The anthracite deposits at the Property are part of significant coal measures within the Bowser Basin. This ancient basin formed and filled with sediments eroded from surrounding high land during the late Jurassic to early Cretaceous periods.

The Klappan (Anthracite) Formation sediments are interpreted to have been deposited in a regional, shallow gradient, stable coastal delta (Gulf 1988). The environments of deposition cycled between fluviodeltaic and marine. The coal seam deposition is an extreme of the cycles, with an average of 20 to 30 metres of mudstone, siltstone and sandstone separating the coal seams. The interburden lithology generally consists of laminated mudstone, siltstone and fine-grained sandstone. Occasional deposition of coarse sandstone and conglomerate occurs.

Anthracite seams are encountered on the Arctos Anthracite Property. Anthracite is the highestrank coal under international coal classification standards. Anthracite on the Property occurs in 33 identified seams with individual seam true thickness of up to 11 metres; 28 of the seams have an average true thickness of at least 0.50 metres and contain at least 50 percent coal.

Primary mine rock stripping will be conducted with hydraulic shovels loading trucks for haulage to the mine rock storage facilities or for in-pit placement. Backhoe excavators will remove top wedge rock material, coal and rock partings. Blasting operations will be limited to mine rock; the coal seams themselves will not be blasted.

The coal wash plant will use water and a series of vibratory and stationary sizing screens, heavy media baths and heavy media cyclones, reflux classifiers and dewatering sieves, for the recovery, cleaning and sizing of coal. Flotation cells will be used for the recovery of ultrafine coal which is anticipated to represent less than 10 percent of the coal being cleaned. The coal wash plant will be designed to produce a 10 percent ash anthracite coal product optimally suited for use in PCI processes utilized in many modern steel manufacturing plants.