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The Company owns the existing New Elk Coal Company LLC
coal property surface assets, including the Coal
Preparation Plant, silos, buildings, railway right of
way, surface real estate, mining equipment, conveyor
systems, electrics and coal waste dump all related to
the New Elk Coal Company LLC coal Resource properties,
and the contiguous New Elk coal resource deposits, are
located near the town of Trinidad in Los Animas County,
southern Colorado, U.S.A.
  
The acquisition of the New Elk
Surface Assets by Cline is the first stage in its
acquisition of all of the coal properties and coal
resources of New Elk Coal Company LLC, now proceeding.
The New Elk Surface Assets are key in the development of
the New Elk coal resources, and fundamental to the Cline
plan to bring the New Elk Coal resources into commercial
production without delay. Cline has the right to
purchase all of the existing coal mine properties, coal
resources and related assets of New Elk Coal Company,
and includes a 100 kilometer area of interest.
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.
The remaining New Elk Coal Properties
include New Elk’s substantial metallurgical and thermal
coal resources of 315,000,000 total tons of NI
43-101compliant in-place coal, detailed below, within
18,555 contiguous acres, a comprehensive earlier data
base by CF&I Steel Company, and a current coal mining
permit. Cline will now proceed to bring the New Elk coal
mine to production without delay.
Behr Dolbear & Company Ltd. (“Behre
Dolbear”) was commissioned by and has delivered to Cline
a Canadian
National Instrument 43-101 Technical Report
on the New Elk coal resources in compliance with the
requirements of the Toronto Stock Exchange. The
independent Qualified Person responsible for authoring
the Technical Report and summarizing the technical
material presented in this release is Mr. Gardar G.
Dahl, Jr., C.P.G., a senior associate of Behre Dolbear.
Mr. Dahl is an established coal consultant with more
than 40 years experience in coal exploration, mining and
sales, both in surface and underground operations. Behre
Dolbear is one of the oldest, continually operating
minerals industry consulting firms in the world,
offering fully integrated management consulting and
technical advisory services specializing exclusively in
the minerals industries from offices around the world.
Behre Dolbear has performed numerous coal assignments
globally for major and junior mining companies alike.
The detailed results of the
NI 43-101
coal resource calculation by Mr. Dahl is as follows:
(coal resources below are in millions
of tons)
|
Total |
Measured |
Indicated |
Total Resource |
Inferred |
|
New Elk Mine |
19.2 |
38.7 |
57.9 |
6.7 |
|
Colorado DOW Lease |
52.7 |
159.2 |
211.9 |
27.2 |
|
NEC Properties |
5.8 |
15.3 |
21.1 |
0.8 |
|
XTO Lease |
9.9 |
14.2 |
24.1 |
0.3 |
|
Total |
87.6 |
227.4 |
315.0 |
35.0 |
Note: Density Factor = 85lb/ft³ |