Summary:
Deposits
Sediments of the Upper Pottsville Mary Lee coal zone are Lower Pennsylvanian in age and comprised of cyclic sequences that include sandstone, siltstone, shale, and coal. Located within the middle of the Black Warrior Basin stratigraphic sequence, the Mary Lee and Blue Creek horizon is situated below drainage throughout the Property and is accessed by shafts.
The lithologic variability of the Mary Lee - Blue Creek sequence and enclosing strata is discussed below:
> The New Castle seam is present approximately 20 to 50 feet above the Mary Lee seam.
> Lithologic composition of the roof strata varies throughout the Property but consists primarily of a coarsening-upward sequence of shale or sandy shale, with occasional sandstone channels located within the immediate or main roof of the Mary Lee seam.
> In areas where sandstone occupies the immediate roof of the Mary Lee seam, seam scouring may locally occur. Where sandstone channels are present within 4 to 6 feet above the Mary Lee (roof bolt horizon), there is potential for increased drawrock conditions and roof instability beneath the sandstone/shale contact.
> Areas, where the combined thickness of the Mary Lee - Blue Creek horizon is less than a minimum continuous miner cutting height (7.0 feet), are shown, which as a result, roof (and/or floor) strata are expected to be excavated as out-of-seam dilution (050).
> Thickness and composition (shale, carbonaceous shale, fireclay, and sandy shale) of the stratum comprising the Middleman is variable.
> Areas, where the thickness of the Blue Creek horizon is less than a minimum longwall cutting height (5.0 feet), are rare; only along the northern edge of the North area.
> Compositional variability and thickness of the floor strata of the Blue Creek seam in a fining upward sequence varying from very soft, thick fireclay within the immediate floor, to sandy fireclay, shale, sandy shale, and finally sandstone within the first three feet below the seam. Fireclay varies in thickness, from less than a foot to more than 10 feet. Due to inherently high clay content, this stratum is typically moisture-sensitive and may degrade when exposed to water accumulation on the mine floor.
Fireclay varies in thickness, from less than a foot to more than 10 feet. Due to inherently high clay content, this stratum is typically moisture-sensitive and may degrade when exposed 10 water accumulation an the mine floor.
Mineralization
Regional coal rank in the BWB generally ranges from low-volatile coal in the southeastern portion of the basin to high-volatile coal to the northwest. Due to the value of the Mary Lee and Blue Creek seams in the metallurgical coking coal market at the Mine No. 4 operation (and adjoining mines) to the south and east of the Property, the subject coal seams have been extensively mined in the region. Laboratory data for the Property on a dry, clean coal basis indicates an average volatile matter (VM) content of approximately 31% in the northwestern area; whereas, the eastern portion of the Property has a VM content of approximately 27%.
Results of regional trends indicate that coals ranging from Low volatile to High volatile Bituminous coal rank are found in the region, according to ASTM criteria:
> Low Volatile Bituminous, or LVASTIM (VM greater than or equal to 14% and less than 22% on a dry- mineral-matter-free basis, or DMMF);
> Medium Volatile Bituminous, or MVASTM (VM greater than or equal to 22% and less than 31% on a dry-mineral-matter-free basis, or DMMF);
> High Volatile A Bituminous, or HVAASIM (VM greater than 31% on a dry-mineral-matter-free basis, or DMMF, and calorific content greater than or equal to 14,000 Btu/lb. on a moist-mineral-matter- free basis);
> High Volatile B Bituminous, or HVBASTM (greater than or equal to 13,000 and less than 14,000 Btu/lb.)
The mineable seam configuration of Mine No. 4 consists of the Mary Lee, Middleman, and Blue Creek seams, also referred to as "twin seam" mining, with the following thickness ranges:
> The Mary Lee averages approximately 1.3-feet throughout the mine plan area;
> Between the two seams, the "Middleman" parting averages around 1.6-feet; the parting generally thickens to the southeast.
> The Blue Creek seam, which typically represents the better metallurgical quality than the overlying Mary Lee seam, typically averages around 3.5-feet;
> The combined thickness of the Mary Lee through Blue Creek interval ranges from 5.0 to 10.0 feet, averaging approximately 6-feet.
The principal parameters examined in the ASTM method for the determination of rank include (but are not limited to) the following: Fixed Carbon (FC), Volatile Matter (VM), Ash, Sulfur, and Calorific content (typically in Btu/Ib.), as well as Moisture content.
Warrior Met Market Placement
Warrior Met reports that the current market placement at Mine No. 4 is generally an average of the Premium Low-Volatile Indices (PLV) and the Mid-Volatile Indices (MV), this average will be referenced as Premium Low—Mid-Vol Average (PLMV). Mine projections suggest that Warrior Met will continue to produce coal in the current “East” district for less than one year before transitioning to the western reserve areas.
As development activities continue to transition to the “North” district and the longwall mines out the “East” district, coal produced from Mine No. 4 will likely incur an increase in the volatile matter. Based on regional trends and laboratory data, volatile matter contents for the subject coals in the western area will gradually edge upward. Although the potential exists for pricing to change as the volatiles vary in future areas as they are developed, MM&A, with support from Warrior Met, has used the PLMV as a basis for pricing.