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. 7 Mine incorporates continuous and longwall underground mining methods similar to the No. 4 Mine, however there is a change in the mineable seam horizon. The Blue Creek seam and the Mary Lee seam are further apart as the middleman thickness increases to several feet in the No. 7 Mine area. The Blue Creek seam is the primary focus of the longwall mining operation. The Mary Lee seam which lies several feet above the Blue Creek is not mined unless it facilitates roof support for long term stability as in the Main developments which must remain stable for the life of all the longwall panels in a reserve area. The Blue Creek seam is currently being mined at a depth ranging from approximately 1,500 to 2,000 feet. The Blue Creek seam is suitable for metallurgical purposes and as a compliance steam coal. Room-and-pillar mining methods designed around the utilization of continuous miners and supporting equipment is employed to develop longwall panels which in turn will be used to produce the vast majority of the coal on an annual basis.

The No. 7 Mine is similar in production method and capacity to the No. 4 Mine, with the exception of the 2009-2010 expansion of the mine to increase from one (1) longwall unit and four (4) continuous miner sections to two (2) longwall units and six (6) continuous miner units. Changes were made to the hoisting, material handling, coal preparation capacity, and loadout utilization to handle the increased production as explained in Item 21.2.2 below.

The accessible mineral at the No. 7 Mine can be divided into two primary logical mining areas (the east and the north areas), and a third minor area (two short longwall panels in the south). Currently, the east area contains more mineable area and consequently more mineable tons than the north area. During the initial 5-year plan, both longwalls will operate on a simultaneous schedule, one longwall in the east area, and one longwall in the north area. At longwall production rates in excess of 2.0 million tons per year, the east area can support longwall production for 19 years. The north area can support longwall production for approximately 14 years, after which time, the two short panels are mined in the south area and in several panels in the east area. In that manner a two (2) longwall operation could be sustained for the majority of the life of the mine.

The preparation plant at the No. 7 Mine has a flow sheet feed capacity of 1,400 raw tons per hour. The plant was originally designed and constructed by McNally. Raw coal is drawn from the raw coal storage pile using four (4) 48-inch reciprocating feeders. The raw coal is carried by conveyor to the preparation plant. Raw coal is distributed to twelve (12) 8-foot x 16- foot horizontal deslime screens where the material is sized at 1 mm. All material larger than 1 mm is sent to twelve (12) 28-inch heavy media cyclones. Clean coal from the cyclones reports to six (6) 8-foot x 16-foot horizontal drain and rinse screens. Refuse from the vessels reports to six (6) 8-foot x 16-foot horizontal drain and rinse screens.

Raw coal, smaller than 1 mm, is sent to fifteen (15) 15-inch raw coal classifying cyclones making a size separation at 100 mesh. Raw coal size fraction 1 mm x 100 mesh is processed through thirty (30) triple start single stage spirals. Middlings from the spirals are rep ........