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 basin is bound on the west by the Sangre de Cristo Mountains, on the northeast by the Apishapa Arch, and on the southeast by the Sierra Grande and Las Animas Arches. The basin is approximately 80 miles in length and 50 miles wide, encompassing approximately 4,000 square miles and is asymmetric in shape with the axis running along the western margin. The basin is filled with approximately 20,000 to 25,000 feet of sedimentary rock in its deepest part.

The Raton Basin contains a large coal resource contained in Late Cretaceous and Paleocene formations. The coal is well known for its high-quality coking characteristics and CBM (coal bed methane).

The Raton Basin is an asymmetric synclinal basin formed during the Laramide Orogeny. The western flank of the basin dips steeply to the east and is displaced by transcurrent and thrust faults. Strata dip becomes milder in the central and eastern areas of the basin and within the permit area the dip ranges from 0 to 7 degrees and averages about 2.2 degrees east-northeast. The axis of thenorthwest-southeast oriented La Veta Syncline occurs just east of the property. The strata dip mildly westward into the basin on the basin’s eastern flank.

The coal seams of interest are hosted by the Upper Cretaceous-Tertiary Raton Formation, a heterogeneous sequence of lenticular, argillaceous sandstone, siltstone, mudstone, and coal. Lithology types are highly variable, both laterally and vertically, with correlations being best established through the occurrence of coal seams. Surface and near-surface bedrock in the mine area is limited to the Tertiary Poison Canyon Formation and the Raton Formation. The Poison Canyon Formation intermittently tops the hills in the mine vicinity.

The coal seams on the Property are numerous, but only a few achieve thicknesses that are amenable to mining. Some seams are laterally continuous and have been designated during the correlation process; these are in descending stratigraphic order: Weston, Green, Loco, Blue, Yellow, Bing Canyon Upper, Bing Canyon Lower, Red, Maxwell, Apache, and Allen.

The seams commonly have rock partings consisting of carbonaceous mudstone. The Red seam contains a tonstein (volcanic ash parting). The tonstein is not evident at every location, probably due to movement of the clay in the swamp or not designated by previous geologists. A tonstein may also be evident in the Allen seam based on past records in the southern part of the property.

The seams strike north 33 degrees west (N33°W) (azimuth 327 degrees) on average and dip 2 to 4 degrees to the northeast. Fractures and cleats vary in orientation and are oriented eastwest to northeast-southwest in the vicinity of the property. Easterly trending normal faults were encountered during previous mining and were successfully traversed without significant adverse effects. Within the Allen Mine, the most significant fault encountered showed a vertical displacement up to 30 feet (down-thrown on the south). The fault decreases in magnitude eastward and forms a graben with a vertical throw of only 3 feet. Other minor faults were encountered but rarely achieved full seam displacement and most were attributed to a depositional mode of placement (i.e., paleoslumps).

The thickness of the Allen seam varies from 1 to 7 feet, with significant areas having mineable thicknesses. The Allen seam averages about 5.5 feet thick in the central part of the property.

The Apache seam is stratigraphically located 20 to 50 feet above the Allen seam and has a thickness ranging from 1 to 6 feet. The Apache seam averages about 3.5 feet within the central part of the Property.

The Maxwell seam is located 25 to 50 feet above the Apache seam and has a thickness ranging from 1 to 9 feet thick.

The Red seam is persistent throughout the Property and ranges on the order of 3 to 4 ft thick in the central part of the Property, and thickens locally to 5 ft.

The Blue seam averages about 4 feet thick, and thickens to as much as 6 feet in the central and extreme southern parts of the Property. The Green, Loco, and Bing Canyon Upper seams are variable and swell and thin abruptly over the Property.

Coal production commenced in the Blue Seam at the Mine on 21 May 2021, with the first production unit. The Blue seam has 22Mt of saleable coal reserves at a coal seam cut-off height of four foot and the mine plan contemplates mining the entire Blue seam reserve with just two continuous miners over a period of 24 years.

Mining Method
Coal will be mined with continuous miners adopting the place change room and pillar method.

A super section involves two continuous miners operating on each section. This can be either with two continuous miners operating concurrently on a section or sequentially, that is, as one machine has completed a cut, the operator will ‘walk through’ to the other side of the section and commence a new cut with the second machine.

While the operator is making the new cut with the second machine, a crew-hand will reposition the first machine for its next cut. When the operator has completed the cut with the second machine, he or she will return to the first machine and execute another cut, and so the sequence continues without any, or limited, downtime in production during a shift.

Typically, two to three shuttle cars (coal haulers), convey coal from a continuous miner to a feeder breaker while the continuous miner is being operated. The feeder breaker sizes the coal and then feeds it on to a conveyor belt which then transfers the coal outside the mine to a stockpile before being fed into the CHPP. Once a continuous miner completes a cut, and is withdrawn, a roof-bolter enters the cavity and drills bolts into the roof to support the roof, or any part of it, from falling.

New Elk will operate with two continuous miners in a ‘walk through super section’ with seven to nine headings.

Mine Plan
The Mine Plan was driven by coal seam height, and coal quality that would meet the requirements of steel mills and to that end focussed on the two following seams:
- The shallow Blue seam (which is already established with portal entries and main headings); and
- The very shallow Green seam used as an access road to the point at which a new decline can be established into the southern area of the Blue seam.

The Mine Plan was designed with a minimum coal seam height of 4.0 foot allowing for 6 inches of unavoidable out-of-seam dilution. Therefore, a mining height of 4.5 foot provides ample room for conventional lower profile underground mining equipment to operate remaining in the coal seam, and for the Mine to be adequately ventilated. Limiting coal recovery to 4.0 foot does reduce the recovery of some coal, but the gains in retaining a high yield far outweigh loss of coal resource.

Mining commences in the Blue seam where the portal entries (belt road, ventilation, and men and materials) are already established and the main headings already advanced 150m underground. One super section is set-up in the Blue seam on commencement with the second starting six months after the first.

The primary purpose of mining the Green seam is to drive headings in coal southwards to reach a point where a decline can be established into the southern portion of the Blue seam. A consequence of the 4.0 foot coal seam height cut-off, is that the Blue seam areas are not contiguous, separated by areas of coal less than 4.0 foot.

Coal Handling and Preparation Plant
Coal Preparation
The CHPP circuitry consists of;
- Heavy media vessel;
- Heavy media cyclones; and
- Spirals.

The CHPP has a nameplate feed rate of 727tph. The CHPP was reviewed by Performance Industries, Inc, a specialist coal processing consultancy from West Virginia, USA, whose principals undertook a review of the CHPP when the mine was acquired by Cline.

The current circuit provides:
- Raw coal is separated by screens into various size fractions;
- The coarse material is sent to the Heavy Media Vessel;
- The next size fraction down is sent to the Heavy Media Cyclone;
- The remaining raw product is sent to the Classifying Cyclones;
- The plus 100 mesh is sent to the Spiral Circuit; and
- The minus 100 mesh material that is separated from the raw coal feed via the classifying cyclones is discarded and sent to the thickener for refuse disposal.

The minus 100 me ........