Appendix 1

Appendix I. Part 1: Description Of Geology & Reserves System Introduction The Ore Evaluation and Reserve programs have been developed to aid in the evaluation of coal deposits, both qualitatively and quantitatively. The "Weighted Moving Average" technique used provides considerable flexibility in dealing with diverse parameters with differing distribution characteristics. Determination of Model Constants "a" and "k" - Unit 1 The flexibility of the method in dealing with diverse value parameter distributions lies in its ability to cater to the individual characteristics of each. These characteristics are embodied in the values determined for constants "a" and "k", namely, local and regional variations in value distributions, respectively. The empirical method used attempts to optimize the "a" - "k" combination. Realistic values for "a" and "k" are entered into the program together with sample values for the required parameters and their respective coordinate location values. All the values within a specified radius from the point being evaluated are used to interpolate a value at that point. (Note, the interpolated point is the location of one of the boreholes, values of which are not used in the calcula¬tion.) 3n a similar manner, interpolated values are calculated for each borehole location and for each parameter. This is done for each possible combination of "a" and "k".