The Red Hills Mine is in the Wilcox Group of Mississippi which is the most prolific lignite-bearing stratum in the state of Mississippi. The Wilcox Group and underlying Midway Group were deposited during Paleogene time; 66 to 23 million years ago. The most prominent characteristics of the Wilcox Group formations are the cyclical deposition and lateral persistence of the lithologic units, especially the lignite seams. The section from the Gravel Creek Member through the Tuscahoma Formation represents a transition from a transgressive sequence of valley fill, marginal marine strata (lower Gravel Creek) to predominantly regressive, nonmarine, deltaic strata (upper Gravel Creek through the Tuscahoma).

During each depositional geologic sequence, organic material was repeatedly buried by sediment in an ideal, oxygen-free environment. This ideal environment was attributed to the humid, subtropical conditions and high water-table of wetlands present during Paleogene time which prevented plant matter from decaying prior to burial. The oxygen-free environment combined with heat and pressure from continual deposition of overlying sediments allowed for the formation of peat and further mineralization of lignite over time by undergoing a process known as humification and biochemical gelification.

The regional structural geology is fairly consistent. The regional strike is northwest-southeast. The strata are nearly flat lying, dipping to the southwest at only 25 to 35 feet per mile. No evidence of any significant faulting has been observed in the region.

LOCAL AND PROPERTY GEOLOGY
The average thickness of the Wilcox section containing the mineable lignite seams at the Red Hills Mine and surrounding area is approximately 140 feet. Vertical repetition of the geological characteristics results in a straightforward depositional setting facilitating comprehensive analysis of the geological, as well as the geochemical, geotechnical, and geohydrological baseline conditions of the Red Hills Mine.

Following the regional geology, trends in lignite seam sulfur content at the Red Hills Mine support a geologic transition from marine to nonmarine environments. Increased sulfur values are generally associated with marine influences. The C-seam marks a transition from higher sulfur below to lower sulfur contents above.

The local structural geology for the Red Hills Mine also follows the regional structure with a northwest-southeast strike dipping to the southwest. The lignite seams are gently undulating due to differential compaction of the underlying sediments. Small, localized faults have been encountered within the lignite seams while mining through the MS-002 permit area, and are anticipated to be encountered in the MS-004 permit area. These faults have been discontinuous and the seam displacement has typically been less than 10 feet. The faults have not materially affected mining or production at the Red Hills Mine.

MINERAL DEPOSIT TYPE
The Red Hills Mine is solely focused on mining lignite from the project area. Details on the geological units encountered at the Red Hills Mine are described below

GRAVEL CREEK MEMBER
The top of the Gravel Creek Member of the Nanafalia Formation (Wilcox Group) lies just below the C-seam and includes a thin sand layer directly beneath the C-seam. The C-seam is currently the lowest lignite seam stratigraphically mined. However, upon further exploration, the B-seam may be mined in the future, particularly in areas with low laying terrain within the MS-004 permit area.

A basal sand unit, of up to 100 feet in thickness or more, characterizes the Gravel Creek Member. From the limited drill hole data that extends through this member, it appears that these sand units can be fairly widespread, but also may be completely absent. On the geophysical logs and limited cuttings data, the sand unit typically appears to be fairly massive and poorly- to well-sorted, fine- to medium-grained sand. These sand units, along with the sands in the underlying Coal Bluff Formation (Midway Group) are often referred to as the Lower Wilcox aquifer.

Above this basal sand are interbedded silt, clay, sand and lignite (A-seam). Due to the relative depth, anticipated lower quality, and closer proximity to the basal sands, the A-seam is not currently considered a resource targeted for mining.

GRAMPION HILLS MEMBER
Five of the six lignite seams recovered at Red Hills Mine are contained in the Grampian Hills Member of the Nanafalia Formation (Wilcox Group). The formation conformably overlies the Gravel Creek Member and consists of interbedded and interlaminated clays, silts, sands, and lignite. Overall, the section is relatively sand poor.

The clays and silts are typically finely interlaminated. Munsell color varies from dark gray (N 4/ to N 5/) to greenish gray (10BG 5/1). Immediately below the lignite seams, the color is dark grayish brown (10YR 4/2) due to the presence of carbonaceous fragments. These carbonaceous layers often contain lignitized plant roots establishing an autochthonous origin for the peats that formed the lignite seams.

The sands are light gray (2.5Y 7/1) to gray (N 5/) or greenish gray (5GY 5/1). The pale greenish-gray color of many of the sands and silts is a distinctive feature of this unit. Typically, the sands are very-fine-grained, and commonly interbedded with silts and clays. One exception is the tabular sand bed between the D-seam and C-seam. The sand units between the D-seam and G-seam are typically silty, infrequent, lenticular, and probably represent narrow sand channels in the crevasse splay sequences that were penecontemporaneous with peat accumulation. Sand and silty sands compact much less than silts and clays. This phenomenon is probably the chief cause of the gentle structural undulations found in the lignite seams.

Cemented horizons, commonly referred to as “hard streaks”, are also associated with the sand units. These indurated zones are most abundant within the sand channels and the silty, sandy natural levee deposits flanking the channels. The thickness of these hard streaks ranges from less than one foot to about two feet. These zones are cemented with calcite, silica, iron oxide, or siderite, and are suggestive of periods of sub-areal oxidizing conditions during deposition. Modern analogies in the natural levee deposits of the Mississippi Delta have been noted.

The color of the lignite seams ranges from black (N 2.5/) to very dark gray (10Y 3/1). Occasional layers of carbonaceous clay or zones of clay clasts increase the ash content of the lignite. The minimum thickness for recovery is one foot. The maximum thickness of the lignite seams is about eight feet.

TUSCAHOMA FORMATION
The Tuscahoma Formation (Wilcox Group) conformably overlies the Grampian Hills Member of the Nanafalia Formation. The basal portion of this formation is the uppermost stratum to be disturbed by mining. The base of the Tuscahoma is marked by a predominantly sandy, often coarse-grained unit with a variable thickness of 10 feet to 110 feet. The variability is due to the occurrence of contemporaneously bedded clay, silt, and lignite. Laterally, these sands grade into finer grained overbank deposits including lignite seams. The overbank facies of the Tuscahoma are essentially identical to the descriptions for the Grampian Hills Member described above.

The H-seam, which is the uppermost seam that will be consistently recovered, lies at the base of the Tuscahoma. Because of its relatively high stratigraphic position, the H-seam is restricted to the upland areas above approximately 450 feet in elevation within the Red Hills Mine. Other lignite seams lying above the H-seam, including the H2-seamand the I-seam, may be encountered on occasion and are mined when seam thickness and quality are sufficient.

The lignite at Red Hills Mine surface mining operation is recovered using dragline and conventional truck and shovel mining methods due to the proximity of the lignite to the surface and the physical characteristics of the deposit. Mining operations progress in a five-step process, which includes clear and grub, overburden and interburden removal, lignite production, spoil backfill and grading, and reclamation. In the development phase, drainage and water control were established, and then the required infrastructure consisting of power, mine office and maintenance facilities, lignite stockpile facilities, and roadways were established.

The Red Hills Mine began operations in the MS-002 permit area in Mine Area 1 (MA1) and is in the process of transitioning to the MS-004 permit area to Mine Area 3 (MA3). The initial boxcut construction for MA3 began in 2021 and mining in this area will continue through April 2032.

PIT DESIGN
To determine highwall stability, a circular arc failure approach has been utilized. A minimum FoS of 1.2 was calculated using the Modified Bishop Method for each highwall configuration that will be encountered by the mine. Due to the depth and multiple seam nature of the lignite deposit, benching will be required to allow for continuous burden removal and lignite mining. For individual slopes less than 80 feet, the highwall angle is stable up to 70 degrees. Between 80 and 180 feet, the effective slope angle decreases with a linear relationship from 60 to 40 degrees.

For slopes greater than 180 feet, benching is required. In general, the truck and shovel operating level is located 150 to 160 feet above the pit floor and naturally creates bench with a minimum width of 150 feet. When benches and offsets are accounted for pits may range from 100 to 210 feet in width. Initial design assumes a 170-foot pit width.

Low wall or spoil side angles were based on the type of materials found throughout the mine area, an angle-of-repose of 33 degrees was recommended by geotechnical studies. MLMC’s digging plan reduces the effective spoil angle to 33 degrees or less by allowing for an operating bench on the spoil side of the pit.

As a whole, Red Hills Mine pits are designed with an effective highwall angle of approximately 42 degrees, effective endwall angles of approximately 40 degrees, and effective low wall angles of 33 degrees or less.

Mining has been ongoing at the Red Hills Mine since 1998 and the design methodology for the pit slopes has been satisfactory as evidenced by each pit progression. Due to the stratigraphic nature of the Red Hill Mine geology, which is checked by regular drilling exploration programs ahead of mining, repetition of geologic units leads to consistency in applying geotechnical parameters.

NACoal and MLMC engineering have made minor adjustment to the pit design since 1998. However, these adjustments are primarily for optimization, to address new equipment specifications or additional ramps to reduce haul distances. Other adjustments include additional benching in the highwall where topography is higher or the depth to the C-seam increases to establish ramps and functional road systems. This additional benching also increases the FoS of the highwall by reducing the overall effective angle in these instances. Optimization of drainage is another factor that greatly influences the pit design.

PRODUCTION RATE
The Red Hills Mine was designed to supply approximately 2.6 to 3.2 million tons of lignite per year to the adjacent RHPP. Actual production is dictated by customer MMBtu demand.

MINING DILUTION
R-O-M tonnages at the Red Hills Mine meet the following conditions:
–Minimum mining thickness: 1.0 ft;
–Maximum burden depth: approximately 320 feet;
–Average lignite density: approximately 80 lb/ft3

REQUIREMENTS FOR STRIPPING AND BACKFILLING
The Red Hills Mine is a multiple lignite seam surface mining operation.

The primary burden removal units for a typical mining sequence at the Red Hills Mine include:
–one 82-cubic yard electric-powered walking dragline;
–one 41-cubic yard electric rope shovel;
–a fleet of 150-ton and 200-ton end-dump haul trucks and;
–four large track-type push dozers.

Lignite is severed and loaded by a surface miner or hydraulic backhoe.

Similar mining processes will be followed in both MA1 and MA3 for production and reclamation.

First, the truck and shovel fleet remove overburden to an elevation which approximates the first minable lignite seam; usually this will be the H-seam. This overburden material is hauled to fill in the topography to final grade during the reclamation process. Truck and shovel operations may be required to remove other interburdens and rehandle material depending on sequencing/production and reclamation planning.

Following removal of the H-seam, the dozers push the interburden, which overlies the second G-seam, into the previously mined pit. This process is repeated through successive lignite seams until the accumulated interburden has reached a point where it is level across the pit. This typically occurs at or near the E-seam elevation.

Finally, the dragline sits spoil side on a bench primarily constructed from the material the dozers pushed and then removes both the D-seam and C-seam interburdens.

Rough backfilling and grading of reclamation are accomplished using dozers as the haul trucks dump material between the dragline spoils. Hydraulic backhoes may be used to rehandle spoil material that exceeds final grade. In accordance with the mine permit requirements, a minimum of 4 feet of suitable plant growth material (SPGM), or red oxidized soil that meets textural parameters, must be placed on top of the gray unoxidized material in the dump unless otherwise approved. MLMC follows an approved final grading plan using a “balanced acreage” approach in that the same reclaimed areas must be brought up to grade within 29-months of lignite removal. This plan is approved for both permitted areas.

In MA1, mining progresses through three to four pits per year. Due to a shorter pit length in MA3, MLMC anticipates mining five to seven pits per year.

The overall average quality of the mined lignite seams meets the quality specifications stated in the LSA without beneficiation. No mineral processing is performed by MLMC.