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. GRAVEL CREEK MEMBE ........

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 line ........

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.

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