data room in Calgary during

the period June 4 – June 10, 2002. Documents prepared by Gulf Canada Resources and used

for this report are listed in Table 4.1, Review List of Gulf Canada Technical Reports. In addition,

Marston utilized its 1990 feasibility report entitled “Gulf Canada Resources Ltd., Mount Klappan

Anthracite Project, Lost Fox Mine, 1,700,000 Tonnes per Year Mine Plan, Anthracite Reserve

and Mine Plan.”

Richard Marston, a co-author of this report, visited the Mount Klappan site during preparation of

the various feasibility studies conducted by Marston during the period 1987-1990.

4-1


Table 4.1 Review List of Gulf Canada Technical Reports

Description Date

Mount Klappan Coal Project Geologic Report 1981



Mount Klappan Coal Project Geologic Report

Lost-Fox Area 1984


Hobbit-Broatch Area 1984


Summit, Nass, Skeena Area 1984


Lost-Fox Area 1985


Summit, Nass Area 1985

Mount Klappan Anthracite Project Geologic Report

Lost-Fox Area 1986




Lost-Fox Area 1987




Lost-Fox Summit Skeena Areas 1988

Mount Klappan Anthracite Project

Stage II Assessment, Volume I - Summary 1987

Mount Klappan Anthracite Project

Coal Quality Handbook 1994

4-2


5.0 DISCLAIMER

Marston has relied substantially on the reported field exploration techniques and results

contained in the 15 technical reports authored by Gulf technical personnel and listed on Table

4.1, Review List of Gulf Canada Technical Reports. During its involvement with feasibility

studies of surface mining at Mount Klappan conducted for Gulf, Marston met with and verified

many of the assumptions and results of the exploration programs. In addition, it is Marston’s

opinion that the exploration and sample handling procedures and standards described in the

Gulf documents conform to acceptable standards for such activities. However, Marston did not

directly supervise nor observe any of the field exploration programs or subsequent analytic test

work conducted by Gulf or its successors. As such, this report addresses only the accuracy and

applicability of data usage for the preparation of estimates of anthracite resources, and the

various conclusions made possible from review of base exploration and analytic data.

5-1


6.0 PROJECT DESCRIPTION AND LOCATION

The Mount Klappan property is located in northwestern British Columbia between 57°06'N and

57°23'N latitudes and 128°37'W and 129°15'W longitudes, see Figure 1.1, Mount Klappan

Project Location Map. Geographically, the property is near the northern extremity of the Skeena

Mountains at the headwaters of the northerly flowing Little Klappan River, Klappan and Spatsizi

Rivers, as well as the southeasterly flowing Nass and Skeena Rivers.




Skeena. Between 1981 and 1988, annual exploration programs were conducted by Gulf to



and core drilling, adit driving, trenching and outcrop sampling, and quality testing.

In February 1992, a sizable portion of the original Mount Klappan License Block area was

released. The Skeena Area was eliminated and the Nass and Summit areas were drastically

reduced. Licenses were also released in the Lost-Fox and Hobbit-Broatch areas, but these

were less substantive in their impacts. The current Mount Klappan project area licenses are

listed in Table 6.1, Mount Klappan License Holdings.

The anthracite-bearing areas of the Lost-Fox Area are illustrated in plan maps and cross-

sections contained in Gulf’s 1988 Geological Report, and in Marston’s 1990 feasibility

document.

Marston has not reviewed any legal data regarding the status of the licenses, or any associated

obligations required for retention of the licenses. Marston has not reviewed any data pertaining

to legal surveys of the licenses, or any data pertaining to royalty obligations or other

encumbrances, existing environmental liabilities, or permitting requirements.

6-1


Table 6.1 Mount Klappan License Holdings

License Area(ha)

ExplorationArea License Area

(ha)Exploration

Area

7140 281 Lost-Fox 7171 (1) 140.5 Summit7143 281 Lost-Fox 7173 (1) 140 Summit7144 281 Lost-Fox 7174 280 Summit7145 281 Lost-Fox 7177 280 Summit7147 281 Lost-Fox 7384 281 Summit7148 281 Lost-Fox 7423 281 Summit7149 281 Lost-Fox 7424 280 Summit7150 281 Lost-Fox 7425 280 Summit7151 281 Lost-Fox 7426 280 Summit7152 281 Lost-Fox 7756 280 Summit7153 281 Lost-Fox Subtotal 2,522.5 Summit7160 281 Lost-Fox 7119 281 Hobbit-Broatch7161 281 Lost-Fox 7121 224 Hobbit-Broatch7162 281 Lost-Fox 7122 281 Hobbit-Broatch7164 281 Lost-Fox 7123 281 Hobbit-Broatch7165 281 Lost-Fox 7124 98 Hobbit-Broatch7166 281 Lost-Fox 7125 281 Hobbit-Broatch7167 75 Lost-Fox 7126 281 Hobbit-Broatch7168 142 Lost-Fox 7131 281 Hobbit-Broatch7169 281 Lost-Fox 7136 281 Hobbit-Broatch7170 281 Lost-Fox 7137 281 Hobbit-Broatch

7171 (1) 140.5 Lost-Fox 7141 281 Hobbit-Broatch7172 280 Lost-Fox 7142 281 Hobbit-Broatch

7173 (1) 140 Lost-Fox 7155 61 Hobbit-Broatch7175 94 Lost-Fox 7156 167 Hobbit-Broatch7561 21 Lost-Fox 7157 265 Hobbit-Broatch

Subtotal 6,231.5 Lost-Fox 7158 281 Hobbit-Broatch7150 281 Nass 7159 281 Hobbit-Broatch7154 281 Nass 7163 257 Hobbit-Broatch7533 281 Nass 7381 281 Hobbit-Broatch7534 281 Nass 7559 22 Hobbit-Broatch7535 281 Nass 7560 (2) 188 Hobbit-Broatch

Subtotal 1,405.0 Nass Subtotal 4,935.0 Hobbit-BroatchTotal - All Exploration Areas 15,094.0

Notes:

1. Portions of licenses are in two exploration areas.

2. Gulf documents show 154 ha for license 7560. Additional area reflects incorporation of small area

immediately adjacent to license.

6-2


7.0 ACCESSIBILTY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The nearest community to the property is Iskut, approximately 100km to the northwest on the

Stewart Cassiar Highway #37. Larger communities include Stewart, 150km southwest of Mount

Klappan, Terrace, 300km south southwest, and Smithers, 290km south southeast. Vancouver

is approximately 930km south of Mount Klappan.

A British Columbia Railway right-of-way between Prince George and Dease Lake runs through

the property. The sub-grade for this right-of-way has been completed, except for a 24km

section north of the Kluatantan River and a similar distance north of the Stikine River. Ground

access to Mount Klappan is via a connector road from Stewart-Cassiar Highway 37 to the BC

Railway sub-grade. The property is accessible by air to a 1000m graveled airstrip built on the

sub-grade, which is suitable for landing fixed-wing aircraft.

The Mount Klappan property is mountainous, with local relief ranging from 1,100m in valley

floors to over 2,000m along the mountain and ridge crests. The local tree line occurs at

approximately 1,500m elevation, with higher vegetation consisting of alpine tundra intermittently

broken by weathered rock. Lower elevations feature scattered coniferous forest, grasses,

shrubs, meadows and bogs.

The area falls within the Northern and Central Plateau and Mountain Climatic Zone.

Precipitation averages 300 to 400mm per year with mean daily temperatures comparable to Fort

Nelson and Price George. Previous mine feasibility studies completed by Marston assumed

year round operations.

Marston has not reviewed any data pertaining to surface rights for mining operations, the

availability and sources of power, water, mining personnel, etc., other than those listed in its

1990 feasibility study document.

7-1


8.0 HISTORY




Skeena. Between 1981 and 1988, annual exploration programs were conducted by Gulf to



and core drilling, adit driving, trenching and outcrop sampling, and quality testing.

By late 1990, Gulf had completed several iterations of feasibility studies targeting surface mining

of anthracite for subsequent processing into five distinct anthracite products. At that time, the

proposed project included a surface mine, coal processing plant, site infrastructure, a new haul

road and a port capable of handling the various products. The feasibility studies addressed

anthracite production from the Lost-Fox area, identified by Gulf as the primary initial mining area

and the location of the majority of the exploration efforts.

In February 1992, a sizable portion of the original Mount Klappan License Block area was

released. The Skeena Area was eliminated and the Nass and Summit areas were drastically

reduced. Licenses were also released in the Lost-Fox and Hobbit-Broatch areas, but these

were less substantive in their impacts. The current Mount Klappan project area licenses are

listed in Table 6.1, Mount Klappan License Holdings.

8.1 Exploration Programs

Gulf issued a total of 13 reports detailing exploration activities and results on the Mount Klappan

properties between 1981 and 1988. These reports are listed in Table 4.1, Review List of Gulf

Canada Technical Reports. Additional reports prepared by Gulf Canada Resources on the

Mount Klappan Anthracite deposit were available for review as part of this due diligence. A

complete listing of the Conoco resource library contents is contained in appendix A.

8-1

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 Each of the exploration programs included various mapping, drilling, and sampling efforts.

Table 8.1, Summary of Mount Klappan Exploration Programs, lists the various components of

the annual exploration activities.

Table 8.1 Summary of Mount Klappan Exploration Programs

1982 1983 1984 1985 1986 1987 1988

Geological Mapping

Cartography

Outcrop Sampling

Aerial Photography

Paleontology - Sedimentology

Flora And Fauna Identification

Bentonite Study

Fault and Clevage Study

Diamond Drilling

Trenching - Mechanical, Hand

Adits

Trial Pit

Cargo Pit

Geophysical Logging

Stratigraphic Logging

YearDescription

8-2

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 The exploration drilling programs included the compilation of detailed stratigraphic logs and

acquisition of geophysical logs. The suite of geophysical logs included:

• Gamma Ray

• Neutron

• Sidewall density

• Caliper

• Focused beam resistivity (classification)

• Directional deviation

Several components of the annual exploration programs were consistently performed each

year, such as geologic mapping, drilling and trenching. Certain specialty programs, such as the

trial pit, cargo pit, paleontology and bentonite studies, were performed on an intermittent basis.

In total, the Mount Klappan exploration efforts include 159 diamond drill holes with nearly 25km

of drilling, see Table 8.2, Summary of Exploration Programs – Mount Klappan. An additional

1.5km of drill data has been obtained from rotary drill holes, and 3.7km of trench data has been

amassed. Summary listings of exploration efforts in the Lost-Fox, Hobbit-Broatch, and Nass

and Skeena exploration efforts are shown on Table 8.3 through Table 8.5, respectively.

In keeping with Gulf’s identification of the Lost-Fox area as the primary focus for initial

development, the majority of exploration data have been gathered within its boundaries. Total

diamond and rotary drilling in Lost-Fox totals 171 of the 182 total holes, with nearly 25km of the

total meterage drilled. Lost-Fox area trenches include 354 of the total of 570 completed in

Mount Klappan, covering 2.6km of trench. In addition, the primary test pit was built by Gulf in

the Lost-Fox area. Table 8.6, Lost-Fox Area Coal Seam and Carbonaceous Zone Summary,

lists the seam intercept data for the Lost-Fox area.

The exploration programs included comprehensive anthracite quality, sizing and washability

analyses. This included proximate and ultimate analyses, ash analyses, identification of forms

of sulfur, and ash fusion temperature analysis. Because the commercial exploitation of the

deposit requires processing of the run-of-mine anthracite feed to acceptable products, over 700

washability analyses were conducted on drill core samples.

8-3


Table 8.2 Summary of Exploration Programs – Mount Klappan

1981 1982 1983 1984 1985 1986 1987 1988

Adits

Quantity 1 1 2

Tonnes 39 30 69

Diamond Drill Holes

Quantity (HQ) 7 3 8 34 38 34 29 153

Total Meters 1,223 603 1,507 6,164 5,550 4,931 4,756 24,734

Quantity (AIX) 6 6

Total Meters 126 126

Rotary Drill Holes

Quantity 17 6 23

Total Meters 897 620 1,517

Mechanical Trenches

Quantity 128 53 29 210

Total Meters 1,041 700 306 2,047

Hand Trenches

Quantity 24 51 93 95 45 36 13 3 360

Total Meters 89 289 527 416 178 95 58 17 1,669

Measured Sections

Quantity 13 19 6 25 1 64

Total Meters 2,736 3,347 745 1,951 39 8,818

DescriptionYear

Total

8-2


Table 8.3 Summary of Exploration Programs – Lost-Fox Area

1981 1982 1983 1984 1985 1986 1987 1988

Adits

Quantity 1 1 2

Tonnes 39 30 69

Diamond Drill Holes

Quantity (HQ) 1 2 4 34 38 34 29 142

Total Meters 244 411 1,017 6,164 5,550 4,931 4,756 23,073

Quantity (AIX) 6 6


Rotary Drill Holes

Quantity 17 6 23


Mechanical Trenches

Quantity 88 53 29 170

Total Meters 808 700 306 1,814

Hand Trenches

Quantity 9 14 49 55 33 18 5 1 184

Total Meters 27 86 265 260 130 58 29 7 862

Measured Sections

Quantity 5 5 2 15 1 28

Total Meters 1,368 308 93 985 39 2,793

DescriptionYear

Total

8-3


Table 8.4 Summary of Exploration Programs – Hobbit-Broatch Area

1981 1982 1983 1984 1985 1986 1987 1988

Adits

Quantity

Tonnes

Diamond Drill Holes

Quantity (HQ) 5 4 9


Quantity (AIX)

Total Meters

Rotary Drill Holes

Quantity

Total Meters

Mechanical Trenches

Quantity 40 40


Hand Trenches

Quantity 13 32 2 8 55

Total Meters 49 164 17 22 252

Measured Sections

Quantity

Total Meters

DescriptionYear

Total

8-4


Table 8.5 Summary of Exploration Programs – Nass and Skeena Areas

1981 1982 1983 1984 1985 1986 1987 1988

Adits

Quantity

Tonnes

Diamond Drill Holes

Quantity (HQ) 1 1 2

Total Meters 193 130 323

Quantity (AIX)

Total Meters

Rotary Drill Holes

Quantity

Total Meters

Mechanical Trenches

Quantity

Total Meters

Hand Trenches

Quantity 2 4 42 32 12 18 8 2 120

Total Meters 13 34 245 473 48 39 29 10 891

Measured Sections

Quantity 6 2 8

Total Meters 357 205 562

DescriptionYear

Total

8-5


Table 8.6 Lost-Fox Area Coal Seam and Carbonaceous Zone Summary

(Coal) (Coal + Rock)P 3 1.28 1.33 96.24O 16 0.84 1.12 75.00N 18 1.18 1.40 84.29

M/N 11 0.77 1.03 74.76M Upper 2 1.44 1.62 88.89

M 25 2.18 2.86 76.22L/M 1 0.32 0.40 80.00

L 37 1.76 2.26 77.88K/L 37 2.11 2.87 73.52K 54 2.75 3.35 82.09J 63 0.30 0.81 37.04J2 1 0.70 0.71 98.59I 97 4.18 4.62 90.48

H/I 21 0.75 1.57 47.77H/I2 3 1.06 1.19 89.08

H 66 3.01 3.81 79.00H Lower 1 1.09 1.16 93.97

H-1 1 1.07 1.31 81.68Phantom 33 0.70 2.47 28.34

G 29 1.34 2.36 56.78G Lower 11 1.00 1.33 75.19

F/G 4 0.27 0.50 54.00F 14 2.26 2.99 75.59E 11 1.32 1.39 94.96D 5 2.01 2.46 81.71C 5 0.40 0.79 50.63B 2 0.15 1.34 11.19

B Lower 1 0.30 0.30 100.00A 6 1.23 1.88 65.43

A-2 1 0.85 1.02 83.33A-3 1 4.05 4.98 81.33A-4 1 2.38 3.11 76.53A-5 1 3.45 4.69 73.56

Seams 582 29.03 m 48.50 65.03 74.58Questionable

Seams 32 0.74 1.11 66.67

Total of Indentifiable

AverageTrue Thickness (m)Seam

Number of Undisturbed Intersections

PrincipalSeamFlag

% Coal

8-6


8.2 Coal Quality

Coal Rank

In 1994, Gulf produced an extensive summary of coal quality attributes primarily concerning the

coals of the Lost-Fox area, but with reference to samples collected from all of the exploration

areas. The coal rank was reviewed using various analytic methodologies, with the goal of

establishing coal rank according to ASTM Standard D-388. The analyses supported the

classification of the coals at Mount Klappan as a true anthracite.

Proximate, Ultimate and Ash Analyses

Each of the exploration programs included a full suite of proximate, ultimate, and ash analytic

tests on the core and bulk samples obtained. In a 1994 report on coal quality, Gulf geologists

provided full summaries of seam quality characteristics from targeted surface mining areas

identified in the 1990 mining feasibility study. These compilations were prepared as part of a

coal quality manual. Summary listings of proximate, ultimate and ash analyses are presented in

Table 8.7, Table 8.8, and Table 8.9, respectively. Associated data concerning ash fusion

temperatures are included in Table 8.10.

Washability Studies

Over 700 washability studies were performed on the Mount Klappan coal, including the trial and

cargo pits. As a result of the availability of bulk samples, the crushed product size distribution

from drill cores was deemed to be too coarse compared to that of the bulk samples.

Subsequent test results from core samples were adjusted to reflect the results achieved with the

bulk samples. A wash plant simulator was used to adjust these results for predictions used in

feasibility analyses.

8-7


Table 8.7 Summary of Selected Lost-Fox Seam Proximate Analyses

SeamQtyof

Samples

ResidualMoisture(Wt. %)

Gross Calorific Value

(MJ/kg)

AshContent(Wt. %)

Volatiles(Wt. %)

FixedCarbon(Wt. %)

Sulfur(Wt. %) HGI

H 47 1.15 20.3 36.55 7.53 54.68 0.52 58

H/I 2 1.12 19.7 37.57 7.00 54.31 2.10 61

I 52 1.33 26.2 22.29 6.59 69.79 0.40 53

J 3 1.11 20.0 38.10 7.18 53.61 0.46 58

K 35 1.18 22.2 32.49 7.80 58.53 0.62 57

K/L 17 1.14 18.1 42.95 7.31 48.61 0.48 58

L 16 1.06 19.5 39.37 7.73 51.84 0.46 64

M 11 1.45 16.8 44.90 9.70 43.96 0.69 69

N 6 1.32 20.9 36.15 7.22 55.31 2.72 72

*Mean 189 1.24 22.5 31.53 7.32 59.90 0.51 57

Table 8.8 Summary of Selected Lost-Fox Seam Ultimate Analyses

Carbon Hydrogen Nitrogen Oxygen Sulfur Ash Residual Moisture

(Wt. %) (Wt. %) (Wt. %) (Wt. %) (Wt. %) (Wt. %) (Wt. %)

H 55.92 1.84 0.62 3.39 0.52 36.55 1.15

H/I 53.53 1.95 0.64 3.10 2.10 37.57 1.12

I 69.75 2.21 0.81 3.22 0.40 22.29 1.33

J 55.22 1.94 0.64 2.53 0.46 38.10 1.11

K 59.68 1.96 0.73 3.36 0.62 32.49 1.18

K/L 49.53 1.70 0.65 3.55 0.48 42.95 1.14

L 52.89 1.78 0.66 3.79 0.46 39.37 1.06

M 46.31 1.74 0.64 4.28 0.69 44.90 1.45

N 54.01 1.86 0.71 3.23 2.72 36.15 1.32

*Mean 60.62 1.99 0.72 3.39 0.51 31.53 1.24

Seam

8-8


Table 8.9 Summary of Selected Lost-Fox Seam Ash Analyses

SeamSiO2

(Wt. %)Al2O3

(Wt. %)Fe2O3

(Wt. %)CaO

(Wt. %)MgO

(Wt. %)TiO2

(Wt. %)Na2O

(Wt. %)K2O

(Wt. %)SO3

(Wt. %)P2O5

(Wt. %)

H 56.79 18.28 5.88 6.08 3.52 0.97 1.74 1.12 2.57 0.79

H/I 56.30 19.19 7.37 4.15 2.94 1.00 1.59 1.26 1.89 0.49

I 52.78 20.93 6.84 4.89 3.78 0.99 1.87 1.24 2.73 1.56

J 61.29 17.12 6.33 3.82 3.77 0.71 1.26 1.64 2.04 0.78

K 51.85 20.16 8.33 5.47 3.81 1.11 1.79 1.48 3.01 1.24

K/L 58.29 18.73 6.67 4.35 3.00 1.01 1.74 1.51 2.14 0.64

L 56.90 20.11 5.77 5.05 2.94 1.10 1.98 1.29 2.53 1.00

M 53.18 19.73 7.99 5.80 4.08 0.99 1.65 1.29 2.36 0.65

N 52.34 18.86 4.42 2.76 1.02 1.76 1.14 3.60

*Mean 54.31 19.91 6.96 5.17 3.62 1.01 1.80 1.31 2.65 1.17

The I Seam showed very high yields compared to that of H and type H seams (type H seams

being defined as those with similar washability characteristics as H Seam). In the product size

range of 6-0.5mm, the I Seam exhibited 70% yield at 7.5% ash while H Seam showed a yield of

45% at 7.5% ash. As a result of extensive investigation, Gulf determined that the optimum feed

for anthracite preparation was a blend of 40% I Seam, 60% H and type H seams.

8.3 Resource Estimates

Each of the exploration programs completed by Gulf culminated with an estimate of anthracite

resources in the study areas. These estimates were refined each year, and a local mine grid

was implemented for the development of cross-sections through the Lost-Fox and Hobbit-

Broatch areas. All of these estimates were prepared prior to the issuance of Paper 88-21 of the

Geological Survey of Canada, entitled “A Standardized Coal Resource/Reserve Reporting

System for Canada.” However, they conform to the generally accepted predecessor to Paper

88-21, which is Energy, Mines and Resources Report ER79-9, “Coal Resources and Reserves

of Canada.” 8-9


Table 8.10 Summary of Selected Lost-Fox Seam Ash Fusion Temperature

Initial Deformation Softening Hemispherical Fluid Initial

Deformation Softening Hemispherical Fluid

H 1,243 1,283 1,302 1,366 1,200 1,239 1,258 1,337

H/I 1,170 1,295 1,314 1,378 1,111 1,212 1,235 1,319

I 1,245 1,297 1,316 1,365 1,192 1,249 1,272 1,343

J 1,236 1,315 1,333 1,402 1,160 1,254 1,279 1,374

K 1,244 1,296 1,313 1,353 1,179 1,231 1,249 1,320

K/L 1,243 1,300 1,318 1,373 1,191 1,233 1,251 1,344

L 1,244 1,310 1,334 1,401 1,184 1,256 1,282 1,374

M 1,258 1,300 1,320 1,369 1,187 1,229 1,257 1,336

N 1,236 1,303 1,335 1,383 1,160 1,204 1,233 1,317

*Mean 1,244 1,296 1,315 1,368 1,189 1,242 1,263 1,340

Oxidizing Conditions Reducing Conditions

Ash Fusion Temperatures (°C)

Seam

The structural geology throughout the Mount Klappan area generally conforms to the geology

type complex, as defined in Paper 88-21, although certain areas could be identified as

moderate. The description of complex coal deposits from Paper 88-21 is given as:

“Deposits in this category have been subjected to relatively high levels of tectonic

deformation. Tight folds, some with steeply inclined or overturned limbs, may be

present, and offsets by faults are common. Individual fault-bonded plates do,

however, generally retain normal stratigraphic sequences, and seam thicknesses

have only rarely been substantially modified from their pre-deformational

thickness.”

8-10

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 8.3.1 1988 Geologic Study Resource Estimates

By 1988, Gulf had established a local mine grid coordinate system, which was oriented

approximately along the general strike of the anthracite seams. The purpose of the grid was to

establish a nominal coordinate base for the generation of geologic cross-sections through the

Lost-Fox and Hobbit-Broatch areas.

The resource statements in the 1988 Gulf Geological Report included estimates derived from

geologic cross-sections for both the Lost-Fox and Hobbit-Broatch areas. In Lost-Fox, the

sections were spaced 100m apart, while in Hobbit-Broatch the section spacing was 250m. The

cross-sections were developed to show seam position based on geologic interpretation of

applicable drill hole, trench, adit, outcrop, and areal mapping data.

Seam true thickness data and resource classification designations based on nearby drill holes

were then applied on an area-of-influence basis to the seam segments on the cross-sections.

In this fashion, designations of measured, indicated and inferred as well as seam thickness

were applied to the graphical representation of seam stratigraphy. Using these data, plus a

projection distance to be applied with the cross-section, the estimates of anthracite volumes

were generated by multiplying the length of the seam segment(s) by the section projection

distance and applicable seam true thickness. Specific gravity data for each seam were applied,

again by the area-of-influence method, to calculate the tonnage of each seam.

The cross-sectional method of estimating resources is a practice that is historically accepted,

and is specified in Paper 88-21 as the appropriate method for estimates in complex geologic

settings. However, Paper 88-21 specifies a section spacing of no more than 100m for the

estimation of measured resources. The methods used by Gulf for Lost-Fox accommodate this

limitation; however, the 250m section spacing used by Gulf in Hobbit-Broatch precludes the

reporting of measured resources.

Gulf estimated speculative resources by measuring the plan areas of blocks containing

speculative coal resources, then applying average aggregate coal thickness and specific gravity

factors. First, an aggregate coal seam thickness was calculated for use in estimating the

speculative resource. The Lost-Fox and Hobbit-Broatch aggregate coal thickness values were

calculated to be 65.0m and 26.4m respectively. These figures were averaged, and 25% of the

8-11

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 average thickness was designated as a conservative figure for the aggregate thickness of

anthracite underlying the speculative areas within the coal bearing boundaries of the Mount

Klappan area. This estimate resulted in an aggregate coal thickness of 11.43m, which in

tandem with area-average specific gravity figures was subsequently applied to anthracite-

bearing areas to estimate the speculative resource base. The anthracite resources as reported

in the 1988 Gulf Geological Report are summarized in Table 8.11, Summary of Anthracite

Resources – Gulf 1988 Geological Report.

Table 8.11 Summary of Anthracite Resources – Gulf 1988 Geological Report

(All figures reported in millions of tonnes)

Measured Indicated Demonstrated (2) Inferred Speculative

Lost Fox 111.4 111.7 223.1 123.9 711.5 1,058.5

Hobbit Broach 12.1 24.5 36.6 369.1 761.2 1,166.9

Summit 0.0 32.4 1,533.1 1,565.5

Nass 0.0 2,189.4 2,189.4

TOTAL 123.5 136.2 259.7 525.4 5,195.2 5,980.3

TotalResource Classification (1)

ExplorationArea

Notes:

a. The 1988 reports were prepared prior to the issuance of Paper 88-21.

b. Demonstrated resources are calculated as the sum of measured and indicated

resources.

8.3.2 1992 Adjustment to Resource Estimates

As discussed earlier, a sizable portion of the original Mount Klappan License Block area was

released in early 1992, resulting in the current holding of 15,094 ha. This adjustment did not

affect the reported measured and indicated resources of the Lost-Fox and Hobbit-Broatch

areas; however, it reduced the speculative resources base of each area. Gulf revised the

8-12

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 estimates of total speculative resources by removing the released areas using the same

calculation as originally applied for the calculation of the speculative resources.

The current anthracite resources reported by Conoco for the Mount Klappan holdings are

summarized in Table 8.12, Summary of Anthracite Resources with 1992 Lease Adjustments.

Table 8.12 Summary of Anthracite Resources with 1992 Lease Adjustments

(All figures reported in millions of tonnes)

Measured Indicated Demonstrated (2) Inferred Speculative

Lost Fox 111.4 111.7 223.1 123.9 711.5 1,058.5

Hobbit Broach 12.1 24.5 36.6 369.1 619.2 1,024.9

Summit 0.0 32.4 486.2 518.6

Nass 0.0 201.5 201.5

TOTAL 123.5 136.2 259.7 525.4 2,018.4 2,803.5

TotalResource Classification (1)

ExplorationArea

Notes:

c. The 1992 adjustment did not incorporate the requirements of Paper 88-21.

d. Demonstrated resources are calculated as the sum of measured and indicated

resources.

8-13


9.0 GEOLOGICAL SETTING

9.1 Regional Setting

Beginning with geological mapping and hand trenching in 1981 in the Bowser Basin,

subsequent exploration programs included mechanical trenching, rotary drilling, diamond

drilling, adit driveage and trial cargo pits. Each years' work permitted more accurate delineation

of the geology and coal resources in the Mount Klappan area.

The coal measures of the region are contained within a series of marine and non marine

sediments ranging in age from uppermost Jurassic to lower Cretaceous. These sediments were

deposited in the Bowser Basin of north central British Columbia, a successor basin in the

volcanic Hazelton Trough (Tipper and Richards 1976).

Structural deformation of Bowser Basin sediments generated by regional tectonic stresses are

expressed as recumbent folds and local thrust faults extending a few kilometers along strike

(Eisbacher, 1976). The general structural trend resulting from these large scale compressional

forces is oriented northwest-southeast.

9.2 Local Stratigraphy

The sedimentary package comprising the Mount Klappan property has been subdivided into

four gradational sequences which, in ascending order, are: the Spatsizi, the Klappan, the

Malloch, and the Devils Claw.

The lowest stratigraphic unit in the sequence, the Spatsizi, contains interbedded mudstones,

siltstones and sandstones throughout, while thin coal seams and massive conglomerates occur

within the upper portion.

The main coal bearing unit, the Klappan Sequence, which overlies the Spatsizi, is about 1,100

meters thick and contains cyclic packages of interbedded fine to coarse grained sandstones,

siltstones, mudstones, laterally discontinuous conglomerates, and abundant coal seams. Up to

33 coal horizons have been identified with true seam thicknesses up to 11.13m. Twenty-eight

9-1

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 of these seams have an average true thickness of at least 0.50m and contain at least 50

percent coal. Twelve of these are considered potentially mineable.

Above the Klappan lies the Malloch sequence, containing thin coal seams toward the base and

interbedded argillaceous sandstones, siltstones and mudstones throughout.

The Devils Claw Sequence in the youngest stratigraphic unit on the Mount Klappan property. It

is dominated by thick, laterally extensive conglomerate units separated by sandstones,

siltstones and minor mudstones.

9.3 Coal Occurrences

Through 1988, Gulf geologists intersected over 40 seams within a 750m sequence. The

anthracite coal seams have been labeled from A to P with A Seam on the stratigraphic bottom.

Within the Lost Fox area, the primary coal measures occur between B Seam and O Seam within

a 450m sequence.

9-2


10.0 DEPOSIT TYPES

Previous mining studies completed by Marston all contemplated mining operations within the

bounds of the Lost-Fox exploration area. The mining plans were based on open pit mining

methods using electric shovels and hydraulic backhoes to excavate waste and coal, with

haulage by rear-dump pit haul trucks to waste dumps and coal processing facilities. At that

time, Gulf planned to produce 5 different anthracite products, and had completed numerous coal

processing, handling, transportation and marketing studies.

The structural geology throughout the Mount Klappan area generally conforms to the geology

type complex, as defined in Paper 88-21, although certain areas could be identified as

moderate. The description of complex coal deposits from Paper 88-21 is given as:

“Deposits in this category have been subjected to relatively high levels of tectonic

deformation. Tight folds, some with steeply inclined or overturned limbs, may be

present, and offsets by faults are common. Individual fault-bonded plates do,

however, generally retain normal stratigraphic sequences, and seam thicknesses

have only rarely been substantially modified from their pre-deformational

thickness.”

10-1


11.0 MINERALIZATION

The Mount Klappan area contains significant deposits of anthracite, in a multi-seam, complex

geologic setting. Detailed geologic descriptions are available in the Gulf geologic reports

completed between 1981 and 1988. Refer to Section 9.0 for a discussion of the geologic

setting.

11-1


12.0 EXPLORATION

Other than due diligence efforts on Conoco (Gulf) data, Marston is not aware of any exploration

activities conducted at Mount Klappan by, or on behalf of, Fortune Minerals Ltd.

12-1


13.0 DRILLING

Other than due diligence efforts on Conoco (Gulf) data, Marston is not aware of any drilling

programs conducted at Mount Klappan by, or on behalf of, Fortune Minerals Ltd.

13-1


14.0 SAMPLING METHOD AND APPROACH

Other than due diligence efforts on Conoco (Gulf) data, Marston is not aware of any sampling

programs conducted at Mount Klappan by, or on behalf of, Fortune Minerals Ltd. A full

description of the procedures, lab instructions and handling standards utilized by Gulf during

each of its exploration programs is contained in the appropriate report documents.

14-1


15.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

Gulf carried out extensive sampling of coal and carbonaceous intervals that were identified in

surface trenches and diamond drill intersections. Sample preparation procedures were

consistent from 1981 to 1988. A full description of the procedures, lab instructions and handling

standards utilized by Gulf during each of its exploration programs is contained in the appropriate

report documents. Sample preparation procedures for the 1988 program of drilling, trenching

and resource estimation by Gulf are contained in appendix B. Analytical testing was typically

carried out at Birtley Coal and Testing in Calgary, Alberta. Loring Laboratories in Calgary

served as a back-up facility when Birtley were unavailable. Century Geophysical Corp. of

Canada carried out the down-hole geophysical logging. David E. Pearson Assoiates of Victoria,

B.C, conducted the petrographic work.

Other than due diligence efforts on Conoco (Gulf) data, Marston is not aware of any sampling

programs conducted at Mount Klappan by, or on behalf of, Fortune Minerals Ltd.

Marston did not directly supervise nor observe any of the field exploration programs or

subsequent analytic test work conducted by Gulf or its successors. As such, this report

addresses only the accuracy and applicability of data usage for the preparation of estimates of

anthracite resources, and the various conclusions made possible from review of base

exploration and analytic data.

15-1


16.0 DATA VERIFICATION

The work performed by Marston for due diligence review of the databases and estimates of

anthracite resources from Gulf reflected typical procedures for the verification of data acquisition

and usage. Because Marston performed significant review of the Gulf databases and geologic

interpretations as part of previous feasibility study efforts, the quantity of data identified for

review was less than would be typical as compared to a project where Marston had no prior

experience. There has been no additional geologic exploration and interpretation work

performed with respect to the Mount Klappan anthracite resources since the issuance of

Marston’s 1990 feasibility study. Because the majority of the exploration data was within the

Lost-Fox area, and because this area comprises the bulk of the measured and indicated

resource base represented by Gulf and Conoco, Marston’s review efforts focused on this area.

16.1 Drill Hole Data Review

Data compiled from 10 diamond drill holes were selected for a manual review of consistency of

data compilation, correlation methodology, and usage in subsequent structural interpretations.

The selection of drill holes for review targeted a representative sampling of holes throughout the

Lost-Fox area. These data were obtained from several of the annual exploration programs.

The review consisted of a manual examination of driller’s logs, geophysical logs, representative

correlations, and quality analytic data. The archival methodology was comprehensive and

exhaustive, with extensive descriptive logs, positional data and correlation charts available to

substantiate the base data. Marston’s review did identify some minor inconsistencies in data

archival, which are noted on Table 16.1, Summary of Diamond Drill Hole Data Review.

However, the inconsistencies are minor and the use of data on cross-sectional depictions of

area geology conformed to the stratigraphic and geophysical logs.

16-1


Table 16.1 Summary of Diamond Drill Hole Data Review

DDH-85007 DDH-85016 DDH-85019 DDH-85021 DDH-86003 DDH-86031 DDH-86035 DDH-87006 DDH-88001 DDH-88010

Stratigraphic Log (5)

Geophysical Log (2) (5)

Driller's Log (5)

Survey Data

True Thickness Calculation

Analysis (1) (4)

Ash Analysis (4)

Size Analysis (4)

Washability Report (3) (4)

DescriptionDrill Hole

Notes:

1) Proximate and ultimate analytic data available. 2) Geophysical log missing. 3) The washability analysis was performed on a composite sample, as opposed to individually by seam. 4) All analysis data missing. 5) Original interpretation of rock in core re-classified as coal during analysis picks, which was supported by geophysical log.

16-2


16.2 Review of Lost-Fox Cross Sections

In order to verify the use of available exploration data for interpretive geology and subsequent

resource estimates, Marston performed a visual review of 3 cross-sections from the 1988 Gulf

Geologic Report. Gulf based its resource estimates for the Lost-Fox area on measurements

from geologic cross-sections developed through the area, spaced 100m apart on a Gulf mine

grid coordinate system. The review sections were selected based on their contribution to the

demonstrated (measured plus indicated) anthracite resources as reported by Gulf for the Lost-

Fox area in 1988. The sections were identified as 1800N, 2300N, and 2500N respectively.

The structural interpretations on the sections are reportedly based on field mapping, seam

inclination records and interpretive geology performed on each seam in the drilling and trench

data sets. Correlations were based on extensive investigations into seam characteristics,

including cataloging of fauna and floral fossil occurrences in seam and surrounding

stratigraphies. The sections were developed based on all of these records, plus sectional

analysis of interpretations resulting from trench and drill hole intercepts of seams.

Marston’s review did not result in any substantive discrepancies in correlation methodology or

results. The projections of seam structures and interpretations at depth can only be verified

through additional acquisition of deep drilling data; however, because initial mine development

planning addresses relatively shallow surface mineable resources, such exploration programs

are unwarranted and unlikely at this time.

16.3 Resource Estimates – Lost-Fox Area

The review of Gulf resource estimates involved an independent compilation of measured and

indicated resources from 3 seams on the 3 cross-sections listed above. Again, the selection of

the seams for review was based on their relative contribution to the demonstrated resource

base of the Lost-Fox area. The seams were the I Seam, H Seam and K Seam.

The cross-sections were scanned into digital image format using a large format digital scanner.

Using computer-aided drafting (CAD) tools, the images were manually registered to properly

scaled sectional coordinates. Each seam trace had been subdivided on the sectional data with

16-1

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 identification of seam thickness and the drill hole upon which the thickness was based. These

individual line segments were manually verified and traced into the CAD files. Each segment

was assigned the appropriate thickness.

Marston independently generated appropriate boundaries for classification of measured and

indicated extents for each seam on each cross-section based on seam classification polygons

located in Marston’s 1990 feasibility study. Measurement of inferred resources were not

performed, due to the change in allowable distances from data points between the 1988 reports

and current standards, see Section 3.

Based on seam lengths, section projection distances, seam thickness assignments and seam

specific gravity data as reported by Gulf, Marston’s resource verification results are presented in

Table 16.2, Summary of Demonstrated Resources – Marston Review. The resource estimates

were generated consistently with Gulf’s methods, and therefore do not address the assignment

of Deposit Type or Feasibility of exploitation as described in Paper 88-21. Rather, they were

generated solely to verify Gulf’s estimation methodology.

Gulf’s estimates were obtained from anthracite resources statements in the 1988 Geological

Report on the Lost-Fox area. They have been reproduced verbatim and are listed on Table

16.3, Summary of Demonstrated Resources – Gulf 1998 Geologic Report.

Marston performed a comparison of its estimates of resources and the Gulf 1988 estimates.

Results of this comparison on a tonnage basis are listed on Table 16.4, Comparison of

Resources - Marston Estimates and Gulf Reports. In order to clearly illustrate the differences in

the review, an additional calculation of percentage differences between the Marston verification

review and Gulf reports was performed. The results of the percentage differences are listed in

Table 16.5, Summary of Differences – Resources Review. On a total basis, the demonstrated

resources of the 3 seams reviewed on the 4 sections compares to within 1.5%. Individual seam

and section totals show wider variance, which in Marston’s opinion is attributable to the method

of verification and associated estimation errors. In addition, the allocation of measured and

indicated resources may have been adjusted by Gulf for depth, as opposed to the Marston

verification technique which addressed horizontal distance from data points only. This is

supported by the consistent allocation by Gulf of more of each seam to the indicated

classification as opposed to the measured classification, as compared to the Marston estimates.

16-2


Table 16.2 Summary of Demonstrated Resources – Marston Review

(Reported in thousands of tonnes)

Section Class H I K

1800 Measured 1,641 1,904 281 3,826

Indicated 507 501 838 1,845

1800 Total 2,147 2,404 1,119 5,671

2300 Measured 1,902 2,109 750 4,762

Indicated 949 844 623 2,415

2300 Total 2,852 2,953 1,373 7,177

2500 Measured 1,645 1,208 628 3,480

Indicated 1,925 809 474 3,208

2500 Total 3,570 2,017 1,101 6,688

Grand Total 8,568 7,374 3,594 19,537

SeamDescriptionGrand Total

Table 16.3 Summary of Demonstrated Resources – Gulf 1998 Geologic Report


Section Class H I K

1800 Measured 1,563 1,730 477 3,770

Indicated 569 648 982 2,199

1800 Total 2,133 2,377 1,459 5,969

2300 Measured 1,703 1,846 707 4,256

Indicated 1,112 1,076 697 2,885

2300 Total 2,814 2,922 1,405 7,141

2500 Measured 1,503 1,137 558 3,198

Indicated 1,971 939 597 3,506

2500 Total 3,474 2,076 1,154 6,704

Grand Total 8,422 7,375 4,018 19,814

Description SeamGrand Total

16-3


Table 16.4 Comparison of Resources - Marston Estimates and Gulf Reports


Section Class H I K

1800 Measured 196

Indicated 63 147 144 354

1800 Total 340 298

2300 Measured

Indicated 162 233 75 470

2300 Total 32

2500 Measured

Indicated 46 129 123 299

2500 Total 58 53 16

Grand Total 0 424 278


(77) (174) (56)

(15) (27)

(200) (263) (43) (506)

(37) (31) (37)

(141) (71) (70) (282)

(95)

(147)

-4.7% -9.1% -1.5%

-0.7% -1.1%

-10.5% -12.5% -5.8% -10.6%

-1.3% -1.0% -0.5%

-8.6% -5.9% -11.2% -8.1%

-2.7%

-1.7%

Table 16.5 Summary of Differences – Resources Review

(Reported as percentage difference from Gulf 1998 Reports)

Section Class H I K

1800 Measured 69.5%

Indicated 12.4% 29.3% 17.2% 19.2%

1800 Total 30.4% 5.3%

2300 Measured

Indicated 17.1% 27.6% 12.0% 19.4%

2300 Total 2.3%

2500 Measured

Indicated 2.4% 16.0% 25.9% 9.3%

2500 Total 2.9% 4.8% 0.2%

Grand Total 0.0% 11.8% 1.4%


16-4


The standards used in the Gulf 1988 Geological Report for the reporting of inferred anthracite

resources were based on distances between 300m and 1,000m from a data point. The

standards of Paper 88-21 require that inferred resources be located between 300m and 600m

from a data point. Therefore, reported inferred anthracite resources in Gulf’s 1988 report do not

conform to currently accepted standards for reporting of coal resources in Canada. Marston

performed a simple area-based proportional allocation to revise the statements of inferred

resources. Basically, the method applied a simple ratio of areas to the original statements of

inferred resources, summarized as:

AI = Current Inferred Area = 84.82 ha

AO = Original Inferred Area = 285.88 ha

Ratio of Current to Original Areas = AI ÷ AO = 29.67%

Based on this re-allocation, a revised summary of Lost-Fox area anthracite resources was

developed. Table 16.6, Summary of Lost-Fox Area Resources Estimates, lists estimates of the

Lost-Fox area anthracite resources dating from the 1988 Gulf Geological Reports through to the

final adjustments as made by Marston.

Table 16.6 Summary of Lost-Fox Area Resources Estimates


Measured Indicated Demonstrated Inferred Speculative Total

111.4 111.7 223.1 123.9 711.5 1,058.5

111.4 111.7 223.1 36.8 798.6 1,058.5

0.0 0.0

111.4 111.7 223.1 36.8 798.6 1,058.5





16-5

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 As shown, the demonstrated (measured plus indicated) resource estimates are unchanged, and

97 million tonnes of previously classified inferred resources have been re-classified as

speculative resources to accommodate the requirements of Paper 88-21.

16.4 Resource Estimates – Hobbit-Broatch Area

Gulf Canada reported measured, indicated, inferred and speculative resources for Hobbit-

Broatch, which were based on measurements taken from geologic cross-sections located along

the same mine grid as used for Lost-Fox, but spaced 250m apart. According to the

requirements of the coal resource reporting standards listed in Paper 88-21, this spacing is not

sufficient for the reporting of measured resources. In addition, the dictates of Paper 88-21

require the existence of at least 3 data points per section for the classification of measured,

indicated and inferred resources. The exploration data available for Hobbit Broach contained

primarily trench data and nine (9) diamond drill holes.

Marston performed a visual review of the Hobbit-Broatch cross-sections to re-classify the

resource statements according to the standards of Paper 88-21. This review included an

identification of data points and an assessment of the reasonableness of the resource

estimates. Based on this cursory review, and an adjustment to speculative resources based on

the license holding reduction of 1992, a revised statement of Hobbit-Broatch anthracite

resources was compiled, and is listed on Table 16.7, Summary of Hobbit-Broatch Anthracite

Resources.

As shown in Table 16.7, the standards of Paper 88-21 have resulted in the elimination of

measured resources and substantial reduction in indicated resources for Hobbit-Broatch.

Because the complete re-statement of Hobbit-Broatch resources was not within the scope of

this study, and as Marston used conservative techniques to re-state the resources, it is possible

that a thorough review of the cross sections and data points used for the Hobbit-Broatch

resource estimates would further enhance the indicated resource base. Marston recommends

that a detailed review be completed for enhancement of the Hobbit-Broatch resource estimates.

16-6


Table 16.7 Summary of Hobbit-Broatch Anthracite Resources



12.1 24.5 36.6 369.1 761.2 1,166.9

13.5 13.5 258.4 895.0 1,166.9

0.0 13.5 13.5 258.4 753.0 1,024.9





(142.0) (142.0)

16.5 Resource Estimates – Summit and Nass Areas

Marston reviewed the method for reduction of the 1988 Gulf resource estimates for the Summit

and Nass areas as a result of the February 1992 license reductions as the only due diligence

exercise for these two areas. The 1988 reports did not include any measured or indicated

resources for these areas, although there was a minimal amount of inferred resources reported

in the Summit Area. The review indicated that the method of reducing the anthracite bearing

areas was accurate in its result. The adjusted resource estimates for the Summit and Nass

areas are listed in Table 16.8, Summary of Summit Area Anthracite Resources, and Table 16.9,

Summary of Nass Area Anthracite Resources. Gulf (and subsequently Conoco) determined

that these resources do not form a basis for immediate development, and Marston concurs with

that opinion.

16.6 Resource Estimates – Mount Klappan

The revised estimates for the Lost-Fox, Hobbit-Broatch, Summit and Nass areas were

combined to produce an estimated anthracite resources summary for Mount Klappan. The

results of this calculation are listed in Table 16.10, Summary of Mount Klappan Anthracite

Resources.

16-7


Table 16.8 Summary of Summit Area Anthracite Resources



32.4 1,533.1 1,565.5

9.6 1,555.9 1,565.5

0.0 0.0 9.6 508.9 518.6





(1,046.9) (1,046.9)

(1,987.9) (1,987.9)

Table 16.9 Summary of Nass Area Anthracite Resources



2,189.4 2,189.4

2,189.4 2,189.4

0.0 0.0 0.0 201.5 201.5





16-8


Table 16.10 Summary of Mount Klappan Anthracite Resources



123.5 136.2 259.7 525.4 5,195.2 5,980.3

111.4 125.2 236.6 304.7 5,438.9 5,980.3

0.0 0.0 0.0 0.0

111.4 125.2 236.6 304.7 2,262.1 2,803.4





(3,176.9) (3,176.9)

The standards of Paper 88-21 clearly indicate a preferred format for the reporting of coal

resources, which are applicable to anthracite deposits. In addition to the assurance of existence

classifications of measured, indicated, inferred, and speculative, these include identification of:

• Geology Type – in general, the anthracite deposits of Mount Klappan conform to the

definitions of complex; and

• Deposit Type – refers to the probable extraction technique, specifically Surface,

Underground, Non-conventional, and Sterilized; and

• Feasibility of Exploitation – sub-divided into categories of immediate interest and future

interest, this criteria attempts to identify the resources based on their potential timing for

development.

Paper 88-21 also defines resources as “… coal contained in seams occurring within specified

limits of thickness and depth from surface.” In its 1988 Geologic Report, Gulf defined its

resources as seams having greater than 0.5m true thickness and lying up to 500m below

surface. There was no accommodation for the specification of Geology Type, Deposit Type or

Feasibility of Exploitation in the Gulf estimates.

16-9

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 In order to assign conservative, supportable opinions concerning Deposit Type and Feasibility of

Exploitation to the Mount Klappan resources, Marston utilized its 1990 feasibility study of the

Lost-Fox area and visual review of the cross-sections and geologic maps of the area. In the

1990 study, just over 52 million tonnes of in-situ anthracite was identified for use in mine

planning. The existence of this feasibility study allows the identification of these resources as

Surface resources of Immediate Interest.

The balance of the resources were placed in the Future Interest category. The visual review of

the cross-sections indicated that 25% of the resources reported by Gulf could be conservatively

allocated within 100m of depth, which should accommodate reasonable identification as Surface

resources. Of the remainder, an additional 25% was allocated as Underground resources,

based on visual review of the seam structure. The remainder was allocated as Non-

conventional.

Marston prepared a re-stated table of resources for Mount Klappan according to the dictates of

Paper 88-21, which is listed in Table 16.11, Summary of Mount Klappan Resources – Paper 88-

21 Format.

16.7 Review of Ash and Environmental Issues

Acid-forming Material

In 1985, an investigation was performed into potential acid-forming materials at Mount Klappan.

The report included analytic test work and results for the following materials:

• Sandstone – acid consuming

• Siltstone – acid consuming

• Mudstone – potentially acid consuming

• Mudshale – potentially acid consuming

• Coal – potentially acid producing

16-10


Table 16.11 Summary of Mount Klappan Resources – Paper 88-21 Format

Measured Indicated Inferred Measured Indicated Inferred Speculative

Surface

Lost-Fox Complex Anthracite 40.5 10.9 0.8 17.7 25.2 9.0 199.7




Underground





Non-Conventional





Sterilized There are no sterilized resources of immdiate or future interest

MiningMethod

/Area

DepositType

ASTMCoalRank

Resource of Immediate Interest(millions of tonnes)

Resource of Future Interest(millions of tonnes)

Certain components of the coal and coal/rock boundary materials were identified as having

potential for producing acidic conditions. However, the prevalence of these materials was low,

and the conclusions of the report stated that “There is an abundance of potentially acid

consuming rocks over potentially acid producing rocks. With proper materials handling there

should not be a problem with acid mine draining.”1 Based on the data and methods reviewed,

Marston concurs with this conclusion.

1 Pp4-17, Stage I Acid Generation Potential Studies for the Mount Klappan Project, 1985

16-11

DUE DILIGENCE REVIEW OF MOUNT KLAPPAN ANTHRACITE RESOURCES FORTUNE MINERALS LTD. JUNE 2002 Ash Fouling Characteristics

As part of its 1994 Coal Quality Report, Gulf performed a comprehensive assessment of ash

fouling and slagging characteristics as part of an assessment of utilizing the high ash products

and rejects from washing the anthracite as a boiler fuel. The results of this assessment were:

• Slagging Potential – LOW

• Slagging Factor – LOW

• Fouling Potential – MEDIUM

o Alkalis in Coal – LOW

o Sodium in Coal – LOW to HIGH – the Mount Klappan anthracite seams are

composed of both bituminous and lignitic types.

The methods and results of Gulf’s analyses are consistent with accepted methods for the

determination of slagging and fouling characteristics. Based on its review, Marston concurs with

the results of the analyses.

Combustion Emissions

Gulf conducted test burns of the anthracite waste material planned for use as fuel for a thermal

generation plant. A circulating fluidized bed combustor (CFBC) was evaluated as the full-scale

generation plant. Table 16.12, Emissions Analysis from CFBC Test Burn of Mount Klappan

Anthracite lists the results of the emissions testing for sulfur dioxide, nitrogen oxide, and carbon

monoxide. Results from the emissions analyses for trace elements are shown on Table 16.13,

Mount Klappan CFCB Test Burn - Trace Elements Analysis.

Marston has reviewed the interim guideline on coal-fired power boiler emission objectives

provided by British Columbia. Since the ‘Mount Klappan Anthracite Project Stage 2

Assessment’ was released, there have been no updates to the pollution control emissions

criterion shown in the Table 16.12 and Table 16.13. However, there is always the possibility

that site-specific requirements may apply, and Marston recommends discussions with the British

Columbia government at the appropriate time.

16-12


Table 16.12 Emissions Analysis from CFBC Test Burn of Mount Klappan Anthracite

Description Units BC Pollution Control Limits

Mount Klappan Maximum Ambient Concentration

Annual Average ppmv 0.01-0.03 0.003

1 hr. Maximum ppmv 0.17-0.34 0.032

Annual Average ppmv >0.04 0.005

1 hr. Maximum ppmv 0.16-0.4 0.055

Annual Average ppmv Not Available 0.002

1 hr. Maximum ppmv 5.7-11.2 0.033

Sulfur Dioxide - SO 2

Nitrogen Oxide - NO X

Carbon Monoxide - CO

Note: ppmv = parts per million (volumetric)

16-13


Table 16.13 Mount Klappan CFCB Test Burn - Trace Elements Analysis

Feed Coal(ug/gm)

Bed Ash(ug/gm)

Fly Ash(ug/gm)

Flue Gas(mg/mole)

Antimony <0.1 <0.1 <0.1 <0.0001 0.16

Arsenic 2.3 2.2 3.6 0.0029 0.16

Beryllium 0.8 0.4 1

Cadmium <0.1 <0.1 <0.1 <0.0001 0.05

Chromium 18.3 15.2 15.1

Copper 20.5 22.3 43 0.0349 0.16

Lead 17 15 15 0.0122 0.16

Mercury 0.24 0.02 0.27 0.00057 0.03

Nickel 69 26 31

Selenium 0.4 0.1 0.8

Silver <0.1 <0.1 <0.1

Thallium 0.35 0.35 0.35

Zinc 93 27 50 0.04 0.16

Fluoride 288 270 1,223

Mount Klappan Anthracite Analytic Data

ElementsBC Emissions

Standard(mg/mole)

Note:

Values are an average of 6 replicate samples of feed coal, bed ash and fly ash from the

burn test.

16-14


17.0 APPENDIX A – CONOCO DATA ROOM INDEX

17-1

MOUNT KLAPPAN ANTHRACITE DATA ROOM INDEX 1. A.1.1 Overview (1993) -License map -License summary -Proof of paid-up licenses -Summary of studies completed -Marketing summaries -Economics -Marketing summaries

A.1.1.2 Title Documents and Environmental Reclamation Permit #C- 160 -Title Description -Coal Holding Lease # 12 -Free Miners Certificate -Coal Act -Coal Act-Coal Regulation -Environmental Reclamation Permit C- 160

A. 1. 1.3 Regulatory Approval Requirements for Mount Klappan Development and Native Land Claims Information

-April 21, 1998 Mining Rights Amendment Act -BC Environmental Assessment Act -Application Requirements BC Mines Act -Land & Resource Management Planning Process -Native Land Claims

A.1.1.4 Market Review and Price Forecast 2. A.2.1 Mount Klappan/Lost Fox Mine, Kilborn Sept. 1990 -1,7000,000 tonnes per Year A.2.2 Mount Klappan/Lost Fox Mine, Kilborn May 1994 -Single Product Study A.2.3 Mount Klappan/Briquetting Study Phase I & 11, Kilborn January 1989 3. A.3.1 Mount Klappan Anthracite Project Stage 2 Assessment Vol. 1-5 A.3.1 Volume I - Summary A.3.2 Volume II - Development Plan A.3.3 Volume III - Environmental Assessment A.3.4 Volume IV - Socio Economic A.3.5 Volume V - Community Profiles

4. A.4.1 Mount Klappan Anthracite Geological report (1988) Appendix 1-V A.4.1 Appendix I - Trench Data A.4.2 Appendix II - Lost-Fox Area A.4.3 Appendix III - Summit Area A.4.4 Appendix IV - Diamond Drill Hole Data A.4.5 Appendix V - Diamond Drill Hole Coal Mount Klappan Anthracite Geological report (1987) Appendix I-IV

A.4.6 Appendix I - Coal Trench Data A.4.7 (2 box) Appendix II - Geological Maps & Cross-Sections – Lost-Fox, Nass-Summit-Skeena A.4.7.1 Appendix II - Geological Maps & Cross Sections – Lost-Fox A.4.7.2 Appendix II - Geological Maps & Cross Sections – Nass-Summit-Skeena A.4.8 Appendix III - Volumes I-IV-Diamond Drill Hole Data A.4.9 Appendix IV - Volumes I-II-Diamond Drill Hole Coal Quality

Mount Klappan Anthracite Project Summit-Nass-Skeena Area Geological Report Appendix I & II (1986)

A.4.10 Appendix I - Geological Report A.4.11 Appendix II - Geological Report

Mount Klappan Anthracite Project Lost-Fox Area Geological report (1986) Appendices I-V

A.4.12 Appendix I&II - Appendix I Coal Trench Data/Measured Sections & Appendix II Bulk Sampling Program Adit 86001 - 1:50 000 Maps A.4.13 Appendix III - 1:2000 Geological Maps & Cross- Sections/ 1: 5 000 Geological Maps and Cross Sections A.4.14 Appendix IV - Diamond Drill Hole Data Volumes I-IV A.4.15 Appendix V - Diamond Drill Hole Coal Quality Volumes I & II

Mount Klappan Coal Project - Summit-Nass Area Geological report - Appendices I & II (1985) Working Copies

A.4.16 Appendix I - Coal Trench Data & Coal Quality Data Measured Sections 1:500000 Maps A.4.17 Appendix II - Geological Maps & Cross Sections 1: 5 000, 1: 10000

Mount Klappan Coal Project - Lost-Fox Geological Report - Appendices I-IV (1985)

A.4.18 Appendix I - Coal Trench Data measured Sections, Rotary Drill Holes Data 1:50000 Maps (Working Copy) A.4.19 Appendix II - Volumes I & II - Volume 1- 1:2500 Geological Maps & Cross Sections, Volume II - 1:5000 Geological Maps & Cross Sections A.4.20 Appendix III - Diamond Drill Hole Data - Volumes I-IV A.4.21 Appendix IV - Diamond Drill Hole Coal Quality - Volumes I-III

Mount Klappan Coal Project Geological Report - Appendices I-VII (1984) Working and Master Copies A.4.22 Appendix I - Lost-Fox Area, 1:50,000 Maps Correlation Charts & Measured Sections A.4.23 Hobbit-Broatch Area, 1:50,000 Maps Correlation Charts & Measured Sections

A.4.24 Summit-Nass-Skeena, 1:50,000 Maps 1:200 Measured Sections A.4.25 Appendix II - Lost-Fox Area Volume I - 1:2500 Geological Maps & Cross-Sections Volume II - 1:5000 Geological Maps & Cross Sections Appendix III - 1983 Adit Data A.4.26 Appendix II; Hobbit-Broatch Area - Geological Maps & Cross Sections 1:2500; 1:5000; 1:10,000 Appendix III; 1981, 1982, 1983, 1984 Coal Trench Data A.4.27 Appendix II; Summit-Nass-Skeena Area- Geology Maps& Cross Sections 1:5000 and 1:10,000 A.4.28 Appendix III; Summit-Nass-Skeena Area Volume I - Diamond Drill Hole Data & Coal Quality Volume II - Coal Trench Data & Coal Quality A.4.29 Appendix IV; Hobbit-Broatch Area Volume I - 1982 Diamond Drill Hole Data Volume II - 1984 Diamond Drill Hole Data A.4.30 Appendix V; Hobbit-Broatch Area Volume I - 1982 Diamond Drill Hole Coal Quality Data Volume II - 1984 Diamond Drill Hole Coal Quality Data A.4.31 Appendix V; Lost-Fox Area. 1984 Rotary Drill Hole Data Volume I - KPNLRRDH84001 to KPNLRRDH84012 Volume II - KPNLRRDH84013 to KPNLRRDH84017 A.4.32 Appendix VI; Lost-Fox Area Volume I - 1981, 1982, 1983 Trench Data Volume II - 1984 Trench Data A.4.33 Appendix VII; Lost-Fox Area Volume I - 1982, 1983 Diamond Drill Hole Coal Quality Data

Volume II - 1984 Diamond Drill Hole Coal Quality Data Mount Klappan Coal Project Geological Report - 1983 Working and Master Copies

A.4.34 Appendix I; Geological Report 1:50,000 Maps, Cross-Sections & Correlation Charts A.4.35 Appendix II; Geology, Maps and Cross-Sections

Volume I - Geological Maps 1:5000 and 1: 10,000 A.4.36 Appendix III; Trench and Drill Hole 1: 5,000 and 1: 10,000 Maps A.4.37 Appendix IV; Volume I - Coal Trench Data

Volume II - Diamond Drill Hole Data Volume III - Coal Quality Data Volume IV - Adit Program Mount Klappan Coal Project Geological Report - 1982

A.4.38 Appendix I; Geological Report Coal Trench Data A.4.39 Appendix II; Volume I - Diamond Drill Hole Data & Geophysical Logs

Volume II - Diamond Drill Hole Data & Geophysical Logs A.4.40 Appendix III; Volume I - Coal Quality Data

Volume II - Coal Quality Data

A.4.41 Appendix IV; Volume I - Wash Plant Simulation Volume II - Wash Plant Simulation A.4.42 Appendix V; Maps A.4.43 Appendix VI; Maps and Diagrams A.4.44 Mount Klappan Coal Project Geological Report 1981

5. A.5.1 Mount Klappan Anthracite Marston & Marston Studies, (October 1990) Volumes 1-8 A.5.1 to A.5.8 inclusive

A.5.1 Volume 1 - 1,700,000 Tonnes per Year Mine Plan/Anthracite Reserve and Mine Plan Volume A.5.2 Volume 2 - 1,700,000 Tonnes per Year Mine

Plan/Mining Costs A.5.3 Volume 3 - 1,700,000 Tonnes per Year Mine

Plan/Seam Polygon Maps -Seams B- I A.5.4 Volume 4 - 1,700,000 Tonnes per Year Mine

Plan/Seam Polygon Maps -Seams J-PH A.5.5 Volume 5 - 1,700,000 Tonnes per Year

Mine Plan/Cross Sections 1000-2500 A.5.6 Volume 6 - 1,700,000 Tonnes per Year

Mine Plan/Cross Sections 2600-4000 A.5.7 Volume 7 - 1,700,000 Tonnes per Year

Mine Plan/Appendix A-D A.5.8 Volume 8 - 1,700,000 Tonnes per Year

Mine Plan/ Appendix E-F A.5.9 Norwest Mine Services - June 12, 1998 Coal Update

- Mine Equipment Costs 6. A.6.1 Mount Klappan Anthracite - Coal Quality Handbook (December 1994) 7. A.7.1 Mount Klappan Anthracite Project

-Native Land Claims - Background Information 8. A.8.1 Volume 1 - Technical Papers - Iron Making and Powdered Coal Injection (1998-1997)

A.8.2 Volume 2 - Technical Papers - Iron Making and Powdered Coal Injection (1991) 9. A.9.1 Report on Domestic Transportation of Mt. Klappan Coal 1988-06-30 Robert Deaver-Engineer 10. A.10.1 Mt. Klappan Container Study (February, 1988) Canadian Pacific Consulting Services 11. A.11.1 Heritage Resources Impact Assessment Mt. Klappan Coal Property

(April 1985) Aresco Ltd.

12. A.12.1 Heritage Resource Overview Assessment Mt. Klappan Access Study (August 12, 1985) Points West Heritage Consulting Ltd. 13. A.13.1 Folder containing the following: Proposal for Coal Handling (January 1987), Esso - 4 Copies; Proposal for Coal Handling (March 1986) - 2 copies 14. A.14.1 Interim Route Engineering Assessment of the Stikine-Iskut Transmission System (October 1984) BC Hydro 15. A.15.1 Refuse Anthracite Bum Test in an Ahlstrom Pyroflow Circulating Fluidized Bed Combustor – Final Report (June 1986) Pyropower Corp. MK1320-33 16. A.16.1 Mt. Klappan Power Development Study (January 1988) Monenco MK1000-23 17. A. 17.1 Resource Standard Road (December 2, 1987) Delcan MK 1000- 17 18. A.18.1 Mt. Klappan Resource Standard Access Road (May 1988) Delcan MK 3620-2 A.18.2 Mt. Klappan Resource Standard Access Road Maps (May 1988) Delcan MK 3620-2 A.18.3 Mt. Klappan Access Road Costing Study to Upgrade Resource Standard Road to Haul Standard Road - September 1988 19. A.19.1 Mt. Klappan Access Road Study - Stage II Impact Assessment - Volume I - Report (December 1986) Pedology Consult. MK 1000- 17 A.19.2 Mt. Klappan Access Road Study - Stage II Environmental Impact Assessment Volume 11 - Preliminary Environmental Impact Matrices 20. A.20.1 Mt. Klappan Access Road Comparison of Bridge Costs Vs Culvert Costs (September 1988) Delcan MK3600-4 21. A.21.1 Mt. Klappan Access Road Granular Resources Inventory (February 3, 1986) Thurber Consult. MKIOOO-17 22. A.22.1 Mt. Klappan Road - Road Alignment Study (February 1987) Delcan MK 1000- 17 23. A.23.1 Mt. Klappan Access Road Alignment & Costing Study (June 1986) Delcan MK 1000- 17 - 2 Volumes

A.23.2 Mt, Klappan Access Road Alignment & Costing Study (June 1986) Maps Delcan MK 1000- 17 24. A.24.1 Mt. Klappan Transportation Study (December 17, 1986) Trimac MK 1000- 17 A.24.2 Mt. Klappan Transportation Study Update (October, 1988) Trimac MK3620-5 25. A.25.1 Her Majesty the Queen vs. the National Indian Brotherhood (November 8, 1994) Western Law Dept. 784-9 26. A.26.1 Esso Minerals Cda. - Study for Coal Handling - Mt. Klappan Project (July 1988) Esso NM1355-1 27. A.27.1 Indirect Impacts of the Proposed Mt. Klappan Coal Property Access Roads (March 1987) Westland Resource MK1000-17-(2 copies-draft & final) 28. A.28.1 Containerized Coarse Coal Trial Shipment (November 15, 1988) W.C. Bailey & G.E. Seve MK3610-11 (Copy) A.28.2 Containerized Coarse Coal Trial Shipment - Appendix External to Report (November 15, 1988) MK3610-11 29. A.29.1 Mount Klappan 138 KV Transmission Line Studies by BC Hydro November 1986 Study and May 1998 Update 30. A.30.1 Geotechnical Conditions & Recommendations Pertaining to Open. Pits, Waste Dump, and Other Infrastructure Elements - Mount Klappan Anthracite Project - April 25, 1986 - (Volume 1) A.30.2 Appendices for Report on Geotechnical Conditions & Recommendations Pertaining to Open. Pits, Waste Dump, and Other Infrastructure Elements - Mount Klappan Anthracite Project - August, 1987 - (Volume 2) ANTHRACITE MARKETING REFERENCE MATERIAL 31. A.31.1 Global Overview of World Seaborne Metallurgical & Steaming Coal Trade 32. A.32.1 Anthracite Briquettes - Review of the Fuel Briquette Industry 1987-1990 33. A.33.1 Briquette Fuels in Europe - 1990-2000 (R. D. Energy) 34. A.34.1 Anthracite Briquettes in Europe by Andrew Robertson & Associates A.34.2 Anthracite Fuels in Europe 1990 and 1991 (With an Outlook to 2000) by Andrew Robertson & Associates

A.34.3 The International Supply and Trade in Anthracite in 1989 by Andrew Robertson & Associates A.34.4 The Structure of Anthracite Prices in Europe by Andrew Robertson & Associates 35. A.35.1 Sized Anthracite Market in Europe by AEC Resource Consultants Ltd. 36. A.36.1 Anthracite in France - Abbreviated Interview Notes from Study 37. A.37.1 Anthracite Filter Media Market Analysis - December 3, 1987 by The WEFA Group 38. A.38.1 QIT Anthracite Market Study Report by Associated Economic Consultants Ltd. -July, 1987 39. A.39.1 Pennsylvania Anthracite Industry Update by P.J. Whalen, P. Eng. - December, 1989 40. A.40.1 Long-Term Anthracite Demand by South African Coal Report A.40.2 South African Anthracite Industry by South African Coal Report A.40.3 Swaziland Coalfields by South African Coal Report 41. A.41.1 The Anthracite Market In The Eastern United States - December, 1987 - by Calvert International Sales Company 42. A.42.1 Maple Shipping Experts in Marine Transportation - Freight Forecast Update 1988 A.42.2 Maple Shipping Experts in Marine Transportation - Ocean Transportation of Pre-Packaged Anthracite 43. A.43.1 Maple Shipping - Ocean Transportation of Anthracite from Stewart, B.C. - March, 1987 44. A.44.1 The Activated Carbon Industry - September, 1988 Applications, Manufacturing Technology & Markets VOL UME I A.44.2 The Activated Carbon Industry - September, 1988 Applications, Manufacturing Technology & Markets VOL UME II – Appendices 45. A.45.1 Petroleum and Metallurgical Coke Markets - October, 1990 - Potential for Anthracite Replacement 46. A.46.1 An Assessment of Anthracite Markets for Carbon Electrode Manufacture - January, 1989 by Whalen, Thibault & Associates

47. A.47.1 The Impact of Oil Prices on the Mt. Klappan Project - March, 1986, By Associated Economic Consultants Ltd. 48. A.48.1 Currency Denominations in Canadian Export Coal Contracts - January 1985, by Associated Economic Consultants Ltd. 49. A.49.1 Mount Klappan Anthracite European Market Trial Report 50. A.50.1 Ministry of Industry and Small Business Development Ministry of Transportation and Highways District of Stewart General Purpose Wharf Study, Stewart, B.C. 51. A.51.1 Market Survey - Anthracite Trade in Belgium by SGS - September 2, 1988 52. A.52.1 Directory of the Canadian Trade Commissioner Service Abroad - 1997, Working Together, We are taking on the world


18.0 APPENDIX B – 1988 SAMPLE PREPARATION PROCEDURES

18-1

8.0 COAL QUALITY 8.1 Summary The 1988 Lost-Fox Area exploration program continued the delineation of anthracite resources in the Lost Ridge region. Coal quality information was enhanced in the defined pit areas and new data gathered on the margins of these pits. All coal quality information was obtained from diamond drill coal core. A total of 29 diamond drill holes produced 4 756 metres of core, 206.25 metres of that as recovered coal. Laboratory analysis of the coal core can be found in Appendix V of this report. 8.2 Procedures and Parameters 8.2.1 Diamond Drilling Program Each of the 132 coal and carbonaceous zones intersected was logged in detail prior to sampling. Sample intervals were based on the stratigraphy of the seam, including rock partings and variance in coal composition. Geophysical logs were used extensively in defining these seam characteristics. The complete analysis of the coal is outlined on the flow sheet in Figure 8.1 and average analytical results are documented in Table 8.1 Selected seam intersections from the coal core received were first crushed to pass a top size of 35 mm. Size consist was then determined according to the following:

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Table 8.1 1988 AVERAGE DIAMOND DRILL CORE RAW COAL QUALITY BY SEAM

SEAM (A.D.B) G& G to H/I H I J J2 K K/L L M N P Proximate Analysis % Residual Moisture 1.28 1.12 1.30 1.23 0.96 0.81 1.26 1.37 1.26 1.25 1.31 1.32 Ash 47.10 36-35 44.11 28.38 45.77 32.13 44.87 46.41 43.65 52.59 41.47 31.50 Volatile 7.07 7.11 6.66 6.17 7.13 5.55 7.90 7.18 7.62 9.52 7.71 7.40 Fixed Carbon 44.55 55.42 47.93 64.22 46.14 61.51 45.97 45.04 47.47 36.64 49.51 59.78 H.G.I. 68.0 60.35 61.77 62.00 63.43 62.25 72.25 71.0 59.0 55.0 Specific Gravity 1.57 1.59 1.51 1.61 1.57 1.61 1.61 1.60 1.59 1.55 Carbon Dioxide 1.55 0.60 0.62 0.25 0.66 1.06 0.49 1.58 1.23 1.39 Chlorine (ppm) 1736.0 693.0 796.0 960.0 732.0 855.0 286.0 43.0 170.0 504.0 Sulphur 0.42 0.48 0.39 0.55 0.52 0.50 0.35 0.49 1.79 1.01 Calorific Value Gross (MJ/kg) 16.53 20.86 17.61 23.93 16.73 21.61 17.16 16.48 17.71 13.31 19.08 22.80 Gross (cal/gm) 3951 4986 4209 5719 3998 5165 4101 3939 4233 3181 4560 5449 Ultimate Analysis Carbon 56.05 55.81 66.60 50.53 55.69 49.24 48.65 49.65 49.71 58.92 Hydrogen 1.91 1.81 2.10 1.77 1.92 1.71 1.72 1.52 1.81 2.02 Nitrogen 0.62 0.63 0.76 0.59 0.69 0.65 0.62 0.68 0.64 0.82 Oxygen 3.28 3.50 3.42 2.86 3.72 3.71 4.51 3.57 3.27 4.41 Ash Fusion (deg C) Oxidizing Initial 1127.0 1203.0 1194.0 1239.0 1187.0 1205.0 1149.0 1187.0 1183.0 1185.0 Softening 1264.0 1265.0 1287.0 1312.0 1289.0 1281.0 1304.0 1271.0 1296.0 1259.0 Hemispherical 1290.0 1280.0 1303.0 1325.0 1301.0 1297.0 1323.0 1294.0 1310.0 1269.0 Fluidizing 1322.0 1327.0 1349.0 1405.0 1333.0 1350.0 1384.0 1349.0 1361.0 1332.0 Reducing Initial 1056.0 1146.0 1139.0 1155.0 1123.0 1157.0 1086.0 1090.0 1051.0 1145.0 Softening 1219.0 1211.0 1228.0 1251.0 1213.0 1208.0 1262.0 1194.0 1192.0 1190.0 Heisherical 1243.0 1225.0 1250.0 1273.0 1230.0 1229.0 1283.0 1215.0 1209.0 1200.0 Fluidizing 1317.0 1301.0 1323.0 1381.0 1297.0 1319.0 1364.0 1328.0 1327.0 1251.0 Ash Mineral Analysis SiO2 58.60 56.21 52.68 63.63 50.98 56.69 59.98 53.66 56.85 56.20 A1203 18.44 17.74 20.07 15.34 19.40 17.80 17.74 20.06 17.96 20.49 Fe203 5.27 6.26 7.45 4.57 9.27 7.84 5.75 8.50 10.73 7.88 CaO 5.78 6.24 4.85 4.70 6.05 5.11 5.32 4.00 3.32 4.09 MgO 3.48 3.92 3.98 3.49 4.07 3.43 3.14 3.44 2.79 3.14 T102 0.89 1.05 1.04 0.76 1.05 0.99 0.98 1.04 0.95 1.00 Na2O 1.57 1.76 1.87 1.17 1.60 1.66 1.91 1.82 1.15 1.45 K20 1.17 1.59 1.34 1.80 1.57 1.38 1.14 1.52 2.13 1.80 S03 2.24 2.23 3.01 1.97 2.69 2.19 2.04 1.67 1.62 2.24 P205 0.60 0.82 1.48 0.89 1.18 0.68 0.89 0.64 0.85 0.77 NOTE: Table represents a straight average of diamond drill core coal quality.

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35 mm x 25, 25 x 12, 12 x 6, 6 x 0.5, 0.5 x 0.15 and 0.15 mm x 0. Results of the average size consist for each seam are presented in Table 8.2. Washability analysis of the coal core consisted of a consolidation of several sizes into the following 4 fractions: 35 x 6 rpm, 6 x 0.5 mm, 0.5 x 0.15 mm, 0.15 x 0 mm. All but the fine fraction, 0.15 x 0 mm, were tested at the specific gravities of separations of: 1.40, 1.45, 1.50, 1.55, 1.60, 1.70, 1.80, 2.00, 2.60. The fine fraction will undergo froth floatation at a later date. Al 1 raw washability data is found in Appendix V.

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Table 8.2

STRAIGHT AVERAGE SIZE CONSIST LOST-FOX AREA 1988

35x25mm 25x12mm 12x6mm 6x0.5mm 0.5x0.15mm 0.15x0mm Seam wt% wt% wt% wt% wt% wt%

H/I 12.64 19.98 18.15 38.09 6.42 4.72

H 27.94 20.95 14.92 27.90 5.24 3.05

1 19.31 18.34 16.19 34.64 7.50 4.02

1 34.01 20.33 13.40 24.31 5.12 2.83

K 27.34 20.49 14.20 28.33 6.30 3.34

K/L 31.08 23.01 15.03 24.52 4.17 2.19

L 20.98 22.47 17.31 29.20 6.68 3.36

M 22.04 20.44 15.91 32.22 5.57 3.82

N 22.26 20.14 14.89 30.95 7.23 4.53

P 25.94 21.46 15.95 30.17 4.38 2.10

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