Coal forms in sedimentary environments by the accumulation, compaction and induration of variously altered plant matter. It is a readily combustible sedimentary rock that contains more than 50% by mass and more than 70% by volume of carbonaceous material. Coal quality is determined by its grade, type and rank. Coal grade is inversely related to the percentage of inorganic material it contains. Coal type (maceral composition) is determined by the nature of the original plant material and its degree of alteration during the diagenic stage of coal formation.

Coal rank determines coal quality. Coal rank refers to the degree of metamorphism which resulted from increases in temperature and pressure after the burial of the original organic material by younger sediments. This metamorphism causes a change in the chemical composition and in the physical-chemical properties of the organic material. In general, the higher the rank of a coal, the deeper it was buried and the higher the temperature it was subjected to during and after burial. Older coals tend to be of higher rank because they are more likely to have been buried more deeply for longer periods of time.

The properties of sub-bituminous coal vary from those of lignite and bituminous coal. Bituminous coal is a relatively soft coal containing a tar-like substance called bitumen. It is of higher rank than lignite coal but of lower rank than anthracite coal. Bituminous coal is formed by diagenetic and submetamorphic compression of peat bog material. Bituminous coal has been compressed and heated so that its primary constituents are the macerals: vitrinite and exinite. The carbon content of bituminous coal is between 60% and 80%. The rest is composed of water, air, hydrogen, and sulphur, which have not been driven off from the macerals. Bituminous coal is usually black, sometimes dark brown, often with well-defined bands of bright and dull material. Bituminous coal seams are stratigraphically identified by the distinctive sequence of bright and dark bands.

Magdalena
The Fritz Seam is thin and poorly developed in the Magdalena Project Area, whilst the Alfred and GusSeams are well-developed. Large portions of the farms Mount Johanna, Slieve Donald and Mourne are capped by the 30 m to 50 m thick Ingogo Dolerite sill which has a transgressive undulating split from its base. The sill is broken by erosion to the northeast along a cliff-faced scarp with steep boulder strewn slopes. Dolerite dykes are masked below the plateau and have only been located where exposed along the scarp flanks, and in underground workings. A widely spaced dolerite dyke network with intrusive thicknesses varying between 0.5 m to 15 m, and no significant displacements, has been encountered during mining activities.

Hilltop Area
There are two regional geological structures that affect the Hilltop Area: a NW-SE trending dolerite intrusion named the Ingogo Sill and the Dannhauser Fault. Both the Alfred and Gus Seams are depressed in the central and southern parts of the area, which corresponds to a depression in the Ingogo Sill in the central portion of the Hilltop Area. The localised nature of this depression suggests that the feature may be the result of a tectonic roll or fold, oriented in a NW-SE direction.

Where present, the Ingogo Sill bears no relation to the seam thickness, although it is possible that there is some correlation with the interseam sandstone splits. The Alfred Seam displays a marked thickening in the north and east of the property.

The thicker parts of the Alfred Seam being superimposed on an equivalent portion of the Gus Seam are indicative of depositional stability during the period of formation of both seams. The rapid thickening of both seams towards the east and south, together with some evidence of erosive-based sandstone units in the boreholes logs, suggests that an active fluvial channel system was operative in this area. The borehole logs reveal that the sandstone split between the Gus and Alfred Seam thickens steadily towards the northwest of the property and that the split normally displays an upward-fining trend, characteristic of a fluvial channel sequence. Some evidence of coarser grain sizes in the direction of thickening support the interpretation that the sandstone split represents a crevasse splay unit derived from a channel situated to the west of the property.

Overlying the Alfred Seam is a typically upward coarsening sequence. In some cases, however, this upward coarsening sequence is not evident and an upward fining sequence may be possible. The ambiguity may be due to the presence of a thin transgressive sandstone unit immediately above the Alfred Seam, however, no mention has been made of the glauconite mineralisation that normally characterises such a unit.

The overlaying Ingogo Sill encroaches on, intersects and ultimately underlies the coal formation in the extreme east of the Hilltop Area. This has resulted in extreme devolatilisation of the coal in the vicinity. The Gus Seam comprises generally better quality bituminous coal than the Alfred Seam. The middling between the Alfred and Gus Seams is, on average, 8 m.

The Group suspended its mining operations at Magdalena in the last quarter of 2018. During Q4 2019, the care and maintenance team at Magdalena was tasked to conduct sweepings from previously mined areas underground at Magdalena and to process the sweepings product through the wash plant on an ad-hoc basis when enough tonnes had been collected. The cost involved with this process was limited primarily to variable costs associated with recovery and washing of the product. This process also involved time and related costs as the process utilized the basic resources in place at Magdalena consisting of a small team with limited equipment on hand. Unfortunately, the yields from the sweepings were low, and therefore a high volume of sweepings was required to fulfill an economic size of an order. To improve the volumes and yields, the current Magdalena team started to mine at Magdalena on a small scale in Q2 2020, using conventional drill and blast mining methods (different to the previously utilised continuous mining method). These mining activities were however suspended on September 30, 2020 due to a lack of a reliable and economical attractive market for the Group’s bituminous coal at the time. Mining activities targeting monthly production of 8,000 tonnes a month resumed in February 2021 following renewed interest in the Group’s bituminous coal.

The raw coal is broken underground by mechanical feeders that reduce the coal to a size which is amenable to transport by conveyor belt to the surface stockpile. The coal is then fed through two stages of roll crushers, which reduce the size down to 90 mm and 50 mm respectively.

The processing plant consists of five sections which perform the following functions: crushing, large coal washing HMS, small coal HMS, spiral plant and slimes handling.

The screened coal at a size of 25 mm to 50 mm is then fed through a Teska Bath HMS separator. The discard is rejected to waste and the product is screened to the desired size fraction. The 1 mm to 25 mm fraction is upgraded in a cyclone washing plant to produce washed Duff and Peas. The minus 1 mm material is treated in a spirals circuit to produce a concentrate. The tailings are discarded to the residues. Slimes are settled in a settling dam for the recovery of clean water (returned to plant) and the rejection of settled solids.