The New Elk Mine is located in the Raton Basin, a crescent-shaped structural trough and depocenter that extends from Huerfano Park, Colorado, to Cimarron, New Mexico. The Raton Basin contains a large coal resource contained in Late Cretaceous and Paleocene formations. The coal in the Raton Basin is historically well known for its high quality coking characteristics and coal bed methane (CBM).

The coal-bearing strata are underlain by Late Cretaceous sedimentary rocks of the Pierre Shale and Trinidad Sandstone. The Upper Cretaceous Vermejo Formation conformably overlies the Trinidad Sandstone. Overlying the Vermejo Formation is the Upper Cretaceous and Paleocene Raton Formation which contains the coal seams of mining interest. The New Elk Mine coal resource includes, in descending stratigraphic order, the Green, Loco, Blue, Bing Canyon Upper (BCU), Red, Maxwell, Apache, and Allen seams contained in the lower coal zone of the Raton Formation. The Raton Formation coals are also targets for the gas industry and numerous CBM wells are active on the New Elk Property and in the surrounding area.

The seams vary from less than 2 feet to over 12 feet thick, with a mineable coal thickness considered to be from 3 feet to the maximum seam thickness. The coal resource is based on a minimum coal thickness of 3 feet. The overburden depths vary from outcrop to over 1,400 feet.

Mining will occur in the Blue seam in the central, northern and southern parts of the Property, in the Maxwell seam in the northern portion of the Property and, to a limited extent, the Apache and Allen seams near the historical Allen Mine.

Where multi-seam mining is projected, there is at least 220 feet of interburden which should mitigate any material seam interaction issues.

Room-and-pillar mining will be practiced, with second mining (pillar extraction) on retreat.

The mine will operate two 12-hour shifts per day, both production shifts, with maintenance scheduled during those shifts as needed or required.

The assumed mining method is continuous mining, with shuttle car haulage and dualboom roof bolters used for roof support. A walk-between super section concept will be employed.

The development sections consist of the following equipment types:
-Continuous miner (2)
-Shuttle cars (3)
-Roof bolter (2)
-Section power center
-Section switch house
-Feeder breaker
-Diesel scoop (2)
-Auxiliary fan(s)
-Maintenance/parts trailers
-Section mantrip

The economics assessment assumes place-change mining will occur. Place-change mining consists of the continuous miner extracting one cut of coal, ranging generally from 20 to 40 feet past the last row of permanent roof support, then moving to the next face (place). The roof bolter then supports the just-mined face. On a “walk between” super section, one miner operates at a time. Each miner operator stays with his or her continuous mining machine, and while the other continuous mining machine is mining coal, the first machine changes working places, services the machine, assists with face ventilation adjustments, and prepares to mine the next cut of coal. If air quality permits, walk-between super sections use one single split of air to ventilate the section.

To market the New Elk Mine’s production, all ROM coal produced will have to be washed (beneficiated) in a coal preparation plant. An existing plant located at the main portal site, originally designed for about 550-tons/hour plant feed, was recently rehabilitated and upgraded to a 800-tons/hour rated capacity. The plant was tested and commissioned in March of 2011.

When CF&I operated the New Elk and Golden Eagle Mines, the ROM coal was first processed via a rotary breaker to scalp off oversized rock, trash and wood, and in some cases, metal items such as roof support materials. The ROM coal was then stored in approximately 10,000-ton capacity silos and then railed to the Pueblo steel plant where the coal was washed before being coked.

After CF&I sold the mines, Wyoming Fuel Company constructed the coal preparation plant at the New Elk Mine site and washed coal for the thermal markets. Once the New Elk and Golden Eagle Mines were closed, the plant (now named the Picketwire Preparation Plant) processed surface-mined coal that was railed or trucked raw, processed, and shipped by rail to thermal customers. This surface-mined coal was not processed through the rotary breaker before being fed to the plant. The rotary breaker was sold and has been replaced as part of the preparation plant rehabilitation with a scalping screen and crusher.