The Sukunka Project lies within the elongate, disturbed Foothills sedimentary belt of northeastern British Columbia. The coal licenses are underlain by the transgressive/regressive Lower Cretaceous Bullhead and Fort St. John Groups that consist of fluviodeltaic and marine terrigenous clastic sediments that have a maximum composite thickness, excluding those of the Minnes Group, of 1,100 m. The oldest lithologies exposed within the property belong to the Minnes Group. That unit is overlain by the Cadomin, Gething, Moosebar, Gates, Hulcross and Boulder Creek Formations.

In the southern half of the Peace River Coal District the coal beds within the Gates Formation constitute the primary exploration target. Recent mine developments and coal exploration activities have focused on these coals. The Gates Formation is an 80 to 280 m thick interstratified sequence of mainly non-marine sandstone, conglomerate, coal, shale and mudstone. It is separated from the underlying Gething Formation by interstratified fine grained marine deposits assigned to the Moosebar Formation. Within the formation, eleven coal beds that have a maximum thickness of about 10 m and an aggregate thickness of up to 46 m have been reported. Four or five laterally extensive seams, ranging in thickness from 5 to 10 m, are common between Kakwa and Sukunka rivers. The Peace River Arch apparently controlled the northern extent of alluvial-deltaic environments where the major coal beds originated.

Structural deformation of the Cretaceous sequence in the district is characterized by en echelon, northwest-plunging anticlines and synclines, and by southwest-dipping low and medium angle thrust faults, which have repeatedly brought coal measures to the surface. Locally, the tectonic activity has resulted in a thickening of coal beds. At a mesoscopic scale, fault and fold structures can be complex and mining operations can be significantly complicated.

Although the rank of coals that occur in the Gething and Gates Formations ranges from high volatile A to low volatile bituminous, most of the resource is classified as medium volatile bituminous. In some areas mean maximum vitrinite reflectance values exceed 1.5 percent, indicating a rank of semi-anthracite. The coals commonly have sulphur contents of less than 1 percent wt and excellent coking properties. Locally the upper seam in the Gething Formation can have sulphur contents up to about 1.5 percent. Coals within both formations have similar characteristics, and those in the Gates Formation are similar to those of the Luscar Group in the southern Inner Foothills.

The Sukunka deposit outcrops around many parts of the tenure which makes it suitable for contour mining. Excavation will be carried out using conventional open pit mining equipment. Mining will be conducted in two discrete areas, the Nose and Window pit area in the northern part of the property and the Saddle Creek area in the south east. The amount of waste rock to be removed over the life of the open pit operation will be approximately 725 MBCM with the maximum annual extraction rate being around 40 MBCM. Extraction rates for the open pit are based on a 12.4:1 ROM strip ratio. This strip ratio is based on current knowledge, and will be updated with the results of on-going exploration. ROM coal production will initially be in the range of 2 to 3 Mt/y, increasing to approximately 7.5 Mt/y when underground mining commences.

The proposed underground mining will be accessed from around the Chamberlain Creek area from the highwall of the open cut. A series of longwall coal panels will be developed extending northeast to the Nose area and southwest towards the Saddle Creek open pit.

The overall plan for the Sukunka Project is to:
- Excavate raw coal and waste rock from three open pits within the property boundary using conventional open pit mining methods and equipment
- Excavate raw coal and waste rock from an underground longwall mining operation within the property boundary using conventional underground mining methods and equipment
- Haul the coal to a Coal Handling Preparation Plant (CHPP)

The ROM coal from the open cut will be truck dumped onto one or more stockpiles (depending on the type or quality of coal being mined), fed into a breaker or crusher and conveyed to the raw coal stockpiles. Underground ROM coal will be fed via conveyor from the mine entrance to the raw coal stockpiles. From the raw coal stockpile coal will be fed to the CHPP via a surge bin.

Initial coal quality testing has indicated that the CHPP is likely to consist of a two-stage sized dense medium cyclone, spirals/teeter bed mid-circuit and fines flotation which will yield a primary coking coal product and a secondary PCI/thermal product. In order to advance the CHPP design, core samples and washability tests will be collected during the 2012 exploration program. The proposed CHPP will have a 24,000 tonnes per day (t/d) (1,200 tonners per hour [t/h] throughput) ROM coal capacity to produce approximately 6 Mt/y of washed coal.

The Sukunka CHPP will initially be required to wash ........