The coal reserves reported herein are typically low-volatile bituminous coals which exhibit metallurgical coal characteristics. The primary coal-bearing formations on these Properties are of the Pennsylvanian System of the Carboniferous Period, and are part of the Pottsville Formation. The average seam thickness for coal horizons in these formations ranges from less than 1 foot to more than 5 feet. Within the subject Properties, coal zones can locally exceed 10 feet where individual coal beds merge to form a single mineable unit. Coal reserve deposits on the Properties average approximately 1,700 in depth below the surface of the Properties. Structurally, the strata form a homocline that exhibits a regional northwest-southeast strike and a regional southwestward dip of less than one percent. The seams are continuous across much of the Properties with complex zones of offset due to faulting. Seams generally retain normal stratigraphic sequences and are rarely modified from predeformational thickness.

Mineable coal beds within the subject Properties are typically low-ash, low-sulfur, highthermal content, and low-volatile bituminous coals. Although maximum seam thickness may reach over 10 feet, the seam thickness of the mineable zones in this evaluation generally averages 4.5 to 5.0 feet. These mineable zones include the Mary Lee and Blue Creek seams which define the coal reserves that are presented herein. These seams are present and continuous across the entirety of the JWR Properties, with the exception of localized zones disrupted by faulting. These seams have been extensively deep mined on adjacent properties and appear, from CBM gas development wells, to demonstrate additional resource potential beyond the boundary of the current JWR controlled Properties. The seams average approximately 1,700 in depth below the property surface and 1,200 below MSL.

The Mary Lee and Blue Creek coal seams are part of the Mary Lee depositional coal zone. The Mary Lee seam averages 18 inches in thickness across the subject Properties and is characterized by a single bench of bright-banded coal with no significant rock partings. The Mary Lee seam is stratigraphically 2.5 to 3.0 feet above the Blue Creek seam. The Blue Creek seam averages 4.5 feet in thickness and is characterized by bright banded coal with a boney zone near the middle of the seam. The seam contains no major rock partings. The total combined thickness of the Mary Lee to Blue Creek zone averages approximately 8.5 feet. The two seams are separated by a shale interval that averages 2.5 to 3.0 feet in thickness.

The mining plan at the No. 4 Mine is based upon underground longwall mining methods, which incorporates the use of the room-and-pillar method which facilitates and supports the production from the longwall equipment. Two coal seams within close proximity of each other, the Blue Creek and Mary Lee seams are currently being mined simultaneously (locally referred to as “twin seam mining”), at a depth of approximately 2,000 feet. Both seams are suitable for metallurgical purposes and/or as a compliance steam coal. Room-and-pillar mining methods designed around the utilization of continuous miners and supporting equipment will be employed to develop longwall panels which in turn will be used to produce the vast majority of the coal on an annual basis. Production levels are a function of several processes operating simultaneously, each with its own capacity limitations.

The accessible mineral at the No. 4 Mine can be divided into three main logical mining areas. At longwall production rates in excess of 2.0 million tons per year, the east area can support longwall production for 10 years. The west area south of the Black Warrior River can support longwall production for approximately 4 years, and the west area north of the Black Warrior River, which is the largest mineable unit, can support longwall production for 16 years. During the initial 5-year plan, the longwall will operate on an alternating schedule in the east area and the west area south of the Black Warrior River. Shortly after the initial 5-year plan period, it will continue to operate in the east area. The west area north of the Black Warrior River is available for mining and its immediate development at the end of the five-year plan period is an alternate production option.

Coal production starts as mining progresses at either the longwall face or a continuous miner section face. The No. 4 Mine has one longwall unit capable of producing at a rate of 4,000 raw tons per hour at any given instant. In addition, the No. 4 Mine has at any time up to five (5) continuous miner units with each capable of producing at a rate of 33 raw tons per minute. Both the longwall and the continuous miner units load raw coal onto a series of conveyor belts. These belts are capable of hauling from 4,000 raw tons per hour for face belts to 5,000 raw tons per hour for main line belts. The belt conveyors take the raw coal to the production shaft and hoist which is capable of hoisting 1,300 raw tons per hour to the surface storage piles. The mine currently operates on a 3 shifts per day and 6 days per week schedule, and operates 285 days per year on average.

Underground mine production is hoisted to the surface and immediately sized to a minus 2-inch product through a run-of-mine crushing and screening section consisting of a 60-inch reciprocating feeder, an 8-foot x 22-foot double deck incline screen, and a 12-foot x 24-foot rotary breaker. Oversize material from the screen is fed to the rotary breaker where large rock is removed and sent to the refuse dump. All material smaller than 2 inches is carried by conveyor belt to the raw coal stacking tube and raw coal storage pile.

Raw coal is drawn from the raw coal storage pile using four (4) 48-inch reciprocating feeders. The raw coal is carried by conveyor at 1,300 raw tons per hour to the preparation plant. Raw coal is distributed to two (2) 6-foot x 16-foot and three (3) 8-foot x 16-foot incline screens where the material is sized at 3/8 inch. All material larger than 3/8 inch is sent to four (4) 9-foot low flow heavy media vessels. Clean coal from the vessels reports to four ........