JOINT VENTURE AGREEMENT

This Agreement (this “Agreement”) is by and between GFC 2005, a limited
liability company organized in St. Kitts, British West Indies (“GFC 2005”) and
GLOBAL EARTH ENERGY INC., a placeStateNevada corporation (the “Company”).

In consideration of the mutual promises and covenants hereinafter contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:

1.

Subject to the terms and conditions of this Agreement, the Company shall
participate in the Coal Purchase Order owned by GFC 2005, a copy of which is
attached hereto as Attachment A, and over time the Memorandum of Understanding
for the remaining product, a copy of which is attached hereto as Attachment B
(collectively, the “Coal Project”).  It is clearly understood between the
parties that the Company does not have any ownership interest in the land or any
leasehold interest in the land with respect to the Coal Project.  The Company
has only interest in the income stream of the Coal Project hereinafter
described.

2.

GFC 2005 represents and warrants to the best knowledge of GFC 2005 that
information contained in Attachments C, D, and E are true, accurate, and
complete in all material respects.

3.

In consideration for the execution of this Agreement, and based upon the
representations and warranties of GFC 2005 herein, in order to fund GFC 2005’s
production and sales of coal from the Coal Project, the Company agrees to pay to
GFC 2005 the sum of $7,000,000.00 within five business days after the receipt by
the Company of the sum of $100,000,000.00 from the sale by the Company of 1,000
shares of the Company’s Series A Preferred Stock to LB Tim Co., Ltd., a South
Korean corporation (the “Preferred Stock Sale”).  If the Preferred Stock Sale
does not close and fund within 30 days of this Agreement, this Agreement shall
be null and void, and neither party shall have any liability to the other
hereunder.

4.

Proceeds from the Coal Project sales shall be split as follows: seventy percent
(70%) of the proceeds shall be distributed to GFC 2005 and thirty percent (30%)
to the Company.

5.

The relationship of GFC 2005 to the Company shall be that of an exclusive
partner.  Neither federal, state nor local income tax, payroll tax, nor any
foreign tax of any kind shall be withheld or paid by GFC 2005 on behalf of the
Company.  GFC 2005 and the Company each understand and agree that at no time
does either party acquire rights, interest or title in any product or service or
equity of the other party and that all copyrights, marks, patents, intellectual,
rights and any and all other proprietary rights of each party remain and shall
always remain the property of such party.

 

6.

Each party represents and warrants to the other that it is not party to any
agreement, contract or understanding which will in any way restrict or prohibit
it from entering into this Agreement and performing its obligations hereunder in
accordance with the terms and conditions of this Agreement.  Neither party
represents or warrants that it has any license or permit, foreign or domestic
that may be required to sell the coal as contemplated by this Agreement.

7.

Both GFC 2005 and the Company shall indemnify and hold harmless one and the
other and its affiliates from and against any and all losses, claims, damages,
liabilities, expenses (including reasonable legal fees and expenses), judgments,
fines, settlements and other amounts (collectively “Claims”) arising from any
and all claims, costs, demands, actions, suits or other proceedings (whether
civil, criminal, administrative or investigative) (collectively “Proceedings”)
in which either party may be involved, or threatened to be involved as a party
or otherwise that as a result of or arising out of (a) either party’s acts or
omissions, other than a Proceeding that also arises out of the acts or omissions
of the Company that constituted negligence, or (b) a breach by either party of
any of its representations, warranties, covenants or agreements under this
Agreement.

In claiming any indemnification hereunder, the indemnified party shall promptly
provide the indemnifying party with written notice of any claim, which the
indemnified party believes falls within the scope of the foregoing paragraphs.
 A party’s failure to give prompt written notice shall relieve the indemnifying
party of its obligations hereunder, but only to the extent that such failure to
give notice prejudices the indemnifying party’s ability to defend such claim.
 The indemnifying party thereafter shall have sole control of the defense of any
such claim (with counsel reasonably satisfactory to the indemnified party) and
all negotiations for settlement; provided, however, that the indemnified party
may, at its own expense, assist in the defense if it so chooses, provided that
the indemnifying party shall control such defense and all negotiations relative
to the settlement of any such claim and, further provided, that any settlement
intended to bind the indemnified party in any way other than the payment of a
financial settlement within the scope of the indemnity or which may adversely
affect the indemnified party’s continuing business activities shall not be final
without the indemnified party’s written consent, which shall not be unreasonably
withheld.  The indemnified party will provide the indemnifying party with all
reasonably necessary assistance, information and authority to perform the
foregoing, all at the indemnifying party’s expense.

All amounts to be paid under the indemnification provisions of this Agreement
shall be paid by the indemnifying party to the indemnified party (ies) as such
Claims are incurred.

 

-1-

The obligations of the parties under this paragraph 7 shall survive the
termination of this Agreement.

8.

Except as may be required under paragraph 6 of this Agreement with respect to
indemnification, under no circumstances shall either party be liable for any
indirect, incidental, economic, special, punitive or consequential damages,
whether for breach of contract, negligence or under any other cause of action,
that result from the relationship or the conduct of business contemplated
herein.

9.

GFC 2005 and the Company acknowledge that each may receive or learn Confidential
Information about the other and its customers during the course of this
Agreement.  The party receiving the Confidential Information shall: (a) maintain
it in confidence, except to the extent necessary to carry out the purposes of
this Agreement, in which event written confidentiality restrictions shall be
imposed upon the parties to whom such disclosures are made; and (b) use at least
the same degree of care in maintaining its secrecy as it uses in maintaining the
secrecy of its own Confidential Information, but in no event less than a
reasonable degree of care.  “Confidential Information” means all proprietary,
secret or confidential information or data relating to either party and their
operations, employees, products or services, clients, and customers.

Information shall not be considered Confidential Information to the extent that
such information is: (i) already known to the receiving party free of any
restriction at the time it is obtained; (ii) subsequently learned from an
independent third party free of any restriction and without breach of this
Agreement; (iii) becomes publicly available through no wrongful act of the
receiving party; (iv) independently developed by the receiving party without
reference to any Confidential Information of the other; or (v) required to be
disclosed by law, rule or regulation.

This paragraph shall survive for a period of three years after termination of
this Agreement.

10.

This Agreement shall be binding in all respects upon the parties hereto and
their successors.

11.

This Agreement expresses the entire understanding between the parties concerning
its subject matter and supersedes all prior agreements made between the parties
with respect to the subject matter hereof.  This Agreement may not be modified
except by a written instrument signed by all parties.  The failure of a party to
insist upon adherence to any term of this Agreement shall not be considered a
waiver or deprive the party of the right thereafter to insist upon strict
adherence to that term or any other term in this Agreement.

 

12.

This Agreement is executed voluntarily and without any duress or undue influence
on the parties or their officers, employees, agents, or attorneys and no party
is relying on any inducement, promises or representations made by any other
party or any of its officers, employees, agents, or attorneys other than as set
forth in this Agreement.

13.

This Agreement shall be enforceable upon the exchange of facsimile signatures
and scanned and emailed signatures.  This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.

 

14.

All notices, requests, demands, and other communications hereunder shall be in
writing and delivered personally or sent by registered or certified United
States mail, return receipt requested with postage prepaid, or by telecopy or
e-mail, if to the Company, addressed to Mr. Sydney A. Harland at 1213 Culberth
Drive, Wilmington, North Carolina 28405, telephone (910) 270-7749, telecopier
(910) 270-6640, and e-mail sydneyharland@globalearthenergy.com; and if to GFC
2005, addressed to Mr. Paul M. Van Gamper at 3759 Baldwin Road, Suite 203, Lake
Orion, Michigan 48359, telephone (248) 499-7011; telecopier (248)-920-0396, and
email pvangamper1@gmail.com.  Any party hereto may change its address upon 10
days’ written notice to any other party hereto.

15.

The rights and obligations of GFC 2005 and the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of GFC 2005 and the Company.

16.

If any provision of this Agreement shall be found invalid or unenforceable for
any reason, in whole or in part, then such provision shall be deemed modified,
restricted, or reformulated to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein, as the case may be.  The
parties further agree to seek a lawful substitute for any provision found to be
unlawful; provided, that, if the parties are unable to agree upon a lawful
substitute, the parties desire and request that a court or other authority
called upon to decide the enforceability of this Agreement modify those
restrictions in this Agreement that, once modified, will result in an agreement
that is consistent with the intent of the parties and is enforceable to the
maximum extent permitted by the law in existence at the time of the requested
enforcement.

 

-2-

17.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Nevada, without regard to any conflicts of laws provisions thereof.
 Each party hereby irrevocably submits to the personal jurisdiction of the
United States District Court located in Hanover County, North Carolina, as well
as of the Courts of the State of North Carolina in Hanover County, North
Carolina over any suit, action or proceeding arising out of or relating to this
Agreement.  Each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such mediation, arbitration, suit, action or proceeding
brought in any such county and any claim that any such mediation, arbitration,
suit, action or proceeding brought in such county has been brought in an
inconvenient forum.

 

18.

Each of the parties hereto waives any right to trial by jury in any legal
proceeding arising out of or relating to this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of February 9,
2011.

GFC 2005

By:    Paul M. Van Gamper, Chief Executive Officer

GLOBAL EARTH ENERGY, INC.

By:    Sydney A. Harland, Chief Executive Officer

-3-

Attachments:

Attachment A

Coal Purchase Order

Attachment B

Memorandum of Understanding

Attachment C

Edmund Carroll Killen Resume

Attachment D

Evaluation of Northfork Coal Resource, Mcdowell, County, West Virginia

Attachment E

Buzzard Branch Coal Refuse Area Volumes, McDowell County, West Virginia

 

Attachment A

Coal Purchase Order

[coalpurchase2001.jpg] [coalpurchase2001.jpg]

[coalpurchase2002.jpg] [coalpurchase2002.jpg]

 

[coalpurchase2003.jpg] [coalpurchase2003.jpg]

 

Attachment B

Memorandum of Understanding

[mou001.jpg] [mou001.jpg]

[mou002.jpg] [mou002.jpg]

[mou003.jpg] [mou003.jpg]

[mou004.jpg] [mou004.jpg]

Joint Venture Agreement GFC 2005 and Global Earth Energy v4 NTR

Attachment C

Edmund Carroll Killen Resume

EDMUND CARROLL KILLEN

313 Pine Street

Tazewell, Virginia 24651

(276) 988-5614

GENERAL

Over 35 years of experience in the coal mining industry as an educator,
inventor, owner, operator, and consultant

HISTORY

May 1959

Graduated from high school in Clintwood, Virginia, high school

1959 - 1963

Enlisted in the US Air Force immediately after high school graduation and was
trained as a radar technician

Attended evening classes at the University of Louisville for one year

1963 – 1969

Discharged from the US Air Force

Began work as a project engineer and draftsman in Louisville, Kentucky

Attended evening college classes at the University of Kentucky, the University
of Tennessee, and Western Kentucky University, under the auspices of the G.I.
Bill for Viet Nam-era veterans

1969 – 1973

Passed a series of exams in Frankfort, Kentucky, and in Knoxville, Tennessee
proving qualifications to knowledge to teach engineering trades at the
University level

Taught basic engineering classes at the University of Kentucky under the MDTA
program for almost four years

Taught at Elizabethtown Vocational School in Elizabethtown, Kentucky

Was certified as a land surveyor during this time.

1973 – 1990

Began a new manufacturing organization to produce mining electronics

Started an evening mining engineering program at Southwest Virginia Community
College; the program continued for the next seventeen years

Taught twenty-seven classes in various subjects to including basic and advanced
electronics, land surveying practices, basic and advanced mechanical drawing,
machine blueprint reading and

related math, architectural rendering and design, mine mapping, and others.

Owned and operated a coal mine in Northfork, West Virginia.

Owned and operated several businesses manufacturing mining products, either
electrical or electro/mechanical (one such company is now in it's 28th year and
doing well)

1990 – present

Consultant for many individuals or mining companies, providing expertise in
planning and implementing coal mining operations, and coal marketing

Generated feasibility reports covering reclamation of washed fines

Generated coal reserve estimate reports

NOTABLE ACCOMPLISHMENTS

Coal Mining:

Several innovative designs for the coal mining industry that involved a visual
signal that was extracted from phone lines; this design resulted in the creation
of a new law for underground communications (the first new law in 52 years)

Solar Power:

Several designs also in the field of solar power and the conversion of
electricity from DC to AC power.

Provided design and consulting expertise for the Catholic Church to furnish
power to certain islands the Fiji Islands group in the south Pacific

Developed a solar-power water pump for cattle farmers at the request of Virginia
Tech

Designed solar power systems for several local homes

Other:

Hold a U.S. Patent for a marine propulsion device

PERSONAL

Wildlife artist; occasionally hold art shows displaying work

Date of Birth:

June 13, 1941

Attachment D

Evaluation of Northfork Coal Resource, Mcdowell, County, West Virginia

 

 

MCDOWELL COUNTY, WEST VIRGINIA September 30, 2009

EVALUATION OF NORTHFORK COAL RESOURCE

MCDOWELL, COUNTY, WEST VIRGINIA

INTRODUCTION

This report was prepared to document the value of the coal stockpile owned by
GFC 2005 LLC at its site near Northfork, West Virginia. Total reserve
information was acquired by the author when he personally inspected the site on
September 30, 2009. Additional information acquired by reviewing reserve
research records maintained by Black Diamond Enterprises, Inc. in its office in
Cedar Bluff, Virginia and from the records maintained at the McDowell County
Courthouse located in Welch, West Virginia.

LOCATION AND ACCESS

The subject resource is located on approximately 200 acres of property that is
owned in fee by GFC 2005. As may be noted in the photographs which are a part of
this report, the town of Northfork is adjacent to the property and both homes
and businesses may easily be seen by looking southward from the reserve site.
Northfork is a small town, with a population of approximately 700 people that is
located near the state line in southeastern West Virginia. The property is
easily accessed by taking US Highway 52 northwestward, approximately 25 miles,
from Bluefield, West Virginia. It is also served by a major railroad. Water and
electrical power are readily available on the site. A legal description of the
subject property is enclosed as Attachment A.

BACKGROUND

Local operators and later Island Creek Coal Company, a major US coal producer,
operated underground mines and cleaning facilities in this site from about 1920
until about 1952. The famous Pocahontas No. 3 and No. 4 coal seams outcrop and
were mined on the property. These two seams are well known as being one of the
highest quality “coking” or metallurgical grade coals ever found in the US. The
remains of numerous coke ovens are still evident on the property.

At the time when operations were started in this location, only approximately
1-1/2 inch diameter and coarser coal particles were used for coke production.
The coal was brought out of the mines with rail cars and “forked” into other
cars for transport to the coke ovens. The forks that were used allowed the small
or fine sized coal particles to fall through and be separated from the coarse
material. The fine material was then simply dumped at convenient locations along
the hillsides.

When Island Creek Coal Company took over the operations, they installed a
cleaning plant with a “magnetite sink-float” process to clean the coal.
Magnetite (Fe3O4) is a highly magnetic iron ore mineral with a specific gravity
of 5.18. If minor amounts of finely ground magnetic particles are added to water
it is easy to increase the density of the slurry to 1.65-1.70. In that medium,
lumps of coal float while, heavier, non-coal minerals sink.

The floating particles are simply scraped off the top of a separation tank in
one direction and the sunken material goes the opposite way, and a simple
separation is easily completed. The products are then rinsed over a fine (0.6 mm
or Tyler #28) screen to remove the adhering magnetite and fine coal. The
magnetite is then recovered with magnets for re-use. During that period, island
Creek produced and sold more than 15 million tons of coal from this site.

Island Creek’s management and technical staff had recognized that they were
losing approximately 20% of their coal in the fine fraction that passed through
the rinse screen, and had the foresight to store it in a large pond so that it
could easily be recovered and sold in the future. That means that approximately
4 million tons of fine coal was stored at this site.

GFC 2005 acquired the site from Black Diamond Enterprises, Inc for both the coal
reserve and the fresh water that flows out of the old mine portal. Since then,
they have thoroughly tested and evaluated the reserves and applied for permits
to initiate operations at the site.

COAL QUALITY

The metallurgical grade bituminous coal that is located at this site is of
extremely high quality. Steel companies are always willing to pay a premium
price for coal from the Pocahontas No. 3 and No. 4 seams. To create coke, coal
is placed in a reduction atmosphere furnace and heated to high temperatures to
drive off volatile gases and reduce it to pure carbon. That product is then
placed into steel production furnaces with iron ore to both generate heat and
absorb oxygen from the iron ore. It's use is essential in the production of
modern high quality steel.

The US standard for rating coal quality is the number of British Thermal Units
(BTU’s) of heat that can be produced per pound of coal burned. That is typically
called the “BTU Rating”. Another important number is the amount of material that
will not burn, and must be removed from the furnace after combustion. This is
commonly called the “percent ash”. Both moisture and ash content affect the BTU
rating, and both may be corrected by processing, so a standard raw coal rating
is MAF (moisture – ash free) BTU. That test was used for this material.

Sulfur causes contamination in steel and is also a serious part of modern
industrial world air pollution. Current air quality regulations require that
sulfur content not exceed 2 % in coal that is to be used for metallurgical
purposes. Another important measurement of metallurgical coal is the free
swelling index of “FSI”. That is an ASTM standard measurement of the amount that
the coal expands when it is coked. Good coke is similar to a sponge and allows
intimate contact with oxygen for immediate and complete combustion

Following is a comparison of industry specifications and the Northfork coal:

 

A quick review of these numbers shows the superiority of the Northfork
Pocahontas No. 3 and No. 4 seams of coal for high quality metallurgical use.

 

RESERVE ESTIMATE

The coal stored at the Northfork coal reserve consists of 5 separate piles of
coarse or “forked” coal that are located primarily along hillsides, and the fine
coal storage pond that was created by Island Creek. All have been evaluated by
Black Diamond Enterprises, Inc. Those evaluations and reserve estimates were
reviewed by the author and found to be professional and accurate. Following are
the details of each:

 

Pile No. 1

Length – 1,328 feet Weighted Average Width – 48 feet Weighted Average Depth – 65
feet Specific Weight – 76.4 lb/ft3 Total Tons – 158,276 Tons

Pile No. 2

Length – 1,256 feet Weighted Average Width – 62 feet Weighted Average Depth – 89
feet Specific Weight – 76.2 lb/ft3 Total Tons – 264,056 Tons

Pile No. 3

Length – 1,860 feet Weighted Average Width – 52 feet Weighted Average Depth – 58
feet Specific Weight – 76.4 lb/ft3 Total Tons – 214,293 Tons

Pile No. 4

Length – 1,190 feet Weighted Average Width – 120 feet

Weighted Average Depth – 72 feet Specific Weight – 76.4 lb/ft3 Total Tons –
392,757 Tons

 

Pile No. 5

Length – 852 feet Weighted Average Width – 294 feet Weighted Average Depth – 54
feet Specific Weight – 76.4 lb/ft3 Total Tons – 516,707 Tons

Fine Coal Storage Pond

Surface Area – 3,028,570 ft2 + 24.66 Acres Weighted Average Depth – 74 feet
Specific Weight – 76.2 lb/ft3 Total Tons – 3,028,570

Total Fine Coal Tonnage 3,028,570 Tons Total Coarse Coal Tonnage 1,546,089 Tons
TOTAL PROVEN RESERVE = 4,574,659 TONS COAL VALUE

To determine the value of coal of the quality of this reserve, the author
contacted an acquaintance, Mr. Gerald Stokley. Mr. Stokley has operated a coal
brokerage business based in Beckley, West Virginia for more than 20 years. He
further provided the attached notarized letter stating the coal of the subject
reserve quality has a current market value of US $100 to $125 per ton. He
further suggested that I contact Mr. Teddy Schonan for further value
confirmation. Mr. Schonan operates an international coal trading business based
in Brooklyn, New York that buys and sells many millions of tons of coal per year

 

Based on this information, the author has chosen to use an average value price
of US $110.00 per ton for the purpose of this report.

TOTAL RESERVE VALUE $ 503,212,490.00

As calculated above, the total amount of coal located in this reserve has been
proven to be 4,574,659 tons. At the above-stated value of US $110 per ton, the
total gross value of this reserve may be calculated as US $503,212,490 or more
than five hundred three million US dollars.

CERTIFICATION

I hereby certify that I have over 20 years experience as a teacher of the
Engineering Trades with an emphasis on Mining Technology and that I have more
than 35 years of professional experience in the mining and mineral industry
dealing with studies of this nature. I further certify that this report,
consisting of six (6) pages of text, each of which I have initialed and the last
being signed, is true and correct to the best of my professional knowledge and
experience.

[algoma1006.jpg] [algoma1006.jpg]

Edmund C. Killen

[algoma1007.jpg] [algoma1007.jpg]

EXHIBIT A

DESCRIPTION:

Parcels 1 through 5 shown in brown and as outlined by red border on a colored
whiteprint map, which map is marked for identification in the lower right hand
corner thereof “Pocahontas Land Corporation, Bluefield, W.Va., No. 3274-B,
August 15, 1988, G.B.M.” and which map is of record in the office of the clerk
of the County Commission of McDowell County, West Virginia, in Map Book 34, page
138, and containing in the aggregate approximately 82.9 acres, situated in North
Fork Magisterial District of McDowell County, West Virginia, on the waters of
North Fork of Elkhorn Creek and Buzzard Creek of same. The said Parcels 1
through 5 are more particularly bounded and described in that certain Deed,
dated May 27, 1998, between BUZZRD CREEK ENERGY CORPORATION as Grantor, and
COVOL TECHNOLOGIES, INC as Grantee, which Deed is of record in the aforesaid
Clerk’s Office in Deed Book 464 at Page 339, and to which Deed reference is
hereby made for a more specific description of the said Parcels 1 through 5, and
as further described in that certain Deed dated January 18, 2000 between Covol
Technologies as Grantor and Black Diamond Enterprises, Inc as Grantee and
recorded in Book 465 page 362 in the records of the Clerk’s Office of McDowell
County Commission.

Those certain tracts or parcels of land situated in North Fork Magisterial
District of McDowell County, West Virginia, on the waters of Elkhorn Creek and
Buzzard Creek and shown as PARCELS NOS 1 through 5 in yellow on the whiteprint
map marked in the lower right-hand corner thereof: “Sheet No. 2 of 6, Pocahontas
Land Corporation, W.VA. No. 3274-B, Aug. 15, 1988, G.B.M.” and PARCEL NO. 11 in
yellow on the whiteprint map marked in the lower right-hand corner thereof:
“Sheet No. 7 of 7, Pocahontas Land Corporation, W.Va., No. 3275-B, Aug 15, 1988,
G.B.M.” Said parcels are more particularly described in the deed dated September
14, 1988 between Buzzard Creek Energy Corporation and Pocahontas Land
Corporation recorded in the Office of the Clerk of the County Commission of
McDowell County, West Virginia, in Deed Book 397, at Page 502, and as further
described in that certain BILL OF SALE AND AGREEMENT dated January 18, 2000
between COVOL Technologies, Inc as seller, and GFC 2005, LLC as buyer and
recorded in Book 465 page 359 in the records of the Clerk’s Office of McDowell
County Commission.

EXHIBIT B

 

Item

Industry Standard

Northfork

MAF/BTU

12,000 Min.

15,200

% Ash

8% Max.

4.5%

% Sulfur

1% Max.

0.3%

FSI

7 Min.

9

Attachment E

Buzzard Branch Coal Refuse Area Volumes, McDowell County, West Virginia

 

[volumereport001.jpg] [volumereport001.jpg]

 

Alchemy Engineering Associates, Inc.

Mining & Civil Engineering Consultants  546 West Old Middle Creek Rd.
Prestonsburg, Kentucky 41653Office (606) 886-8889Fax (606) 886-8847E-mail:
alchemy@alchemyengineering.net

April 28, 2009

Nick Song International

Project Management LLC.

7270 Park Circle Drive, Suite H

Hanover, MD 21076

RE: Buzzard Branch Coal Refuse Area Volumes - McDowell County, West Virginia

Dear Mr. Song:

On April 27th, 2009, I visited the above-referenced site, for the purpose of
becoming familiar with the area, and to perform a cursory review of coal refuse
stockpiles contained within the subject watershed. The following is a general
discussion of my observations, which include a preliminary estimate of the total
volume of refuse materials contained within each known stockpile.

 

SITE LOCATION AND GENERAL DISCUSSION

 

The project area is located within the Buzzard Branch watershed, near the mining
community of Algoma, in McDowell County, West Virginia. This watershed has been
extensively deep and surface-mined, with mining having occurred since the
beginning of the 20th century.  

The primary coal seam(s) mined were the Pocahontas 3 & 4 seams, which were
historically used as coking coals; in fact, remnants of site-built coke ovens
were evident all along the site access road. Rumor has it that approximately 20
ovens remain in the area, and contain prepared coke, ready for use.

 

From my observations, five readily visible refuse stockpiles were noted to
exist. I have attached a location map showing these areas as part of this report
(Attachment “A”). Three of the areas appear to be old pre-surface mining law
stockpiles, as no evidence of a reclamation effort having been made was noted.
The piles were scattered all along the length of the roadway, from the beginning
of the watershed, with the tour ending approximately 1.6 miles up the watershed,
terminating at a large fines settlement impoundment area (Stockpile #5), which
is now reclaimed.

 

VOLUME CALCULATION NARRATIVE

Per your request, I have made quick estimates of the volume of refuse material
contained within each stockpile area. Having no exploration data, limited site
topography information, and little correlation of existing quality data, the
volumes offered are to be considered cursory estimates, only, and treated as
inferred reserve volumes. No discount allowances have been made for moisture
contents, ash contents or coal preparation recovery efficiencies.

*VOLUMES DETERMINED BY TIN SURFACE TO SURFACE COMPARISON, USING USGS & GOOGLE
EARTH TOPOGRAPHIC MAPPING **COMPACTED DENSITY USED; 65 PCF USED FOR LOOSE FILLED
MATERIAL, SITES 1-4

PROJECT ECONOMICS

With current unknown variables including projected target recovery qualities,
existing particle size distributions, refuse matrix qualities, etc., it is
difficult to project mining costs. The following is a general discussion of
various costs which will be incurred in startup and on-going production costs,
as is found with similar projects we have been involved with.

1.

EXPLORATION/TESTING/ENGINEERING  $150,000.00

2.

PERMITTING* 150,000.00

3.

PERMIT DISTURBANCE BONDING**  420,000.00

4.

STARTUP CLEARING/GRUBBING/ACCESS ROADS 75,000.00

5.

MATERIAL STRIPPING/LOADING $8.00/TON RAW

6.

HAULAGE*** $5.00/TON RAW

7.

WASHING FEES**** $6.50/TON CLEAN

8.

REFUSE HANDLING***** $1.50/TON CLEAN

9.

SITE RECLAMATION  $5,000/ACRE

10.

MISCELLANEOUS CONTINGENCY $500,000.00

•

*PORTIONS OF THIS PROJECT WILL ELIGIBLE FOR AML ENHANCEMENT STATUS, WHICH WILL
HASTEN THE ALLOWABLE PROJECT STARTUP DATE; SITES 2 AND 5 WILL REQUIRE FORMAL WV
DEP PERMITTING, WHICH WILL TAKE APPROXIMATELY 18-24 MONTHS TO ACCOMPLISH; OTHER
ISSUES MAY INCLUDE US ARMY CORP OF ENGINEERS 404 PERMITTING, DEP KPDES DISCHARGE
PERMITTING, AND 401 WATER QUALITY PERMITTING

• **BONDING MAY VARY—STATED RATE IS $3,500/ACRE OF DISTURBANCE, NORMAL RATE FOR
NEW MINING STARTUPS IN UNDISTURBED COAL BEDS • ***HAULAGE IS BASED ON TAKING
MATERIAL TO THE BLUE STONE WASHING FACILITY, APPROXIMATELY 10 MILES NORTH OF THE
PROJECT AREA

•

****STANDARD 1.50 SPECIFIC GRAVITY HEAVY MEDIA WASH COST; MAY VARY FROM PLANT TO
PLANT, AND IS HEAVILY DEPENDENT UPON RECOVERY RATES FROM FEED VOLUME

•

*****ASSUMPTION THAT REJECTED REFUSE MATERIAL WILL BE HAULED BACK TO SITE; BLUE
STONE OR CONTRACTED WASH FACILITY MAY HANDLE ON-SITE

RECOMMENDATIONS

In order to properly plan this project, we recommend that a comprehensive
exploration and discovery program be undertaken for this site. This would
involve a database search to determine if existing reliable information
detailing product quality and quantity is available, and performance of
additional exploration and testing to confirm available data, if found.
Otherwise, a detailed exploration and mapping program should be undertaken to
obtain this vital planning data. Coal quality and wash recovery information is
required in order to perform an economic analysis of the project.

LIMITATIONS

The volumes given in this report were prepared using existing public domain
information, field estimations of depth of material, and assumptions regarding
in-place densities. As such, variations from the volumes reported can be
expected. No considerations were given as to property ownership, and those
stockpile areas shown to us on the ground were assumed to be available for right
of entry and processing.  

Should you have questions regarding this report, or require further assistance,
please

contact me at your earliest convenience. We thank you for your kind
consideration of our

firm, and look forward to working with you in the future.

Sincerely;

Gary Ousley, P.E., L.L.S. President,

Alchemy Engineering Associates

Xc:ile Attachments

Location Map Gary Ousley Vitae

 

TABLE A ESTIMATED VOLUMETRICS CHART

PILE No.

SURFACE

AVG.

VOL.

ESTIMATED

TONNAGE

 

AREA

DEPTH

 

DENSITY

 

  

(AC.)

  

(FT.)

  

(CU.YDS)

  

(LBS/CU.FT.)

  

(U.S. TONS)

 

1

 14.0

30

677,600

65

595,000

2

6.0

30

290,400

65

254,826

3

 6.9

40

445,400

65

390,700

4

 13.0

40

838,930

65

736,100

5

62.6

VARIES*

2,649,160

90**

3,218,730

TOTALS

102.5

 

 4,901,490

 

  5,195,355