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Cline owns 100% of the New Elk Coal Mine in Trinidad, Colorado.  The New Elk mine has a measured and indicated metallurgical coal resource of 618.9 million tons of in-place coal, as documented in the Agapito Associates, Inc. independent National Instrument 43-101 Technical Report entitled "NI 43-101 Technical Report - New Elk Mine Property, Las Animas County, Colorado, U.S.A." dated July 6, 2012 prepared by Leo Gilbride, P.E. and Tim Ross, P.E. (the "2012 Technical Report").  These resource increases are attributed to the agreement the Company entered into with the Department of Wildlife of the State of Colorado (“DOW”), which extended its present DOW coal mining property lease area at New Elk from 15,553 acres to 29,940 acres, a 92% percent increase in acreage. The 14,387 acre extended DOW lease also includes the recently acquired Secora Ranch, and four new coal seams connected to the initial New Elk property (see Cline’s May 24, 2012 press release).

2012 New Elk Mine Technical Report (13 MB PDF)
2011 New Elk Mine Technical Report (11 MB PDF)
2010 New Elk Mine Technical Report (16 MB PDF)




Seam Measured (Tons) Indicated (Tons) M & I (Tons) Inferred (Tons)
Green 31.9 27.5 59.4 0.1
Loco 14.4 30.0 44.3 26.6
Blue 52.2 38.1 90.3 0.9
BCU 12.8 36.8 49.6 30.0
Red 23.3 10.3 33.6 0.0
Maxwell 72.1 71.7 143.8 17.4
Apache 50.3 56.8 107.1 15.4
Allen 42.8 47.9 90.7 14.1
TOTALS 299.8 319.1 618.9 104.5

The New Elk Mine was opened in 1951 by the CF&I Steel Company to provide metallurgical coking coal for its blast furnace iron and steel production plant at Pueblo, Colorado. The CF&I plant was converted to direct electrolytic reduction of steel in 1981 eliminating its need for coking coal and the mine was sold to Wyoming Fuels who continued operation of the mine through 1989; the coal preparation plant, which was built in 1984 to improve product coal specification, continued operating with coal from other nearby mines until 1996.

On July 3, 2012 the Company announced that it is currently revising and optimizing the operations of the New Elk Coal Company LLC (“New Elk”) under the leadership of New Elk’s recently-appointed Chief Operating Officer, David Stone. Taking into account the inclusion of the additional tons of Measured and Indicated (“M&I”) coal resources identified through the updating of the Company’s resource by Agapito Associates, Inc., a detailed optimization process has been commenced to ensure that the optimum Net Present Value is achieved for the asset. It is envisaged that this review process should take approximately 10 to 12 weeks and will include short-term volume optimization for a defined ‘Life of Mine’ value maximization.

A forecast will also be developed during this period for the remainder of the 2012 year and a budget for the 2013 year. These actions will enable the provision of appropriate volume and cost guidance as the operation tracks from the completion of the opening project through to Phase 1 of the production cycle.

The quality of the coal in the seams is described as low-sulphur, medium-to-high fluidity, high-volatile B bituminous metallurgical coking coals. The high grade specification that can be delivered on “as received” basis is FSI 7.0-8.0; Ash 8.5%; Moisture 8.5%; Volatiles 35%; Fluidity 25,000 ddpm; Reflectance 0.90%; Sulfur 0.5%; Btu/lb. 13,500-14,000. Test qualities are determined and reported by SGS. Seam qualities are generally consistent and are not expected to require mine site blending for the coking market.

 


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