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Reserves and Resources

On June 26, 2009 Grande Cache Coal Corporation (GCC) requested that AMEC Americas Limited (AMEC) complete an Independent Qualified Person’s Review and Technical Report that covers the following mine areas: No. 7 Mine, No. 8 Mine, No. 12 South B2 surface and underground Mines, No. 12 South A deposit, No. 12 North deposit and No. 16 Mine Area.

The work entailed estimating coal resources and reserves in conformance with National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 430-101”). It also involved the preparation of Technical Report as defined in NI 43-101 and in compliance with Form 43-101 (“Technical Reports”). The work represents a material change from the last disclosure on these deposits in the Technical Report dated June 2007 with the addition of resources in the No. 8 Mine East area, No. 12 South B2 underground area, No. 12 Mine South A area and No. 16 Mine West area. Carel van Eedenburg, P.Eng, Senior Mine Engineer, and Tim Kuhl, R. Geo., Principal Geologist, both employees of AMEC, are the Qualified Persons responsible for preparing the 2009 Technical Report.

The technical report NI 43-101 is available on www.sedar.com and the Grande Cache Coal Corporation’s website www.gccoal.com.

 

Coal Resources

Coal resources are generally derived from the drill hole information through the use of cross sections and/or seam surface interpretation. AMEC has verified the interpretation of these elements. Computer software has been used to convert the geological interpretations to 3D block geological models. These models were then used to check the resource numbers reported by the Corporation. The resources are subdivided into categories based on Assurance of Existence and reported using the categories allowed under NI 43-101.

The coal resources for No. 12 Mine North and the underground portion of No. 12 Mine South A remain the same as in the AMEC 2007 Report. Resources for No. 7 Underground Mine and No. 12 Mine South B2 are represented by the tonnage reported in the AMEC 2007 Report less the mining depletion that occurred since the date of the report and adjusted for any additions or deletions. No. 8 Mine has updated resource values based on additional drilling and an updated geological interpretation. Grande Cache Coal Corporation has identified additional surface mineable resources in the No. 12 Mine South A area. Underground mining is now planned, supported by additional drilling results, northeast of the No. 12 Mine South B2 pit highwall. Additional drill holes have allowed an extension of the resources in the No. 16 Mine area. The following table summarizes Grande Cache Coal Corporation's measured and indicated in-place coal resources as of April 1, 2009 as reported in the AMEC 2009 Report.

Summary of In-place Measured and Indicated Resources(1),(2)

Mine Area Measured (million tonnes) Indicated (million tonnes) Total (million tonnes)
No. 8 Mine 26.5 5.7 32.2
No. 12 Mine South B2 6.3 2.7 9.0
No. 12 South B2 Underground Mine 10.6 - 10.6
No. 12 Mine South A(3) 30.4 7.6 38.0
No. 12 Mine North (4) 34.2 13.8 48.0
No. 16 Mine 33.6 24.7 58.3

Notes:

  1. No. 7 Underground Mine is not reported in this table similar to the AMEC 2007 Report as AMEC classified all No. 7 Underground Mine resources as reserves and only reported reserves.
  2. All resources classified as Bituminous (ASTM).
  3. Underground resource estimated by AMEC in the AMEC 2007 Report. Minimum depth of cover approximately 50 metres. Maximum underground extraction angle of 15°; remaining resource surface mine with less than 50 metres of cover.
  4. Resource estimated by AMEC in the AMEC 2007 Report.

 

The following table summarizes Grande Cache Coal Corporation's inferred in-place coal resources as of April 1, 2009 as reported in the AMEC 2009 Report.

Summary of In-place Inferred Coal Resources(1)

Mine Area Inferred (million tonnes)
No. 8 Mine 1.7
No. 12 Mine South B2 0.2
No. 12 South B2 Underground Mine 3.2
No. 12 Mine South A 1.7
No. 12 Mine North(2) 6.6
No. 16 Mine 26.8

Note:

  1. All resources classified as Bituminous (ASTM).
  2. No. 12 Mine North inferred resources were estimated by AMEC in the AMEC 2007 Report.

 

Coal Reserves

To convert Grande Cache Coal Corporation's resources to reserves, a number of economic and technical factors were applied. These included but are not limited to the following:

  • Estimate for the near and long term price of metallurgical and thermal coal in the domestic and international market place.
  • Operating costs associated with open pit mining, underground mining, transporting and processing the coal at the mine site.
  • Overhead costs associated with marketing and transporting the finished product coal to customers.
  • Overhead costs associated with administrative and technical functions relative to running a mine.
  • Geotechnical parameters governing the orientation of the pit slopes, haul roads, waste dumps and other parameters associated with water flow and climate.
  • Estimate for the recovery of coal and addition of dilution material during the mining and coal handling process, (known as Run of Mine estimate).
  • Estimate for the recovery of coal from processing; generally referred to as cleaning or washing the coal, (known as Clean or Saleable estimate).

Using these and other factors, Grande Cache Coal Corporation engineers and their predecessors used mining software to produce economic mine designs at the Grande Cache operation. AMEC has reviewed these procedures and parameters and determined that the mine designs are valid.

The following table summarizes Grande Cache Coal Corporation's roven and probable run-of-mine coal reserves as of April 1, 2009 as reported in the AMEC 2009 Report.

Summary of Proven and Probable Run-of-Mine Coal Reserves(1)

Mine Area Proven (million tonnes) Probable (million tonnes) Total (million tonnes)
No. 7 Underground Mine (2) 2.38 - 2.38
No. 8 Mine (3) 14.68 3.16 17.84
No. 12 Mine South B2 (4) 1.09 0.96 2.05
No. 12 South B2 Underground Mine 8.98 - 8.98
No. 12 Mine South A (5) 3.96 - 3.96
No. 16 Mine 12.14 1.78 13.92

Notes:

  1. All reserves classified as Bituminous (ASTM).
  2. Value as reported by Grande Cache Coal Corporation mine operations staff which is equivalent to the reserve estimate from the AMEC 2007 Report, less depletion of approximately 1.6 million tonnes plus an operational adjustment of approximately 28,000 tonnes due to design changes.
  3. Proven and Probable categories in the No. 8 Mine area have been broken out on a pro-rated basis based on resource categorization.
  4. Value as reported by Grande Cache Coal mine operations staff which is equivalent to the reserve estimate from the AMEC 2007 Report, less depletion of approximately 1.38 million tonnes plus an operational adjustment of approximately 12,000 tonnes due to increased coal thickness and the addition of the pushback area (approximately 350,000 tonnes).
  5. Planned surface mine only.

 

The following table summarizes Grande Cache Coal Corporation's proven and probable saleable coal reserves as of April 1, 2009 as reported in the AMEC 2009 Report.

Summary of Proven and Probable Saleable Coal Reserves (Clean Coal)(1)

Mine Area Proven (million tonnes) Probable (million tonnes) Total (million tonnes)
No 7 Mine (1) 1.60 - 1.60
No. 8 Mine (2) 10.62 2.29 12.91
No. 12 Mine South B2 0.78 0.67 1.45
South B2 Underground Mine 7.08 - 7.08
No. 12 Mine South A (3) 2.92 - 2.92
No. 16 Mine 9.11 1.33 10.44

Notes:

  1. All reserves classified as Bituminous (ASTM).
  2. Proven and Probable categories in No. 8 Mine have been broken out on pro-rated basis based on resource categorization.
  3. Planned surface mine only.
  4. Total coal will be marketed as hard coking coal and 500,000 clean tonnes annually of PCI coal.