Pine Pass Coal Property 2005 Exploration Assessment Report
Prepared for: Pine Valley Mining Corp. 501 - 535 Thurlow Street Vancouver, BC V6E 3L2
Prepared by: ResourceEye Services Inc. 715-675 West Hastings Street Vancouver, BC V6B 1N2
For submittal to: BC Ministry of Energy and Mines Energy and Minerals Division Geological Survey Branch 5th Floor, 1810 Blanshard St. Victoria, BC V8W 9N3
Ron Parent, P. Geo. June 1, 2006
Ministry of Energy & Mines Energy & Minerals Division ASSESSMENT REPORT Geological Survey Branch TITLE PAGE AND SUMMARY
Pine Pass Coal Property 2005 Exploration Assessment Report TOTAL COST $ 3,682,750
AUTHOR(S) ResourceEye Services Inc. - Ron Parent, P. Geo. SIGNATURE(S)
NOTICE OF WORK PERMIT NUMBER(S)/DATE(S) CX-9-017 YEAR OF WORK 2005
STATEMENT OF WORK - CASH PAYMENT EVENT NUMBER(S)/DATE(S) $3,682,750 for field work (April to September, 2005) and assessment reporting and resource evaluation.
PROPERTY NAME Pine Pass
CLAIM NAME(S) (on which work was done) Coal licenses 327312, 327313, 409343, 409344, 409346, 409347 -- the work is sought to apply to the contiguous block which also includes the following coal licenses: 409348, 409349, 409350, 409351, and 409352 .
COMMODITIES SOUGHT Coal
MINERAL INVENTORY MINFILE NUMBER(S), IF KNOWN 093O 007 - Pine Pass
MINING DIVISION Liard NTS 93O069, 93O059
LATITUDE ____55o ______37' ______" LONGITUDE ______122o __20' ______" (at centre of work)
OWNER(S)
1) Pine Valley Mining Corporation 2) Falls Mountain Coal Inc.
MAILING ADDRESS
501-535 Thurlow Street, Vancouver, BC, V6E 3L2 501-535 Thurlow Street, Vancouver, BC, V6E 3L2
OPERATOR(S) [who paid for the work]
1) Pine Valley Mining Corporation 2) Falls Mountain Coal Inc.
MAILING ADDRESS
501-535 Thurlow Street, Vancouver, BC, V6E 3L2 501-535 Thurlow Street, Vancouver, BC, V6E 3L2
PROPERTY GEOLOGY KEYWORDS (lithology, age, stratigraphy, structure, alteration, mineralization, size and attitude):
Gething Formation, Lower Cretaceous, Coal Seams, Thrust Faults
REFERENCES TO PREVIOUS ASSESSMENT WORK AND ASSESSMENT REPORT NUMBERS 00757,00560, 00586, 00589, 00590, 00591, 00592
(OVER) TYPE OF WORK IN EXTENT OF WORK PROJECT COSTS THIS REPORT (IN METRIC UNITS) ON WHICH CLAIMS APPORTIONED (incl. support)
GEOLOGICAL (scale, area)
Ground, mapping 58 outcrops Coal licenses 327312, 327313, 409343, $ 30,650 GEOLOGICAL MODELING AND RESOURCES 409344, 409346, 409347 $ 200,000
GEOPHYSICAL (line-kilometres)
Ground
Magnetic
Electromagnetic
Induced Polarization
Radiometric
Seismic
Other down-hole gamma, density, resistitivty, caliper, dipmeter, deviation $ 248,500
Airborne
GEOCHEMICAL (number of samples analysed for ...)
Soil
Silt
Rock
Other
DRILLING (total metres; number of holes, size)
Core 6 holes, 1083.5m, 3" core $ 277,850
Non-core 85 holes, 15252.4m, 6" $ 1,526,925
RELATED TECHNICAL
Sampling/assaying Coal quality sampling (1724 samples), ARD sampling (229 samples) $ 161,425
Petrographic
Mineralographic
Metallurgic
PROSPECTING (scale, area)
PREPARATORY/PHYSICAL
Line/grid (kilometres)
Topographic/Photogrammetric (scale, area)
Legal surveys (scale, area)
Road, local access (kilometres)/trail 5,695m of new access $ 1,138,900
Trench (metres)
Report Preparation $ 60,000
Other Permitting and Environmental $ 38,500
TOTAL COST $ 3,682,750 Section 4.3.2, Section 5, Appendix 9, part of the Summary and part of the Conclusions remain confidential under the terms of the Coal Act Regulation, and have been removed from the public version. http://www.bclaws.ca/civix/document/id/complete/statreg/25 1_2004 Pine Valley Mining Corporation
Pine Pass Coal Property
Table of Contents
EXECUTIVE SUMMARY ...... 1 1 INTRODUCTION...... 2 1.1 SCOPE OF REPORT...... 2 1.2 LOCATION OF SUBJECT PROPERTY ...... 2 1.3 ACCESS AND INFRASTRUCTURE ...... 2 1.4 LAND TENURE ...... 5 1.5 PHYSIOGRAPHY...... 5 1.6 ECONOMIC AND GENERAL ASSESSMENT OF THE PROPERTY ...... 8 2 GEOLOGICAL SETTING...... 9 2.1 REGIONAL SETTING ...... 9 2.2 LOCAL GEOLOGY & SEDIMENTATION...... 13 2.2.1 The Cadomin Formation:...... 13 2.2.2 The Gething Formation:...... 13 2.2.3 The Moosebar Formation:...... 15 2.3 DESCRIPTION OF THE COAL MEASURES ...... 15 2.3.1 Seam Development ...... 15 2.3.2 Coal Quality...... 16 2.4 STRUCTURE...... 16 2.5 SURFICIAL GEOLOGY ...... 18 3 EXPLORATION...... 21 3.1 HISTORY OF PINE PASS PROPERTY EXPLORATION ...... 21 3.2 2005 EXPLORATION PROGRAM ...... 23 3.2.1 Objective and Scope ...... 23 3.2.2 Permitting...... 25 3.2.3 Field Program Summary...... 25 3.2.4 Exploration Access Road and Drillsite Development ...... 25 3.2.5 Drilling...... 31 3.2.6 Core Logging...... 44 3.2.7 Sampling ...... 46 3.2.8 Coal Quality Testing...... 50 3.2.9 Geophysical Logging...... 52 3.2.10 GPS Surveying...... 58 3.2.11 Outcrop Mapping...... 60 3.2.12 Site Reclamation...... 65 3.3 GEOLOGICAL DATA COMPILATION, INTERPRETATION AND REPORTING ...... 67 3.3.1 Data Compilation...... 67 3.3.2 Geological Interpretation...... 67 3.4 COST SUMMARY AND PERSONNEL ...... 69 4 GEOLOGICAL MODEL...... 72 4.1 DATA INTERPRETATION ...... 72
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4.1.1 Driller’s Logs...... 72 4.1.2 Geophysical Logs...... 72 4.1.3 Core Log Information ...... 73 4.2 SOLIDS MODELING...... 73 4.3 COAL QUALITY RESULTS AND STATISTICAL ANALYSIS...... 83 4.3.1 Raw Coal Quality...... 83 4.3.2 Float Sink Test ...... 86 4.3.3 Comparison With Geophysical Results ...... 89 4.3.4 Block Modeling of Quality Parameters ...... 95 5 COAL RESOURCES...... 96 5.1 GENERAL CRITERIA ...... 96 5.1.1 Geology Type...... 96 5.1.2 Deposit Type...... 96 5.2 QUANTIFICATION PARAMETERS – ALL RESOURCE CATEGORIES...... 96 5.2.1 Data Points...... 96 5.2.2 Seam Thickness...... 97 5.2.3 Areal Extent...... 98 5.2.4 Coal Bulk Density...... 98 5.2.5 Resource Calculation...... 99 5.2.6 Feasibility of Exploitation...... 99 5.2.7 Assurance of Existence...... 99 5.2.8 Resources for Pine Pass ...... 100 6 CONCLUSIONS AND RECOMMENDATIONS...... 126 7 STATEMENT OF QUALIFICATIONS ...... 127 8 REFERENCES...... 128
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Figures
Figure 1: Regional Location Map ...... 3 Figure 2: License Location Map...... 4 Figure 3: Orthographic Compilation of Project Area ...... 6 Figure 4: Shaded LIDAR Topography...... 7 Figure 5: Regional Geology Map ...... 11 Figure 6: Regional Stratigraphy ...... 12 Figure 7: Stratigraphic Correlation Between Willow Creek Mine and Pine Pass Property ...... 14 Figure 8: Comparison of Coal Seam Stratigraphy and Nomenclature in Previous and Present Studies of the Pine Pass Property ...... 17 Figure 9: Schematic Cross Section Illustrating Structural Blocks ...... 19 Figure 10: Overburden Isopach Maps...... 20 Figure 11: 2005 Exploration Program Summary Map...... 24 Figure 12: Exploration Access Road Development...... 27 Figure 13: Drillhole and Trench Location Map ...... 32 Figure 14: 2005 Outcrop Location Map...... 64 Figure 15: Surface Geology Map ...... 68 Figure 16: Rendered 3-D image showing coal seam, 3D solids and faults in the Cleveland Creek fault block (Fault Block 501)...... 76 Figure 17: Rendered 3-D image showing coal seam, 3D solids and faults in the Noman Creek fault block (Fault Block 502)...... 77 Figure 18: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 503...... 78 Figure 19: Rendered 3-D image showing coal seam, 3D solids and faults in the Eastern Fault Block (Fault Block 504)...... 79 Figure 20: Rendered 3-D image showing coal seam, 3D solids and faults in the Far Eastern Fault Block (Fault Block 505)...... 80 Figure 21: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 506...... 81 Figure 22: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 507...... 82 Figure 23: Resource Categories ...... 101 Figure 24: Block Model in Plan View...... 102 Figure 25: 3D image of surface resource extents pit shell...... 111 Figure 26: 3D image of 10:1 cutoff pit optimization resultant pit shell...... 112 Figure 27: 3D image of 8:1 cutoff pit optimization resultant pit shell...... 113 Figure 28: 3D image of 6:1 cutoff pit optimization resultant pit shell...... 114
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Photos Photo 1: Access to timber log deck areas...... 26 Photo 2: Log decking of timber prior to removal from site...... 26 Photo 3: Hitachi 230 excavator operated by Kearah & Weri Environmental Contracting Ltd...... 28 Photo 4: Road and Drill Pad Construction ...... 29 Photo 5: Example of pre-existing access (very wide) that was re-opened...... 30 Photo 6: Example of erosion control for roads...... 30 Photo 7: Rotary drilling rig operated by SDS Drilling Inc...... 31 Photo 8: SDS drill crew drilling angle hole ...... 40 Photo 9: GeoTech Ltd coring rig ...... 42 Photo 10: Anderson drilling rig on site ...... 42 Photo 11: Stacked boxes of core ...... 43 Photo 12: SDS drilling rig set up on angle hole...... 44 Photo 13: Core logging tent ...... 45 Photo 14: Example of drill core photography ...... 46 Photo 15: Core sampling tag attached to core box...... 47 Photo 16: Core box with coal sample marked for removal...... 48 Photo 17: Core box showing core sample with sample tag attached...... 48 Photo 18: Core box with coal sample removed and sample tag affixed to the core box.49 Photo 19: ResourceEye personnel splitting, bagging and tagging ARD samples...... 50 Photo 20: Geophysical logging being performed on site by Century Geophysical ...... 52 Photo 21: Geophysical logging tool being retrieved by Weatherford Inc. of Grande Prairie ...... 58 Photo 22: ResourceEye personnel GPS surveying ...... 59 Photo 23: Drillhole staked with drilling instructions ...... 60 Photo 24: Mapping outcrop of coal seams exposed at drill site ...... 61 Photo 25: Cross ditching for road deactivation ...... 65 Photo 26: Reclaimed trail access showing roll backs ...... 66 Photo 27: Seeding reclaimed areas...... 66
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Tables
Table 1: Coal Licenses Within the Pine Pass Property...... 5 Table 2: Comparison of Geological Classification Systems - Hughes (1967) and Stott (1982) ...... 10 Table 3: Summary of Exploration Road Access Usage and Development ...... 28 Table 4: Pine Pass – Summary of Drillholes from 2005 Exploration Program...... 33 Table 5: 2005 Drilling – Summary of Drilled Seam Intersection by Seam ...... 41 Table 6: Coring Contractor Details...... 41 Table 7: Rotary Contractor Details...... 44 Table 8: Sampling Summary...... 46 Table 9: Rotary Sampling Summary ...... 50 Table 10:Geophysical Logging Tools...... 53 Table 11: Holes vs Logs Completed ...... 54 Table 12: Pine Pass – 2005 Outcrop Mapping Summary ...... 62 Table 13: Historical Data Summary ...... 67 Table 14: 2005 Exploration Program Cost Summary...... 70 Table 15: Gamma Value Ranges for Interburden Lithologies...... 72 Table 16: Geological Solids Volume ...... 74 Table 17: Cross reference of seams present in each fault block ...... 74 Table 18: Minesite model codes for coal seams...... 75 Table 19: Coal quality summary by seam...... 84 Table 20: Proximate Analyses ...... 85 Table 21: Other coal quality parameters...... 86 Table 22: Float-Sink analysis on selected samples ...... 87 Table 23: Default coal quality values for filling model grades ...... 95 Table 24: Seam and Ply Thickness Parameters for Resource Calculations...... 97 Table 25: Criteria for cross-section and data point spacings required for the measured, indicated and inferred resource categories ...... 99 Table 26: 3D Block Model Items ...... 103 Table 27: Seam Codes ...... 104 Table 28: Lithology Codes ...... 105 Table 29: Category Seam Codes...... 105 Table 30: Fault Codes...... 106 Table 31: Global Geological Resources by Seam and Category...... 107 Table 32: Surface Resources of Immediate Interest (Table recommended by GSC 88- 21) ...... 110 Table 33: Surface Resources at 20:1 BCM/tonne RAW cutoff by Seam and Category 115 Table 34: Geological Resources at 10:1 cutoff strip ratio...... 117 Table 35: Geological Resources at 8:1 cutoff strip ratio...... 120 Table 36: Geological Resources at 6:1 cutoff strip ratio...... 122 Table 37: Pit Optimization Results*...... 124
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Graphs
Graph 1: Scatterplot of gamma value vs ash content for CORE samples ...... 90 Graph 2: Scatterplot of gamma values vs ash content for ROTARY samples...... 91 Graph 3: Scatterplot of gamma values vs ash content for ALL samples ...... 92 Graph 4: Scatterplot of gamma value vs ash content for all samples greater than 1 m intersected thickness...... 93 Graph 5: Cross plot showing difference between the gamma predicted (GASH) and actual ash as a function of ash content from composite data...... 94 Graph 6: Geological resources as a function of cutoff strip ratio ...... 125
Appendices
Appendix 1 Daily Exploration Activity Reports Appendix 2 a-e Drillhole Information 2a/ Drillers’ Logs 2b/ Drillhole Information sheets 2c/ Core Photographs 2d/ Geological Core Log Reports 2e/ Geotechnical Log Reports 2f/ Geophysical Logs 2g/ Sample Intervals 2h/ Assay Certificates Appendix 3 Outcrop Mapping Information Appendix 4 Photographic Report: Typical Hole Completion Appendix 5 Geological Cross Sections Appendix 6 Structure Contour Maps Appendix 7 Seam Isopach Maps Appendix 8 Drillhole Composite Data Appendix 9 Minesight Compass Reserve Reports
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Executive Summary
ResourceEye Services Inc. (ResEye), of Vancouver, BC was retained by Pine Valley Mining Corp (PVMC) in December of 2004 to provide background data compilation services on the company’s Pine Pass Property with the aim of carrying out a detailed drilling program to outline the property’s coal resources in advance of any future feasibility study on coal mining operations for the property. This report outlines in detail the exploration program that consisted of the drilling of 91 holes and geological mapping. Sampling for coal quality and Acid Rock Drainage (ARD) was also carried out. Following the field exploration program, several months were spent in the Vancouver office, writing the report and preparing the resource summary, which is compliant with NI 43-101.
Additional exploration work is required to upgrade the resources to the measured category, as well as infill drilling for mine planning activities. This work should consist of rotary and core drilling, along with bulk sampling of selected coal seams via surface excavation, large diameter core, or adit driveage methods.
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1 Introduction
1.1 Scope of Report
This Geological Assessment Report is submitted in compliance with the Mineral Tenure Act Regulation for submission of a Coal Assessment Report for exploration and development in British Columbia.
This report documents the work completed on Pine Valley Mining Corporation’s “Pine Pass Property”. It includes original data, analysis and interpretations originating from the 2005 Exploration Program. The exploration program and this report were completed by ResourceEye Services Inc. of Vancouver, BC.
1.2 Location of Subject Property
The Pine Pass Property is located in the Peace River Land District of northeast British Columbia, in the Liard Mining Division. The property is approximately 53 km west of the town of Chetwynd and is centred at 55º 37’ North Latitude and 122º 20’ West Longitude. Figure 1 shows the regional location of the property. Figure 2 shows the license area.
1.3 Access and Infrastructure
The principal road access to the property is via the John Hart Highway (Highway 97), which links the Peace River District with the city of Prince George. Further ground access is provided by several secondary and tertiary roads, including a good network of forestry and exploration roads built during various programs in the early 1980’s and 1990’s. Property access was further developed during the 2005 exploration program. See Section 3.2.4 for further information on exploration access development.
CN Rail currently operates a rail line through the Pine River valley which services the Peace River District. The rail line is immediately south of the property. This provides a link to the Ridley Island Coal Port at Prince Rupert or the Port of Vancouver, both located approximately 1200 km from the property.
The nearest airports to the site are at Prince George, Dawson Creek and Fort St John, at distances of roughly 250, 150 and 210 km respectively.
Figure 1 indicates the locations of major road and rail networks.
A natural gas pipeline follows the John Hart Highway at the south of the property. There are also two main BC Hydro power transmission lines, one following the Pine River Valley and the other one cutting across the Noman Creek area from the Fisher Creek area to the north. See Figure 2 for the locations of pipelines and power lines.
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Figure 1: Regional Location Map
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Figure 2: License Location Map
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1.4 Land Tenure
The Pine Pass Property coal licenses are under the tenure of the Pine Valley Mining Corporation, through its wholly owned subsidiaries, Falls Mountain Coal Inc. and Pine Valley Coal Ltd. Falls Mountain Coal Inc, is the operator of the project on behalf of the Pine Valley Mining Corporation (PVMC).
The Pine Pass Block covers 3807 hectares over 13 licenses. The Pine Pass Property is comprised of 13 coal license blocks, as presented in Table 1 below. License locations and ownership are shown in Figure 2.
Table 1: Coal Licenses Within the Pine Pass Property
Ownership Tenure Map Number Area Number Hectares Pine Valley Coal Ltd. 327312 093O09W 293 Pine Valley Coal Ltd. 327313 093O09W 293 Falls Mountain Coal Inc. 347214 093O09W 292 Falls Mountain Coal Inc. 409343 930-9W Blk F 293 Falls Mountain Coal Inc. 409344 930-9W Blk F 293 Falls Mountain Coal Inc. 409345 930-9W Blk F 293 Falls Mountain Coal Inc. 409346 930-9W Blk F 293 Falls Mountain Coal Inc. 409347 930-9W Blk F 293 Falls Mountain Coal Inc. 409348 930-9W Blk F 293 Falls Mountain Coal Inc. 409349 930-9W Blk F 293 Falls Mountain Coal Inc. 409350 930-9W Blk F 293 Falls Mountain Coal Inc. 409351 930-9W Blk F 293 Falls Mountain Coal Inc. 409352 930-9W Blk F 292 total hectares 3807
1.5 Physiography
The Pine Pass property is situated in the Rocky Mountain Inner Foothills physiographical region. It lies on the eastern slope of Mount Bickford on the north side of the Pine River. The path of the 1.5 km wide Pine River has developed low, rounded northwest- southeast trending ridges and valleys, separated by several tributaries which, in the license area, include Cleveland Creek, Fisher Creek and Noman Creek.
Figure 3 and 4 help display the prevalent physiographic features using an orthophoto overlay, and a LIDAR (Light Detection and Ranging) shaded relief overlay, respectively.
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Figure 3: Orthographic Compilation of Project Area
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Figure 4: Shaded LIDAR Topography
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Elevations throughout the license area range from 655 m in the Pine River Valley to 1570 m in the northwest part of the Noman Creek area. The Pine River watershed drains the property.
Rock exposure is principally in creek areas and along road cuts due to the dense vegetation cover. The lower elevations are forested by poplar and birch and the higher elevations by fir and spruce. The timberline is approx 1300 m above sea level.
The climate is classified as ‘northern temperate’ with daily temperatures in the range of 7ºC to -6ºC. Extreme temperatures can range from 32º to -48ºC.
Glaciation was widespread throughout the area, and its influence on the surrounding topography is evident by the presence of U-shaped hills and valleys, and abundant glacial deposits and landforms.
1.6 Economic and General Assessment of the Property
PVMC has held crown exploration licenses in the Pine Valley area for many years. Until recently, the company was mainly focused on the Willow Creek area, as a coal mining lease had already been granted for this area. The Willow Creek coal mine, on Coal Lease 389294 commenced operations in July 2004. Its location and proximity to the Pine Pass property is illustrated on Figure 1.
Subsequent exploration has been mainly focused on the Pine Pass block, as it has the potential to host an economic coal deposit that is close enough to supplement production at the existing mine. Pine Pass coal could be hauled by truck from the mining area to the adjacent Willow Creek property. This would allow for treatment in the existing coal processing plant and use of the existing rail load out facilities.
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2 Geological Setting
2.1 Regional Setting
The Peace River Coalfield extends for 400 km throughout the northeast part of British Columbia. It forms part of a north-west trending belt of Jurassic-Cretaceous sedimentary rocks (the Inner Foothills) running parallel to the Rocky Mountain foothills in the northeast and southeast of the province. These sediments, including the Lower Cretaceous coal-bearing beds, were deposited along the western margin of the Western Canada Basin in a series of transgressive - regressive cycles which were then folded, thrusted and uplifted into faulted, plunging anticlines and synclines during the Columbian Orogeny.
The sediments of the Jurassic-Cretaceous Minnes Group, and the Lower Cretaceous Bullhead and Fort St John Groups are exposed in a succession of northwest trending fold and thrust belts within the Peace River inner foothills area. See Figure 5. Coal occurs in both the Gates and Gething formations (of the Fort St John and Bullhead Groups respectively), however it is the Gething which is the main coal-bearing unit within the license area.
The regional stratigraphy has been studied by the Geological Survey of Canada and published, amongst others, by Hughes, 1967 and Stott, 1982. A comparison of the two classification systems is given in Table 2. Hughes grouped the Gething and the underlying Dresser and Brenot Formations into the Crassier Group. The equivalent formations as classified by Stott are the Gething and Cadomin, but these have been termed the Bullhead Group. Both systems recognize the Moosebar Formation of the overlying Fort St John Group. Figure 5 shows the regional geology from the Hughes classification. The regional stratigraphy of the study area is described in Figure 6.
The steeply dipping nature of the coal measures, combined with favourable topography, has resulted in several near-surface deposits amenable to open pit mining. Geological complexity and the intensity of deformation varies from region to region. The Pine Pass area is fairly geologically complex, containing several fault structures typical of what is referred to as “the triangle zone” that occurs along the margin of the Rocky Mountains. The Pine Pass Block is situated in this tectonic setting.
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Table 2: Comparison of Geological Classification Systems - Hughes (1967) and Stott (1982)
HUGHES STOTT
1967 1982
FORT ST. JOHNS FORT ST. JOHNS GROUP MOOSEBAR FM MOOSEBAR FM GROUP
GETHING FM GETHING FM
CADOMIN FM BULLHEAD GROUP
DRESSER FM UNCONFORMITY
CRASSIER GROUP CRASSIER GROUP BRENOT FM
DISCONFORMITY BICKFORD FM
MONACH FM MONACH FM MINNES GROUP BEATTIE PEAKS FM BETTIE PEAKS FM BEAUDETTE GROUP
MONTEITH FM MONTEITH FM
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Figure 5: Regional Geology Map
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Figure 6: Regional Stratigraphy
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2.2 Local Geology & Sedimentation
The area around the Pine Pass license area is underlain by strata of the Cadomin, Gething and Moosebar Formations. The Cadomin and Gething together form the Bullhead Group and are overlain by the Moosebar which is part of the Fort St John Group.
Both the Geological Survey of Canada and the BC Ministry of Energy, Mines and Petroleum Resources have conducted stratigraphy and mapping studies within the license area, these are well documented by Hughes (1964, 1967), McLearn and Kindle (1950) and McKechnie (1955).
A detailed stratigraphic column for the license area is shown in Figure 7, along with a correlation to documented stratigraphy at the Willow Creek Minesite.
2.2.1 The Cadomin Formation:
The Cadomin is a massive resistant unit of conglomeratic, light to medium-grey sandstone which extends laterally from the Peace River to Blairmore, Alberta. It forms a distinctive marker in the Lower Cretaceous sediments throughout the Canadian Rockies. It is separated from the underlying Jurassic-Cretaceous Minnes Group by an erosional unconformity.
In the Pine Pass area the Cadomin does not contain the conglomeratic units which occur further to the south of the property and are characteristic of the formation. Instead it is represented by a thick unit (~200 m) of coarse-grained, arenaceous sand and grit, referred to as the Dresser Formation (Hughes, 1964) and thought to be a facies variation of the Cadomin. The Cadomin sediments were deposited in alluvial fans by fast flowing streams near rapidly eroding mountain ranges; the coarser conglomeratic units fall within the proximal to mid-fan region in the Pine Pass area and the Dresser Formation falls within the distal part (Jordan & Acott, 2005).
In the license area, the Cadomin outcrops at the west edge of the property near Cleveland Creek.
2.2.2 The Gething Formation:
The Lower Cretaceous Gething Formation of the Bullhead Group is the main coal- bearing sequence in northeastern British Columbia. It is also the main sedimentary unit in the license area, and the main unit of economic importance. It is a thick sequence of up to 540 m of fluvio-deltaic sediments, made up of siltstones, dark grey mudstones, fine to coarse-grained sandstones, shaley coal and coal, coalified plant debris, black shale, minor conglomerate and occasional tuffs. Fossils including bivalves and worm burrows occur within some of the sandstone units.
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Figure 7: Stratigraphic Correlation Between Willow Creek Mine and Pine Pass Property
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The Gething can be subdivided into two main facies: coarse sandstones and conglomerates typical of alluvial and upper delta plains grading laterally into the finer sediments of the lower delta plains. There is a distinctive fining-upwards sequence throughout the formation which represents an intermittent and regressive environment of deposition (Panchy,1979). The coarser sediments are thought to represent a basal channel with the upper sands being a product of flood plain sedimentation deposited over the now-abandoned channel. The alternating beds of coal, dark siltstones and shales are characteristic of marshy interdistibutary regions close to the floodplains.
2.2.3 The Moosebar Formation:
Unconformably overlying the Gething are the dark grey, massive mudstones of the marine Moosebar Formation, which averages 300 m in thickness. The contact is easily recognisable due to its abrupt nature and the common presence of a 1-2 m bed of pebble conglomerate or sandstone – termed the Bluesky Conglomerate - thought to have been deposited in the first stages of a transgressing Albian sea (McKinstry, 1989), and intersected at the top of hole FM05-002C. Immediately below the main body of the Moosebar the conglomerate is typically siltier in nature and there is a distinctive glauconitic zone near the top.
The Moosebar Formation outcrops along Fisher Creek and has been exposed into several trenches and intersected in drillhole PP83-1 at 34 m. The Bluesky Conglomerate was also intersected in this hole, as well as in several trenches at Pine Pass (McKinstry, 1989).
Overlying the Moosebar are the basal sandstones of the Gates Formation which is the main coal-bearing sequence further to the south.
2.3 Description of the Coal Measures
2.3.1 Seam Development
Within the Gething formation are nine coal zones of interest that have been identified through the current drilling program and are included in the resource estimate. Within this study these zones have been termed seams B, A, 1, 2, 3, 4, 5, 6 and 7, with seam 7 being the oldest. Additional, discontinuous seams occur above, below, and between these seams, some of which may reach economic thicknesses, locally.
Previous studies have offered different nomenclature on the seams within the project area. The 1979 study by Crows Nest subdivided the Gething into three target zones for economic coal seams – an Upper Zone 30-40 m below the Moosebar-Gething contact, a Middle Zone approximately 100 m below the Upper Zone, and a Lower Zone approximately 100 m below the Middle Zone.
Further evaluations and correlations in later years were focussed on 2 of the thicker lower seams (seams 78 and 76). Seams 78 and 76 from the earlier studies were thought to be the equivalent of the Middle Zone. Seam 60 possibly equates to the Upper Zone and seams 39 and 40 to the Lower Zone.
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In 1983 another study by Crows Nest (White & Fietz, 1983) recorrelated the coal seams into 12 horizons identified alphabetically down the stratigraphy from A to Z. They identified many irregularities in thickness and occurrence of the coal seams between sections.
Norwest’s evaluation of the area in 2003 identified 10 coal zones, of which nine (Seams 1-8 and A) were considered mineable.
The different naming conventions and approximate correlations for the coal seams for both the previous and present studies are presented in Figure 8.
2.3.2 Coal Quality
The coal at Pine Pass appears to be of a similar rank and quality to the coal at the existing Willow Creek mine. However, current comparable raw coal data is unavailable for comparison.
Preliminary coal quality testing was originally undertaken by Crows Nest Resources and the results are presented in their various assessment reports between 1979 and 1989. In general they found the coal to be low to medium volatile bituminous, capable of producing a high quality coking coal in addition to PCI or semi-soft coking products (approximately 35% PCI coal and 65% coking coal). Current quality test results indicate about a 90-10 split between MET and PCI coal product, using a 3.0 FSI raw coal cutoff.
2.4 Structure
Structurally, the Inner Foothills of the Pine River area are the surface expression of a large anticlinorium. Deformation was caused by lateral, almost horizontal compressive stresses which also lead to the development of large thrust faults and smaller, related reverse faults. The anticline itself has been subject to several smaller, quasi-parallel, northwesterly-trending folds, generally terminated at their northern ends by faults and their southern ends by smaller, complex folds (Panchy, 1979). As a general rule, fold axes trend northwesterly, with the dip of fold limbs typically in the range of 20 to 50º. The overall brittle and semi-brittle deformation style is evidence of relatively shallow depths of burial.
In the Pine Pass area, the Cretaceous strata of the Gething Formation have been folded, thrusted and uplifted into abundant small-scale anticlines and synclines which have exposed the coal seams. The Noman Creek syncline and Noman Creek anticline are the 2 main structures dominating the license area.
There are also several shear zones and several faults of importance, notably the Noman Creek Fault, the Cleveland Creek Fault, the Eastern Fault, and the Far Eastern Fault. The Noman Creek Fault was interpreted in previous studies to be a reverse fault dipping east. It has been reinterpreted as a thrust fault verging in the opposite direction.
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Figure 8: Comparison of Coal Seam Stratigraphy and Nomenclature in Previous and Present Studies of the Pine Pass Property
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The Noman Creek Syncline is an important feature of the property area as many of the coal seams are exposed at surface on its east and west limbs. It is relatively asymmetrical in shape, with dips on the west limb ranging from 45º to almost vertical, and on the east limb from 30 to 70º . Its axis strikes 325 and plunges approximately 10º to the south.
Two fault planes cut the east and west limbs of the syncline and are visible in surface outcrop. Adjacent to the west limb is the Cleveland Creek Fault, a west verging thrust fault.with ~100-300 m displacement. Intersecting the east limb is the Noman Creek Fault, a thrust fault striking NW and dipping at approximately 60º to the southwest.
The syncline is cut off at its southern end by alluvial deposits in the Pine River Valley but extends in a northerly direction for approximately 7 km.
The Noman Creek Anticline occurs immediately to the east of the Noman Creek Fault, separated again by a northwesterly trending axis. Its Northeastern limb is cut by two faults, one of which is referred to as the Eastern Reverse Fault, both of which parallel the Noman Creek anticlinal axis. It has moved the northeast limb strata up dip by approximately 135 m, causing a repetition of the Moosebar Gething contact.
East of the Noman Creek anticline is the Fisher Creek Syncline, a large, broad, open structure with steeply dipping limbs which continues to the southeast across the Pine River into the Willow Creek area. It is exposed entirely within the Moosebar Formation for 5 km north of the Hart Highway where Gething Formation outcrops on the west limb. Previous mapping and cross-sections in the area of the syncline have led to the identification of several south-westerly-dipping reverse faults in its core (McKinstry, 1989).
The structure of the Pine Pass/Noman Creek area was reinterpreted in 1983 by Crows Nest Resources. They interpreted the folds as being cut by 3 to 4 east dipping reverse faults and several minor ones (White & Fietz, 1983), which differs from previous interpretations and is a departure from the regional trend of southwest dipping thrust faulting throughout the foothills. Their hypothesis was of minor east dipping thrusts related to the Fisher Creek syncline, but within a small area bracketed by major west dipping thrust faults. The ResourceEye interpretation incorporates elements of all the above.
Figure 9 is a schematic cross-section through the deposit which illustrates the main structural features present in the study area. Detailed geological cross-sections at 50 m spacings are presented in Appendix 5.
2.5 Surficial Geology
Overburden depths were logged in 153 of 175 historical and current drillholes throughout the property. The overburden material is predominantly composed of glacial till. In the property area, the overburden has an average thickness of 7.85 m, with a pronounced thickening as we approach the Pine River and Crassier Creek Valleys. Figure 10 shows the overburden isopachs for the area.
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Figure 9: Schematic Cross Section Illustrating Structural Blocks
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Figure 10: Overburden Isopach Maps
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3 Exploration
3.1 History of Pine Pass Property Exploration
Coal was discovered in the Peace River District over 200 years ago, in 1793. Although the first coal licenses were granted in 1908, the area was so remote that a lack of infrastructure limited mining to small localised operations. Prior to 1980, less than 100,000 tonnes had been mined. Initial exploration in the Pine Pass area was conducted between 1946 and 1951 by the British Columbia Department of Lands and Forests. This work consisted of geological mapping, trenching, core drilling and preliminary reserve estimates. The exploration work was intended to find a fuel source close to the proposed route for the Pacific Great Eastern Railroad into the Peace River District.
Several subsequent exploration programmes were conducted in the area. They are outlined below.
1948 - 1951: BC Dept. of Lands and Forests
N.D. McKechnie, a geologist with the Coal Division of the Dept. of Lands and Forests, carried out field mapping in the area, plus a core drilling program of 26 holes (for 4827 m) in the Noman Creek area (which includes the Pine Pass Block) and subsequent coal quality testing. Results are documented in B.C. Bulletin 36, authored by McKechnie and published in 1955.
1964 & 1967: BC Dept. of Mines and Petroleum Resources
Reconnaissance mapping and regional mapping of the Pine Pass area were undertaken by JE Hughes in 1964 and 1967 respectively. For details for this work refer to the BC Dept. of Mines and Petroleum Resources Bulletins no. 51 and 52. Results of assays from 2 seams showed average ash contents of 7% for Seam A and 6.8% for Seams B/C.
1968: Pine Pass Coal Company
In 1968 the Pine Pass Coal Company drove an adit 37 m along the strike of a thick coal seam (Seam B/C) in the Noman Creek Syncline. A bulk sample was taken and sent for analysis at Warnock Hersey. Results indicated an ash content of 5%, volatiles of 23% and an F.S.I of 8.
1969: Brameda Resources Ltd.
In 1969 additional exploration was done by Brameda Resources in the Hasler Creek, Willow Creek and Noman Creek areas. The latter comprised extensive road work, trenching, 23 core drillholes for 4786 m (16 of which were on the Pine Pass Block), topographic mapping and coal testing. Initial reserves were calculated for seams greater than 1.5 m thick and were estimated at 11,618,600 tonnes. Results of this program are described further in Trenholme, 1969.
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1979 - 1989: Shell Canada Resources Ltd / Crows Nest Resources Ltd
Shell Canada Resources Ltd and its wholly owned subsidiary, Crows Nest Resources Ltd., conducted exploration programs and subsequent studies of the property area in each year from 1979 to 1984, and again in 1989. These are summarized below.
In 1979 a field program was implemented in the Noman Creek area consisting of 1:5000 geological mapping and hand trenching of coal seams. Channel samples from the trenches were sent to the company’s lab in Fernie, BC for analysis. Subsequent preliminary reserve estimates indicated 5 to 10 million tonnes of open pit mineable geological in-place reserves at an overburden ratio of between 5:1 and 10:1.
In 1980 a further program of exploration was conducted by Singhai Engineering on behalf of Crows Nest Resources which focussed on the correlation of coal seams, increasing coal reserves, and gaining more information on the structural setting. Field work consisted of detailed geological mapping, 30 backhoe trenches and sampling of exposed coal seams. Detailed geological and structural cross-sections were prepared on completion of the field program and used to calculate in-situ coal reserves of 25 million metric tonnes open pit mineable geological in place reserves with 4.6:1 overburden ratio. Reserves were calculated both west and east of Noman Creek (East and West pits) and the above reserve figure was for both areas. Coal quality assays returned ash values of between 6% and 11% for all seams, and volatile matter content of 28% to 32%.
In 1981, further exploration on the Noman Creek block included mapping, 30 backhoe trenches and 23 rotary drillholes for 2600 m, 16 of which were on the Pine Pass Block.
A further study was undertaken in 1983 in order to review the existing data and revise previous geological interpretations of the property. Field work consisted of drilling two core holes for 633 m (plus subsequent geophysical logging and geotechnical examination), 12 backhoe trenches for 1130 m, geological mapping and a surface geophysical (resistivity) survey to locate the contact between the Moosebar and Gething Formations. A cross section grid was laid out and 8 new cross sections were generated at 200-600 m intervals. Structural reinterpretation highlighted a system of folds and east dipping thrust faults, which differed from the original theories of west dipping thrust and transverse faults. Difficulties were encountered in cross- referencing and correlating using previous drilling and trenching and some re- correlation was undertaken using the geophysical log responses from the 1981 and 1983 programs. Reserves were not recalculated during this study.
In 1984, a further five core holes were drilled for 553 m to verify seam continuity and thickness from previous drilling. These were also geophysically logged. Results served to confirm existing data and did not conflict with the 1983 structural reinterpretation. Coal samples were sent for analysis, which reconfirmed the rank of the coal as medium volatile bituminous.
During the final phase of exploration in 1989, Crows Nest Resources drilled a further 11 core holes for a total depth of 1095.5 m, in order to further verify seam continuity
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and thickness from previous drilling / trenching campaigns. Their ensuing report highlighted the difficulty in seam correlation, the steeply dipping seam attitudes, thickness variability and complexity of geology. They recommended a program of more detailed angled drilling throughout the license block. Coal quality samples from drilling were submitted to Loring Laboratories of Calgary for assay. Results identified relatively thick, low raw-ash (<15%), metallurgical/thermal coal seams.
Further details of the Crows Nest studies are documented in Panchy,1979; Singhai, 1980; White & and Fietz, 1983 and 1985; and McKinstry, 1989.
1992 - present: Pine Valley Mining Corporation
In 1992 Globaltex Industries, now Pine Valley Mining Corporation, acquired the 14 coal licenses comprising the Willow Creek Coal Project and the Pine Pass license block.
In 2003, Norwest Corporation of Calgary was commissioned to produce a technical report and Preliminary Feasibility Survey for the Willow Creek and Pine Pass areas, in compliance with National Instrument 43-101 and associated reporting guidelines, including Geological Survey of Canada Paper 88-21.
Reserves in the Pine Pass Block were estimated at 9,546 kt (recoverable) and 8,924 kt (saleable). Mine plans were also developed for the Pine Pass mining region with the proposed development of two separate pits, the East Pit and the West Pit. Further details of reserve estimation methods, results and mine designs can be found in Norwest, 2003.
In July 2004, PVMC commenced operations on the Willow Creek coal mine. The mine is currently exporting raw low ash low-volatile bituminous coal for pulverized coal injection (PCI) and aims to reach an annual production of up to 1 million tonnes per year.
3.2 2005 Exploration Program
3.2.1 Objective and Scope
In December of 2004, ResourceEye Services Inc. was retained by Pine Valley Mining Corporation to plan and implement a detailed drilling and mapping program in the Pine Pass Project Area. See Figure 11. This field program was to be followed by the preparation of a geological model, and the reporting of all work to the appropriate regulatory agencies.
This work was conducted with the aim of upgrading as much of the current resources to measured category as possible based on both new and historical data, and to obtain further coal quality data on the coal seams intersected by the drilling. This work is herein referred to as the 2005 Exploration Program.
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Figure 11: 2005 Exploration Program Summary Map
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3.2.2 Permitting
The 2005 Exploration Program was conducted under Permit Number CX-9-017. Notice of Work permits and Annual Summary of Work forms were completed by ResourceEye Services Inc. and submitted to the Ministry of Energy, Mines and Petroleum Resources in Prince George, in accordance with current B.C. government regulations.
These included the following:
• Mineral & Coal Notice of Work & Reclamation Programs - completed and submitted for the two separate phases of drilling in February and October 2005.
• Mineral & Coal Annual Summary of Work for Exploration Activities Pursuant to Part 9.2.1(3) of the H.S.R. Code - completed and submitted December 2005 on completion of field activities. (annual work approval number: 05-1640446-1012)
3.2.3 Field Program Summary
The field program included exploration access road development, core and rotary drilling, geophysical logging, core logging, sampling, coal quality testing, site reclamation and permitting, GPS surveying, and geological mapping. As part of ResourceEye’s Quality Management System, a Daily Exploration Activity Report (DEA) was produced for each day of the field program, providing a detailed summary of the activities on site each day. These DEAs can be found in Appendix 1. See Sections 3.2.3- 3.2.12 for details of the above referenced project components.
3.2.4 Exploration Access Road and Drillsite Development
During the 2005 exploration program, access to and within the property utilized existing roads and tracks, including the Fisher Creek Forest Service Road (FSR), wherever possible. In many cases, old exploration trails had to be reopened in order to access drill sites, or new trails were logged, excavated and leveled. Photos 1 and 2 show log decking of trees in preparation for hauling. Several stream crossings were existing in key areas, resulting in a limited number of crossings that needed to be constructed. Additionally, logging operations were carried out over Ken Steward’s woodlot, by Mr. Stewart, during the latter part of the program. This logging is clearly seen in the orthophoto overlay presented in Figure 3 The locations of pre-existing and newly installed stream crossings are shown on Figure 12. Additionally, all recommendations were followed regarding site access construction as outlined in “Handbook for Mineral and Coal Exploration in British Columbia”.
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Photo 1: Access to timber log deck areas
Photo 2: Log decking of timber prior to removal from site
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Figure 12: Exploration Access Road Development
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A summary of utilized and constructed access roads and drill sites is outlined in Table 3.
Table 3: Summary of Exploration Road Access Usage and Development
ACCESS ROAD CLASS AREA (HA) KM / #
Fisher Creek Forestry Service Road 2.4 3 km
Existing roads/trails – reopened 6.1 12.1 km
Newly constructed access 2.9 5.7 km
Drillsites - new 4.7 52
New accesses were built with the aid of Kearah & Weri Environmental Contracting Ltd. A 230 Hitachi Excavator (see Photo 3), and D65 Komtasu and D7 Caterpillar bulldozers were used for levelling roads and preparing the drill sites and sumps. See Photo 4, which shows drill pad construction and road building. Dunne-Za Ventures LP, of Moberley Lake, B.C. were also contracted for skidder, water trucks and logging services.
Photo 3: Hitachi 230 excavator operated by Kearah & Weri Environmental Contracting Ltd.
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Photo 4: Road and Drill Pad Construction
In many cases, it was noted that the existing trails were a bit wider than the standard 5 m common in the industry. Where these trails were re-opened, ResourceEye made every attempt to keep the new disturbance to a 5 m maximum. Photo 5 shows an example of this situation. In several cases, aggravating factors led to wider than anticipated excavations for a number of reasons, including: • Soft ground conditions necessitates clearing a wider area in order to construct ditches to allow for proper drainage; • The requirement to recover all mercantable timber necessitates constructing wider accesses for logging equipment; • Soft ground conditions often require hole locations to be moved after initial site excavation indicates softer than expected ground conditions. Photo 6 displays an example of typical erosion / sedimentation control measures used on site.
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Photo 5: Example of pre-existing access (very wide) that was re-opened. Note the utilized width was kept to a minimum.
Photo 6: Example of erosion control for roads
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3.2.5 Drilling
A two phase program concentrated on drilling on 300 m sections in the initial phase, with 150 m section line infilling during phase 2. Photo 7 shows an SDS rotary drill rig.
Photo 7: Rotary drilling rig operated by SDS Drilling Inc.
A total of 91 drillholes, for 16,336 m, were completed between April and November 2005. Six were 3” core holes for a total of 1,083.5 m, and 85 were conventional or reverse circulation rotary for a total of 15,252 m. Figure 13 shows the location of all 2005 drillholes, as well as historic drilling locations. Table 4 presents a summary of drillholes from the 2005 exploration program. Detailed drillhole information is provided in Appendices 2a-h.
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Figure 13: Drillhole and Trench Location Map
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Table 4: Pine Pass – Summary of Drillholes from 2005 Exploration Program
Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-001 6161859.15 541555.15 774.00 30 -50 294.5 Rotary 550 374 FM05-002C 6163257.00 540426.86 1020.07 0 -90 21 Core 2350 2 drill burnt through 2 bits in first 5 m. Sent drill home. Re- logged Oct 05 FM05-003 6163259.67 540425.39 1020.13 0 -90 270 Rotary 2350 FM05-004 6163055.87 540660.52 996.43 230 -55 120.5 Rotary 2050 50 hole abandoned due to excessive water flow of 100 gpm. FM05-005 6163054.15 540658.32 996.56 0 -90 300 Rotary 2050 logged through rods; picks from neutron log FM05-006C 6162010.81 541733.49 751.55 0 -90 221 Core 550 25 FM05-007 6163728.45 540064.23 1035.00 0 -90 208 Rotary 2950 199 ARD hole. FM05-008 6163678.73 539976.46 1048.35 0 -90 207 Rotary 2950 FM05-009 6162237.78 541549.36 840.24 230 -60 232 Rotary 850 176 ARD sampling. FM05-010 6162502.45 541862.66 765.51 50 -50 170 Rotary 850 Dip meter cancelled due to no coal FM05-011 6162328.33 540728.45 987.46 230 -50 168 Rotary 1450 deviation and dipmeter log only to 48.5 m, as hole too shallow dipping for tool
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Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples to go any deeper. FM05-012 6162360.27 541679.10 814.81 230 -60 240 Rotary 850 intersections preliminary - from driller's log, waiting for additional logs to be run FM05-013 6162688.31 541131.61 928.94 0 -90 156 Rotary 1450 FM05-014C 6162957.21 540518.96 1008.67 0 -90 267 Core 2050 30 FM05-015 6162154.15 540987.75 922.14 230 -60 165 Rotary 1150 162 ARD Hole FM05-016 6163775.25 541079.08 899.41 230 -65 116 Rotary 2350 Hole abandoned at 116 m on June 16, 2005 due to poor pad conditions - will do work on pad and come back to redrill. (FM05-031) FM05-017 6162442.64 540850.54 948.93 0 -90 330 Rotary 1450 FM05-018 6163828.72 540666.44 954.31 230 -60 280 Rotary 2650 Changed to Rock bit - basically redrilling entire hole. No driller's log available - Overburden depth uncertain. FM05-019C 6163015.06 541054.06 955.79 230 -70 240 Core 1750 35 FM05-020 6162442.64 540850.54 948.93 230 -60 250 Rotary 1450
June 2006 34 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-021 6163113.04 540253.85 1051.17 230 -60 200 Rotary 2350 194 ARD Sample Hole FM05-022 6163363.33 540528.13 1014.70 230 -60 285 Rotary 2350 FM05-023 6162867.29 540389.59 1037.46 230 -70 157 Rotary 2050 165 FM05-024 6162144.73 540489.23 1025.52 50 -70 165 Rotary 1450 FM05-025 6162602.33 540536.96 1010.81 230 -70 153 Rotary 1750 149 FM05-026 6162714.40 540636.40 974.80 230 -70 243 Rotary 1800 FM05-027 6163666.94 540475.65 980.45 230 -70 202 Rotary 2650 FM05-028 6161910.41 540661.28 945.96 50 -70 196 Rotary 1150 FM05-029 6162728.25 540651.15 972.42 50 -70 231 Rotary 1800 FM05-030C 6163486.11 540682.13 991.29 230 -70 122 Core 2350 7 FM05-031 6162781.52 541256.19 901.41 230 -70 201 Rotary 1450 All logs run except dip (tool broken). Dip log redone 25/8/05 FM05-032 6162719.17 540641.57 972.62 0 -90 201 Rotary 1800 FM05-033 6162525.57 540943.09 908.22 0 -90 190 Rotary 1450 146 Dip/deviation tool broke FM05-034 6163772.60 541078.87 897.04 230 -70 201 Rotary 2350 Dip log re-run Oct05 FM05-035 6163210.42 540886.40 980.12 0 -90 207 Rotary 2050 Dipmeter redone 26/08/05 FM05-036 6162525.57 540943.09 908.22 50 -70 190 Rotary 1450 Washout below casing, could not run anything but neutron FM05-037 6162490.04 541852.69 754.24 0 -90 122 Rotary 850 FM05-038 6162497.00 541855.00 765.00 230 -70 124 Rotary 850
June 2006 35 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-039 6162298.07 541135.89 867.51 0 -90 222 Rotary 1150 FM05-040 6162395.56 541258.97 896.73 0 -90 196 Rotary 1150 FM05-041 6162361.90 541680.53 815.89 0 -90 100 Rotary 850 FM05-042 6162298.07 541135.89 867.51 230 -70 150 Rotary 1150 FM05-043C 6162040.73 541314.72 825.50 0 -90 212.5 Core 850 10 FM05-044 6162383.50 541703.88 813.10 0 -90 104 Rotary 850 FM05-045 6162382.95 541703.98 813.90 230 -70 110 Rotary 850 FM05-046 6162291.08 541622.68 834.62 0 -90 70 Rotary 850 Had to pull and reset casing, site abandoned as saturated due to rain. Redrilled 23/8/05 FM05-047 6162291.08 541622.68 825.50 230 -70 50 Rotary 850 FM05-048 6162281.31 541363.16 874.89 0 -90 101 Rotary 1000 FM05-049 6162281.08 541362.73 874.55 230 -70 116 Rotary 1000 FM05-050 6162341.14 541426.01 875.69 230 -60 150 Rotary 1000 FM05-051 6162350.95 541213.13 889.49 0 -90 258 Rotary 1150 FM05-052 6162472.55 541588.84 860.46 0 -90 150 Rotary 1000 FM05-053 6162472.55 541588.84 860.46 230 -70 122.7 Rotary 1000 FM05-054 6162407.85 541519.63 869.42 230 -70 122.7 Rotary 1000 FM05-055 6162458.63 541345.88 901.47 0 -90 250 Rotary 1150 FM05-056 6162901.23 541463.46 882.48 230 -70 242 Rotary 1450 FM05-057 6162800.39 541516.97 866.95 0 -90 178 Rotary 1300 FM05-058 6162496.76 541371.41 899.34 0 -90 240 Rotary 1150 FM05-059 6162407.85 541519.63 869.42 0 -90 150 Rotary 1000
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Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-060 6162040.73 541314.72 825.50 0 -90 50 Rotary 850 This is a redrill of FM05-043C which stopped at 214m in the middle of a large coal seam. Could not get casing to seal up, hole making too much water, abandoned hole at 50m. FM05-061 6161994.49 541109.77 888.19 0 -90 146 Rotary 950 FM05-062 6161994.43 541109.79 886.62 230 -70 146 Rotary 950 FM05-063 6162082.47 541032.43 916.34 0 -90 160 Rotary 1050 FM05-064 6162082.47 541032.43 916.34 230 -70 120 Rotary 1050 FM05-065 6162126.11 540926.42 948.34 230 -70 126 Rotary 1150 FM05-066 6162126.11 540926.42 948.34 230 -50 123 Rotary 1150 FM05-067 6162156.85 540829.14 975.34 0 -90 100 Rotary 1250 FM05-068 6162156.85 540829.14 975.34 230 -70 113 Rotary 1250 FM05-069 6162328.49 540733.53 1000.90 0 -90 116 Rotary 1450 FM05-070 6162239.74 540605.16 1019.81 0 -90 110 Rotary 1450 FM05-071 6162594.33 540540.83 1019.66 0 -90 219 Rotary 1750 FM05-072 6163005.10 541057.68 967.12 0 -90 80 Rotary 1750 FM05-073 6163028.82 541097.70 960.05 0 -90 80 Rotary 1750 FM05-074 6162748.80 540978.25 960.05 0 -90 172 Rotary 1600 FM05-075 6162785.92 541263.34 915.36 0 -90 200 Rotary 1450 FM05-076 6162867.92 541144.70 946.33 0 -90 170 Rotary 1600
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Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-077 6162879.69 540926.65 982.41 0 -90 231 Rotary 1750 FM05-078 6161977.88 541505.76 800.27 0 -90 201 Rotary 700 All logs run but dipmeter- tool broken; dipmeter rerun at later date. FM05-079 6161780.28 541422.91 780.04 0 -90 184 Rotary 550 15 FM05-080 6162535.96 541217.30 930.18 0 -90 200 Rotary 1300 55 FM05-081 6162555.78 541464.21 887.90 0 -90 225 Rotary 1150 25 FM05-082 6162162.23 541455.35 860.56 230 -70 250 Rotary 850 8 Geophysical Log stops at 147m. Coal interval at 151 to 152 recorded on drillers log. FM05-083 6162257.77 541806.87 784.54 0 -90 180 Rotary 700 42 FM05-084 6162027.16 541299.82 839.29 0 -90 219 Rotary 850 The is the 3rd redrill of FM05- 043C (hole terminated in coal seam) and FM05- 060C which was not completed due to ground conditions. FM05-085 6161793.72 541259.72 809.99 0 -90 210 Rotary 700 30 Rig had to ream out hole and log through pipe FM05-086 6161957.61 541195.80 866.12 0 -90 244 Rotary 850 36 FM05-087 6161879.06 541114.12 879.17 0 -90 260 Rotary 850 18
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Hole ID Easting Northing Elev Azimuth Dip Total Type Section No. Coal No. ARD Comments (UTM) (UTM) (m) Depth (m) Quality Samples Samples FM05-088 6162223.75 541055.23 893.27 0 -90 200 Rotary 1150 FM05-089 6161984.15 540996.58 938.33 0 -90 202 Rotary 1000 FM05-090 6162572.41 540827.84 958.52 0 -90 208 Rotary 1600 Dipmeter broke FM05-091 6162391.70 540566.13 1025.94 0 -90 150 Rotary 1600 TOTALS 92 holes 16335.9 338 1615
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The drilling portion of the exploration program was multi-faceted. Initially, two rigs provided by SDS Drilling Inc. of Calgary, were brought on site to start rotary and core drilling simultaneously. Photo 8 shows SDS rotary drilling on site. The initial attempt at coring proved problematic. The core rig was re-configured for rotary drilling and another core rig was brought in a few weeks into the program.
Photo 8: SDS drill crew drilling angle hole
SDS was the primary drilling contractor on site for rotary holes. Anderson Air Drilling, based out of Fort St John, took over coring after SDS, but was replaced by Geotech Drilling in June 2005 for cost and production reasons. Geotech drilling also failed to be cost effective. As a result, it was decided to discontinue coring in favour of rotary drilling with some coal quality sampling in selected holes. Drilling was conducted along 150 and 300 m spaced section lines using existing access roads where possible. Table 5 provides a summary of drilled intersections by seam.
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Table 5: 2005 Drilling – Summary of Drilled Seam Intersection by Seam
2005 drilling - seam intersection statistics
seam Average intersection # hole intersections thickness (m)
B 2.7 3
A 2.4 12
1 2.7 17
2 3 31
3 3.2 50
4 4.3 76
5 5.3 85
6 4.6 51
7 4.0 34
Totals 4.1 356
All surface holes were 6” in diameter and were cased to bedrock. The hole size for rotary drilling was 6”. Core drilling produced 3” core. Upon completion and logging of the hole, the casing was removed and plugged with a stump indicating the hole identifier. Driller’s logs were completed by the drillers for each hole, making note of main lithological intervals, water inflow, and other general comments. See Appendix 2a for Driller’s Logs.
3.2.5.1 Core Drilling Core drilling was performed by three contractors during the course of the program. See Table 6 for contractor details. Geotech and Anderson rigs are shown on Photos 9 & 10.
Table 6: Coring Contractor Details
Hole ID TD Operator Rig Type
FM05-002C 21.0 SDS Drilling TH100 601-21 FM05-006C 221.0 Anderson Air Drilling Ingersol Rand Rotary FM05-014C 267.0 Anderson Air Drilling Ingersol Rand Rotary FM05-019C 240.0 Anderson Air Drilling Ingersol Rand Rotary FM05-030C 122.0 Geotech Drilling Rotary-Track Mounted B-53 Drill/Rubber Track FM05-043C 212.5 Geotech Drilling Rotary-Track Mounted B-53 Drill/Rubber Track
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Photo 9: GeoTech Ltd coring rig
Photo 10: Anderson drilling rig on site
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All core recovered was 3” in diameter and was stored in boxes for transportation to the core logging area. See Photo 11, which shows stacked boxes of core. On final completion of field work, the boxed core was moved to a specially constructed storage bin at the Willow Creek Minesite.
Photo 11: Stacked boxes of core
3.2.5.2 Rotary Drilling The primary purpose of the rotary (conventional and reverse circulation) drilling was to obtain geophysical logs of the coal and interburden lithologies. Two contractors, with three different drill rigs, were utilized during the program. See Table 7 for rotary contractor details. See Photo 12 showing SDS rig set up on angle hole.
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Table 7: Rotary Contractor Details
Operator No. Holes Total m Rig Type Rocky Mt Drilling 3 627 Ingersol Rand Air Rotary Rig (reverse circulation) SDS Drilling 82 14625.4 (2) Rotary Rig No. 601-12 CSR 1000 (conventional circulation)
Photo 12: SDS drilling rig set up on angle hole
3.2.6 Core Logging
Once the core was received at the core logging tent, shown in Photo 13, the boxes were photographed.
June 2006 44 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 13: Core logging tent
After the boxes of core were photographed, the core was logged for geological parameters including rock type, sedimentology and structural features and measurements, and geotechnical parameters including Rock Quality Designation (RQD%), core recovery, and core quality. Geological Core Log Reports and Geotechnical Core Log Reports are located in Appendix 2d and 2e respectively. Core photographs are found in Appendix 2c. A sample is presented in Photo 14.
June 2006 45 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 14: Example of drill core photography
3.2.7 Sampling
During the course of the exploration program, a number of core and rotary cutting samples were collected. Table 8 shows a breakdown of the sample types and numbers. Refer to Appendix 2g for detailed sample interval information.
Table 8: Sampling Summary
SAMPLE TYPE ANALYSIS # OF SAMPLES RESULTS RECEIVED
Core Coal quality 109 Yes
Rotary - ARD 229 No: samples stored at conventional Willow Creek Mine site circulation
Rotary - reverse Coal quality 1615 Yes circulation
June 2006 46 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
3.2.7.1 Core Sampling All drill core received at the core log area was photographed and logged prior to sampling. Refer to Appendix 2g for a list of holes and associated samples. Upon completion of lithological, structural, and geotechnical logging, the core was prepared for sampling. Sample intervals were determined using the following parameters: • For coal samples, lengths were limited to 1 m or less; • Sample intervals must match lithological intervals, with the exception of hanging wall or footwall samples; and • Hanging wall and footwall samples were taken for 10 cm intervals of the roof- floor-rock for significant seam intersections. These hanging wall and footwall samples were obtained for most coal seams, in order to facilitate dilution calculations for mine planning. Sample ID’s and intervals were noted and marked on the core box, and on the sample tags, where a coal quality sample was taken. These lithological intervals were subsequently corrected according to the signature on the geophysical logs that matched the relevant lithological zone, where available, in order to calculate core loss. See Section 3.2.9 for further details on geophysical logging. Once marked for sampling, the sample tags are laid out on the core and photographed, as shown in Photos 15-18, below.
Photo 15: Core sampling tag attached to core box
June 2006 47 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 16: Core box with coal sample marked for removal
Photo 17: Core box showing core sample with sample tag attached
June 2006 48 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 18: Core box with coal sample removed and sample tag affixed to the core box
See Appendix 2c for photographs of the boxed core. After being photographed, the entire core is then bagged for sampling, with the corresponding sample tag placed in the bag and another stapled into the core box and photographed again after the sample was removed. A photograph of the sample, as removed from the box, was taken. Samples were then put into 5 gallon pails for shipment to the laboratory. Samples were sent to the lab for testing of coal quality parameters. Coal quality testing is further discussed in Section 3.2.8.
3.2.7.2 Rotary Sampling Rotary drilling of 6” diameter holes was the primary method of exploration during the program. Sampling of the cuttings from conventional (SDS Drilling) and reverse (Rocky Mtn Drilling) circulation was performed in order to obtain samples for ARD studies and coal quality. ARD sampling was undertaken in select holes and obtained samples every metre during drilling, where recovery allowed. These samples were stacked on pallets, shrink wrapped and are stored at the Willow Creek Plant Site.
June 2006 49 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 19: ResourceEye personnel splitting, bagging and tagging ARD samples
Reverse (RC) circulation samples obtained by Rocky Mountain Drilling were packaged and sent to SGS for coal quality testing. See Table 9.
Table 9: Rotary Sampling Summary
SAMPLE TYPE # LOCATION
Rotary ARD 1615 PVM minesite
Rotary Coal Quality 229 sent to lab
3.2.8 Coal Quality Testing
All core and RC samples were submitted to the laboratory for testing of coal quality and Acid Rock Drainage (ARD) parameters.
June 2006 50 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
SGS Canada Inc (Minerals Service Division) of Delta B.C. was the analytical laboratory contracted for coal quality testing. A summary and discussion of coal quality results are found in Section 4.3.
3.2.8.1 Sample Preparation Upon receipt of the samples from the lab, the samples were weighed as received and then floor dried. After floor drying, each sample was then crushed using a Jaw Crusher to break it down to ½”. It was then split down to 2 pans (the weight depending upon sample size received). If the sample received was in excess of ~6 kg, then a wet reserve sample was kept. The 2 pans were then air-dried. Upon air-drying the samples were then mixed together and crushed through a Hammermill to -8 mesh. These samples were then mixed thoroughly and split down using riffles. One portion was pulped into a - 60 mesh sample for analysis and the remainder kept as dry reserve although in the case of small samples, nothing could be saved.
3.2.8.2 Testing Parameters Following sample preparation, the lab conducted testing for the following coal quality parameters: • Moisture % • Ash % • Volatile Matter % • Free Swelling Index (FSI) • Fixed Carbon % • Sulphur % • Chlorine % • Phosphorus %
• P2O5 % The analysis was done using American Society for Testing and Materials (ASTM) Standards as follows: D 3302-02a: Standard test method for total moisture in coal D 3174-02: Test method for ash in the analysis of coal and coke from coal D 3175-02: Test method for volatile matter in the analysis sample of coal & coke D 720-91(1999): Test method for Free Swelling Index of coal D 4239-02a: Sulphur in the analysis sample of coal & coke using high temperature tube furnace combustion methods D 4208-02: Standard test method for total Chlorine in coal by the Oxygen Bomb Combustion/ Ion Selective Electrode Method. D 4208-02e1: Standard Test Method for Total Chlorine in Coal by the Oxygen Bomb Combustion/Ion Selective Electrode Method
June 2006 51 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
3.2.9 Geophysical Logging
Upon completion of each drillhole, Century Geophysical Ltd of Tulsa, Oklahoma, performed geophysical logging of the hole while the drill rig was still on the hole. See Photo 20 of geophysical logging in progress.
Photo 20: Geophysical logging being performed on site by Century Geophysical
Utilizing a suite of tools, a number of geophysical parameters were measured, depending on the hole conditions. Table 10: Geophysical Logging Tools, shows the various tools and the geophysical parameters measured by each tool. Where the stability of the hole was in question, a preliminary run was made through the drill steel to the bottom. Following this, an attempt was made at logging open hole. If unsuccessful, the driller was asked to clean out the hole, and another attempt at open hole logging was made. It is not uncommon to require several attempts to get a good open hole log.
June 2006 52 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 10: Geophysical Logging Tools
TOOL NUMBER 9033 9410 9067 9068A 9055A 9139A 9411A Natural x x x x x x Gamma (API-GR) Gamma- x Gamma (cps) Density (g/cc) x Neutron x x (API-N) Resistivity x x (Ohm-m) Caliper x x x (cm) Dip x Vertical x Deviation Neutron x Porosity Por Den x (Percent) DEN (LS) x DEN (SS) COMP x DEN(CDL)
On several occasions during the program, the dipmeter/deviation tool malfunctioned, making it unavailable. In these cases, the rest of the logging tools were run, and casing left in the hole. Upon receiving the repaired tool, Century attempted to log as many holes as possible that had been previously missed See Table 11: Holes vs Logs Completed, for list of holes with no dipmeter.
June 2006 53 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 11: Holes vs Logs Completed
Geophysical logging HOLE-ID LENGTH DEVIATION GAMMA DENSITY RESISTIVITY CALIPER NEUTRON DIPMETER COMMENTS FM05-001 294.50 Yes Yes Yes Yes Yes Yes Yes FM05-002C 21.00 No No No No No No No drill burnt through 2 bits in first 5 m. Sent drill home. Re-logged Oct 05 FM05-003 244.00 Yes Yes Yes Yes Yes Yes Yes FM05-004 120.50 No Yes Yes Yes Yes Yes No hole abandoned due to excessive water flow of 100 gpm. FM05-005 300.00 No Yes No No No Yes No logged through rods; picks from neutron log FM05-006C 220.00 Yes Yes Yes Yes Yes Yes Yes FM05-007 208.00 Yes Yes Yes Yes Yes Yes Yes ARD hole. FM05-008 207.00 Yes Yes Yes Yes Yes Yes Yes FM05-009 232.00 Yes Yes Yes Yes Yes Yes Yes ARD sampling. FM05-010 170.00 No Yes Yes Yes Yes Yes No Dip meter cancelled due to no coal FM05-011 168.00 Yes Yes Yes Yes Yes Yes Yes deviation and dipmeter log only to 48.5 m, as hole too shallow dipping for tool to go any deeper. FM05-012 240.00 No Yes Yes Yes Yes Yes No intersections preliminary - from driller's log, waiting for additional logs to be run FM05-013 156.00 Yes Yes Yes No Yes No Yes FM05-014C 267.00 Yes Yes Yes Yes Yes Yes Yes FM05-015 165.00 Yes Yes Yes Yes Yes Yes Yes ARD Hole FM05-016 116.00 No No No No No No No Hole abandoned at 116 m on June 16, 2005 due to poor pad conditions - will do work on pad and come back to redrill. (
June 2006 54 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Geophysical logging HOLE-ID LENGTH DEVIATION GAMMA DENSITY RESISTIVITY CALIPER NEUTRON DIPMETER COMMENTS FM05-031) FM05-017 330.00 Yes Yes Yes Yes Yes Yes Yes FM05-018 280.00 No Yes Yes Yes Yes Yes No Changed to Rock bit - basically redrilling entire hole. No driller's log available - Overburden depth uncertain. FM05-019C 240.00 Yes Yes Yes Yes Yes Yes Yes FM05-020 250.00 Yes Yes Yes Yes Yes Yes Yes FM05-021 200.00 Yes Yes Yes Yes Yes Yes Yes ARD Sample Hole FM05-022 285.00 Yes Yes Yes Yes Yes Yes Yes FM05-023 157.00 Yes Yes Yes Yes Yes Yes Yes FM05-024 165.00 Yes Yes Yes Yes Yes Yes Yes FM05-025 153.00 Yes Yes Yes Yes Yes Yes Yes FM05-026 243.00 Yes Yes Yes Yes Yes Yes Yes FM05-027 202.00 Yes Yes Yes Yes Yes Yes Yes FM05-028 196.00 Yes Yes Yes Yes Yes Yes Yes FM05-029 231.00 Yes Yes Yes Yes Yes Yes Yes FM05-030C 122.00 No Yes Yes Yes Yes Yes No FM05-031 201.00 Yes Yes Yes Yes Yes Yes Yes All logs run except dip (tool broken). Dip log redone 25/8/05 FM05-032 201.00 No Yes Yes Yes Yes Yes Yes FM05-033 190.00 No Yes Yes Yes No Yes No Dip/deviation tool broke FM05-034 201.00 No Yes Yes Yes Yes Yes Yes Dip log re-run Oct05 FM05-035 207.00 Yes Yes Yes Yes Yes Yes Yes Dipmeter redone 26/08/05 FM05-036 190.00 No Yes No No No Yes No Washout below casing, could not run anything but neutron FM05-037 122.00 No Yes Yes Yes Yes Yes No FM05-038 124.00 Yes Yes Yes Yes Yes Yes No FM05-039 222.00 Yes Yes Yes Yes Yes Yes No FM05-040 196.00 Yes Yes Yes Yes Yes Yes No FM05-041 100.00 Yes Yes Yes Yes Yes Yes No FM05-042 150.00 No Yes Yes Yes Yes Yes No FM05-043C 212.50 Yes Yes Yes Yes Yes Yes Yes
June 2006 55 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Geophysical logging HOLE-ID LENGTH DEVIATION GAMMA DENSITY RESISTIVITY CALIPER NEUTRON DIPMETER COMMENTS FM05-044 104.00 Yes Yes Yes Yes Yes Yes Yes FM05-045 110.00 Yes Yes Yes Yes Yes Yes Yes FM05-046 70.00 No No No No No No No Had to pull and reset casing, site abandoned as saturated due to rain. Redrilled 23/8/05 FM05-047 50.00 Yes Yes Yes Yes Yes Yes Yes FM05-048 101.00 Yes Yes Yes Yes Yes Yes Yes FM05-049 116.00 Yes Yes Yes Yes Yes Yes Yes FM05-050 150.00 No Yes Yes Yes Yes Yes No FM05-051 258.00 Yes Yes Yes Yes Yes Yes Yes FM05-052 150.00 No Yes Yes Yes Yes Yes No FM05-053 122.70 Yes Yes Yes Yes Yes Yes Yes FM05-054 122.70 Yes Yes Yes Yes Yes Yes Yes FM05-055 250.00 Yes Yes Yes Yes Yes Yes Yes FM05-056 242.00 Yes Yes Yes Yes Yes Yes Yes FM05-057 178.00 Yes Yes Yes Yes Yes Yes Yes FM05-058 240.00 No Yes Yes Yes Yes Yes Yes FM05-059 150.00 Yes Yes Yes Yes Yes Yes Yes FM05-060 50.00 No No No No No No No This is a redrill of FM05- 043C which stopped at 214m in the middle of a large coal seam. Could not get casing to seal up, hole making too much water, abandoned hole at 50m. FM05-061 146.00 Yes Yes Yes Yes Yes Yes Yes FM05-062 146.00 Yes Yes Yes Yes Yes Yes Yes FM05-063 160.00 Yes Yes Yes Yes Yes Yes Yes FM05-064 120.00 Yes Yes Yes Yes Yes Yes Yes FM05-065 126.00 Yes Yes Yes Yes Yes Yes Yes FM05-066 123.00 Yes Yes No No No Yes Yes FM05-067 100.00 Yes Yes Yes Yes Yes Yes Yes FM05-068 113.00 Yes Yes Yes Yes Yes Yes Yes FM05-069 116.00 Yes Yes Yes Yes Yes Yes Yes FM05-070 110.00 Yes Yes Yes Yes Yes Yes Yes
June 2006 56 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Geophysical logging HOLE-ID LENGTH DEVIATION GAMMA DENSITY RESISTIVITY CALIPER NEUTRON DIPMETER COMMENTS FM05-071 219.00 Yes Yes Yes Yes Yes Yes Yes FM05-072 80.00 Yes Yes Yes Yes Yes Yes Yes FM05-073 80.00 Yes Yes Yes Yes Yes Yes Yes FM05-074 172.00 Yes Yes Yes Yes Yes Yes Yes FM05-075 200.00 Yes Yes Yes Yes Yes Yes Yes FM05-076 170.00 Yes Yes Yes Yes Yes Yes Yes FM05-077 231.00 Yes Yes Yes Yes Yes Yes Yes FM05-078 201.00 Yes Yes Yes Yes Yes Yes Yes All logs run but dipmeter- tool broken; dipmeter rerun at later date. FM05-079 184.00 Yes Yes Yes Yes Yes Yes Yes FM05-080 200.00 Yes Yes Yes Yes Yes Yes Yes FM05-081 225.00 Yes Yes Yes Yes Yes Yes Yes FM05-082 250.00 Yes Yes Yes Yes Yes Yes Yes Geophysical Log stops at 147m. Coal interval at 151 to 152 recorded on drillers log. FM05-083 180.00 Yes Yes Yes Yes Yes Yes Yes FM05-084 219.00 Yes Yes Yes Yes Yes Yes Yes The is the 3rd redrill of FM05-043C (hole terminated in coal seam) and FM05-060C which was not completed due to ground conditions. FM05-085 210.00 No Yes No No No Yes No Rig had to ream out hole and log through pipe FM05-086 244.00 Yes Yes Yes Yes Yes Yes Yes FM05-087 260.00 Yes Yes Yes Yes Yes Yes Yes FM05-088 200.00 Yes Yes Yes Yes Yes Yes Yes FM05-089 202.00 Yes Yes Yes Yes Yes Yes Yes FM05-090 208.00 Yes Yes Yes Yes Yes Yes Yes Dipmeter broke FM05-091 150.00 Yes Yes Yes Yes Yes Yes Yes
June 2006 57 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Geophysical logging was completed on 87 of the 91 drillholes. At one point during the program, Weatherford Inc. of Grande Prairie, had to be called out to retrieve the tool, after it became stuck in hole FM05-012. See Photo 21.
Photo 21: Geophysical logging tool being retrieved by Weatherford Inc. of Grande Prairie
The geophysical logs were received by the ResourceEye office in hard copy and electronic form. The logs were then processed and interpreted. Geophysical logs are found in Appendix 2f.
3.2.10 GPS Surveying
A GEOExplorer GPS unit was used to survey and layout all holes. See Photo 22 which shows ResourceEye personnel surveying.
June 2006 58 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 22: ResourceEye personnel GPS surveying
Hole positions were initially located with a GPS receiver, and flagged for site preparation. Upon site completion, the hole location was marked with a stake indicating the required drilling parameters. See Photo 23, which shows a marked stake. Post processing of the GPS data was done using a base station operated by Cansel Surveys in Prince George. Refer back to Table 4 for the GPS survey locations of the drillholes.
June 2006 59 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 23: Drillhole staked with drilling instructions
Easting and northings surveyed are accurate to 10 cm. Surveyed elevations are accurate to about 1 m. The property was recently flown with LIDAR sensing equipment, giving a 1 m by 1 m grid of surface elevation points accurate to 0.1 m. Refer to Figure 4 for shaded relief LIDAR Map. The collar locations used in the geological model utilized elevations from the topographic model at each collar location.
3.2.11 Outcrop Mapping
An outcrop mapping program was undertaken throughout the property to supplement the data obtained from drilling. Structural measurements from 58 newly excavated or previously unmapped rock exposures were obtained, as well as lithological descriptions, photographs and field sketches. See Photo 24 which shows outcrop mapping.
June 2006 60 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 24: Mapping outcrop of coal seams exposed at drill site
The locations of each outcrop point were surveyed using a handheld GPS unit. Additionally, during the course of mapping new rock exposures, existing structural measurements obtained from previous mapping exercises were checked for validity. (i.e. position, rock type, strike and dip). A >95% accuracy in the previous mapping was found. Appendix 3 contains outcrop information sheets for the program. A summary of the outcrop mapping is provided in Table 12. See Figure 14 for outcrop locations.
June 2006 61 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 12: Pine Pass – 2005 Outcrop Mapping Summary
Outcrop Easting Northing Elevation Lithology Dip Bedding ID Direction Dip 101 541733.74 6162025.49 767.25 Shaley Coal 63 31 201 539830.66 6163537.03 1100.89 Coal/Shale 81 49 202 539824.30 6163563.00 1090.31 Coal/Shale 81 46 203 539822.90 6163563.00 1090.12 Shale 85 29 301 540052.78 6163717.15 1052.52 Shale 77 50 302 540053.64 6163729.45 1049.05 Shaley Coal 79 59 401 540720.13 6162355.12 1020.53 Shale 66 63 501 541540.78 6162229.34 857.04 Shale 53 56 502 541542.31 6162239.11 860.97 Shaley Coal 53 50 503 541540.01 6162245.05 857.17 Shale 42 58 504 541541.70 6162240.00 858.14 Coal/Shale 40 50 505 541541.30 6162243.00 857.83 Coal/Shale 25 47 601 540832.29 6162393.99 963.23 Shale 60 49 602 540830.35 6162412.88 962.49 Shale 60 53 603 540830.50 6162424.07 957.29 Shale/Coal 55 54 604 540836.31 6162438.56 957.93 Shale/Coal 49 56 605 540839.46 6162447.07 958.16 Coal/coaly shale 56 54 606 540844.92 6162450.70 962.35 Shale 55 52 607 540846.43 6162454.56 956.98 Siltstone 72 52 608 540839.90 6162433.00 967.27 Coal/Shale 48 51 609 540838.70 6162435.00 964.59 Coal/Shale 53 47 701 540869.29 6162492.23 939.70 Siltstone 60 74 702 540875.29 6162508.16 947.80 Shale 75 48 703 540881.33 6162515.68 958.03 Shale 64 70 704 540884.83 6162530.33 952.25 Fissile Shale 50 58 705 540886.24 6162544.76 945.06 Sandstone 55 65 706 540900.04 6162575.39 956.65 Shale 69 75 707 540887.64 6162586.45 924.38 Shale 251 60 708 540867.30 6162491.00 949.08 Coal/Shale 57 66 709 540866.80 6162495.00 945.22 Coal/Shale 67 78 801 541362.22 6162664.17 908.62 Shaley Coal 46 64 802 541362.40 6162656.00 913.52 Coal/Shale 803 541362.70 6162658.00 915.94 Coal/Shale 40 65 804 541360.20 6162662.00 909.24 Coal/Shale 26 47 805 541364.00 6162668.00 914.54 Coal/Shale 42 71 901 541208.43 6162356.33 891.94 Shaley coal 44 59
June 2006 62 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Outcrop Easting Northing Elevation Lithology Dip Bedding ID Direction Dip 1001 541720.75 6162102.88 777.03 Shale 57 57 1002 541719.31 6162108.61 776.84 Shale 65 49 1003 541718.83 6162111.98 777.59 Shale 65 41 1004 541719.61 6162124.97 779.61 Siltstone 84 43 1101 540634.10 6162715.40 982.01 Shale 52 56 1102 540634.26 6162726.76 979.56 Shale 46 69 1103 540637.81 6162738.55 973.27 Shale 54 67 1201 540507.87 6162960.79 1007.71 Shale 62 90 1202 540506.50 6162958.00 1009.26 Coal/Shale 56 49 1301 541260.10 6162749.00 923.78 Shale 56 82 1302 541262.60 6162753.00 918.23 Coal/Shale 47 63 1303 541259.80 6162746.00 918.01 Coal/Shale 45 63 1401 540527.80 6162599.00 1019.07 Shale 70 78 1402 540535.90 6162610.00 1021.12 Shale 64 79 1403 540534.60 6162609.00 1013.08 Coal/Shale 26 84 1404 540534.90 6162611.00 1009.29 Coal/Shale 50 62 1501 540474.80 6162129.00 1036.09 Shale 55 86 1502 540473.20 6162138.00 1035.40 Shale 49 89 1503 540427.80 6162147.00 1033.06 Coal/Shale 66 69 1504 540472.10 6162152.00 1035.61 Coal/Shale 52 79 1601 540857.00 6163821.00 935.40 Shale 122 24 1602 540847.30 6163824.00 933.61 Shale 132 15
June 2006 63 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 14: 2005 Outcrop Location Map
June 2006 64 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
3.2.12 Site Reclamation
Road deactivation and interim reclamation was undertaken on the site after the exploration program was complete. This included establishing cross-ditches to control run-off, as well as seeding and fertilizing of all disturbed areas. Drill sumps were backfilled immediately upon completion of drilling. See Appendix 4 for a copy of a photographic report demonstrating typical hole completion during the program. Photos 25-27 below demonstrate cross-ditching and reclamation on a decommissioned road.
Photo 25: Cross ditching for road deactivation
June 2006 65 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Photo 26: Reclaimed trail access showing roll backs
Photo 27: Seeding reclaimed areas
June 2006 66 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
3.3 Geological Data Compilation, Interpretation and Reporting
3.3.1 Data Compilation
Prior to commencing the 2005 program, ResourceEye undertook a detailed geological data compilation of all existing information from the property. This enabled the development of cross sections for exploration planning. This included the digitizing of various maps and cross sections, development of a comprehensive geological database in MS Access. This information provided the basis for planning the 2005 program. Table 13 lists the historical data was compiled into the database during the course of the compilation work. Refer back to Figure 13 for compiled drillhole and trench locations.
Table 13: Historical Data Summary
ITEM # DATA FEATURES
Trenches 41
Rotary holes 23
Core holes 60
Structural measurements 147
3.3.2 Geological Interpretation
New geophysical logs were utilized in conjunction with the historical logs and all coal seams were assigned new seam codes based on a regional correlation with the Willow Creek Mine stratigraphy. Refer back to Figure 7. The geological model was developed using MineSight® software to create solids for each seam, and to construct a 3D block model for resource estimation and future reserve calculations by Falls Mountain Coal’s engineering group. Additionally, all historical and new trenching, mapping and sampling data was used as a guide to interpretation. A compilation of the surface geology is presented in Figure 15.
June 2006 67 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figur e 15: Surface Geology Map
June 2006 68 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
3.4 Cost Summary and Personnel
The total program cost was approximately $3,421,708. This works out to about $209.4 per metre of drilling. This is less than the project’s budgeted overall rate of $222 per metre. See Table 14 for a breakdown of project costs.
June 2006 69 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 14: 2005 Exploration Program Cost Summary
CATEGORY COMPANY FUNCTION COST $/m Permititng Allnorth Consultants Limited assist with timber cutting permit $18,761.75 $1.15 North Fork Resources Inc. assist with timber cutting permit $500.00 $0.03 sub total Permiting $19,261.75 $1.18
Geological Services ResourceEye Services Inc. geological program management $612,953.88 $37.52 and services, exploration program reporting Exploration report preparation, $ 260,000.00 $15.92 including resource calculation sub total Geological $872,953.88 $53.44 Services
Drilling SDS Drilling Services rotary drilling, one core hole $1,180,444.46 $72.26 Geotech Drilling Services Ltd core drilling $97,043.76 $5.94 Cora Lynn Drilling Partnership core drilling $150,146.00 $9.19 Rocky Mountain Drilling Inc reverse circulation drilling $40,002.00 $2.45 Sub Total Drilling $1,467,636.22 $89.85
Drill Support Aim Trucking core box transportation $900.00 $0.06 Kearah and Weri Environmental heavy equipment support $634,238.85 $38.83 Dunne-Za Ventures LP timber removal, water truck $381,052.56 $23.33 Century Geophysical Corporation Geophysical logging $187,188.49 $11.46
Sub Total Drill Support $1,203,379.90 0.97
Environmental Environmental Dynamics Inc. environmental studies $18,522.01 $1.13 Allnorth Consultants Limited environmental studies $725.42 $0.04
June 2006 70 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
CATEGORY COMPANY FUNCTION COST $/m Sub total Environmental $19,247.43 $1.18
Laboratory Analysis SGS Canada Inc. coal quality testing $95,341.00 $5.84 ALS Environmental Canada Ltd. chlorine testing $3,888.00 $0.24 Sub Total Lab Analysis $99,229.00 $6.07
TOTAL FIELD PROGRAM COST $209.47 - not including $3,421,708.18 report preparation TOTAL FIELD PROGRAM PLUS REPORT PREPARATION $225.37 – including $3,681,708.18 report preparation
June 2006 71 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
4 Geological Model
4.1 Data Interpretation
4.1.1 Driller’s Logs
Drillers logs were completed by the drilling company for each hole. These are presented in Appendix 2a. The logs were utilized along with the geophysical logs, primarily to determine overburden depth. In cases where no geophysical log or core log was available for a particular hole, the driller’s log was used as the primary source of information for the geological database.
4.1.2 Geophysical Logs
Geophysical information, in the form of .LAS (log – ASCII) format digital files were provided by Century Geophysical Corp. for all parameters logged. See Section 3.2.9. This digital data was loaded to ResourceEye’s Pine Pass geological database. Several steps were involved in the data interpretation: 1. determine overburden depth by comparing casing length as recorded on the geophysical log to the driller’s log. 2. determine coal intersections using Century Geophysical logging software. Copies of these interpreted logs are included in Appendix 2f. 3. determine interburden lithologies using one of the two following methods: a. manually interpret interburden lithologies, using Century Geophysical logging software, or; b. utilize Minesight Geological Modeling software to assign rock types for interburden lithologies based on gamma response. Where no geophysical log is available, the coal and interburden lithologies were input into the database from the driller’s log. Interburden lithology was then interpreted by utilizing the gamma value ranges from the gamma logs. This was accomplished either manually using Century Software or using an automatic routine within Minesight. Table 15 below is a listing of gamma value ranges used for each lithology for the Minesight interpretation of interburden lithologies. The results are stored in ResourceEye’s Pine Pass geological database.
Table 15: Gamma Value Ranges for Interburden Lithologies
LITHOLOGY GAMMA RANGE (API) Clean sandstone (SSC) 0 - 100 Argillaceous sandstone (SSA) 100 - 150 Shaley Sandstone or Siltstone (SHS) 150 - 200 Mudstone or Shale (SH) 200 - 999
June 2006 72 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
4.1.3 Core Log Information
Core log information was recorded on field logs as laid out in ResourceEye’s Quality Management System (QMS). This data was entered into the database and the information presented in the form of a Core Log Coversheet, a Geological Core Log Report and a Geotechnical Core Log Report. These are presented in Appendices 2d and 2e. This information was utilized to compare and correlate cored intersections with geophysical log intervals in order to determine precise core recovery, especially in the coal seams. The descriptions and bedding angles measured and provided in the core log were also used as an aid in the structural interpretation of the geological model.
4.2 Solids Modeling
The purpose of the solids modeling is to provide an accurate representation of the various geological features such as coal seams (solids) and faults (surfaces). The geological model was constructed utilizing cross sections at a 50 m spacing oriented at an azimuth of 50 degrees for 2650 metres. Drilling information (See Section 3.2.5) was projected perpendicular to these from 25 m on either side of the section. Additional information utilized to construct the cross sections included historical trenching and geological mapping data. See Section 3.3.1. Due to the complex nature of the geology and time constraints, the drillhole intersections were not matched in true 3D. Seam bottoms for all 9 seams and 7 faults were digitized on each cross section. The seam bottom dips were then coded to the drillholes, utilizing routines developed by Minesight® known as the True Thickness Methodology. Structure contour maps illustrating the seam bottom elevations in plan view are presented in Appendix 6. Seam isopachs representing the true seam thickness are presented in Appendix 7. These maps illustrate the modeled thicknesses; where seams overlap, the contours were “averaged” to provide a simplistic picture of the variations in seam thickness over the area. Closed polygons of the seams were then created by interpolation of the calculated true thickness on each 50 m section. A cutoff of 1 m seam true thickness was used in the construction of the seam polygons. The seam polygons were then used to construct the geological solids by linking seams on adjacent sections and extruding by 25 m along strike, any seam polygons that exist on one section but not an adjacent section. Table 16 shows the volume calculations obtained from the solids constructed in Minesight.
June 2006 73 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 16: Geological Solids Volume
seam total modeled solid volume (includes partings) cubic metres
B 852,363 A 894,981 1 2,328,325 2 3,147,991 3 5,135,780 4 8,420,447 5 13,060,564 6 10,740,538 7 7,011,653 Total 51,592,642
Each seam that was present in each of the 7 fault blocks, numbered 501 to 507, was linked as a separate solid for clipping against the bedrock surface and intersected faults. See Table 17.
Table 17: Cross reference of seams present in each fault block
SEAMS PRESENT - FAULT BLOCK YOUNGEST TO OLDEST
Code Name B A 1 2 3 4 5 6 7 (if applicable)
501 Cleveland X X X X X X X X Creek
502 Noman Creek X X X X X X X X X
503 X X X X X X X
504 Eastern X X X X X X X X X
505 Far Eastern X X X X X X X X X
506 X X X X
507 X X X X X X X
June 2006 74 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Model codes utilized in the drillhole data and for polylines are shown in the following table.
Table 18: Minesite model codes for coal seams
SEAM MINESIGHT CODE
B 111
A 110
1 101
2 102
3 103
4 104
5 105
6 106
7 107
Refer back to Figure 9 for a schematic illustrating the fault blocks on section. Figures 16- 22 show various 3D views illustrating the block locations. Cross-sections on 50 m spacings for the entire model are located in Appendix 5.
June 2006 75 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 16: Rendered 3-D image showing coal seam, 3D solids and faults in the Cleveland Creek fault block (Fault Block 501). View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 76 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 17: Rendered 3-D image showing coal seam, 3D solids and faults in the Noman Creek fault block (Fault Block 502). View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 77 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 18: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 503. View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 78 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 19: Rendered 3-D image showing coal seam, 3D solids and faults in the Eastern Fault Block (Fault Block 504). View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 79 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 20: Rendered 3-D image showing coal seam, 3D solids and faults in the Far Eastern Fault Block (Fault Block 505). View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 80 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 21: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 506. View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 81 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Figure 22: Rendered 3-D image showing coal seam, 3D solids and faults in Fault Block 507. View looking NW. Hwy 97 is shown by the white stripe in the foreground. Topographic overlay lease boundaries are shown in brown. Topographic surface from LYDAR is the grey, semitransparent surface.
June 2006 82 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
4.3 Coal Quality Results and Statistical Analysis
4.3.1 Raw Coal Quality
Coal quality samples were obtained during the field program, and sent for coal quality analysis. Selected samples were also sent for float-sink testing. A discussion of sampling and analytical methodology are provided in Sections 3.2.7 and 3.2.8 respectively. A total of 109 Drill core and 229 rotary chip samples were obtained during the course of the exploration program. Detailed results are included in Appendix 8. Once the new data was combined with the historical data, individual sample results were then composited by seam, in order to come up with a weighted average value of assay results representing the entire thickness of the seam, including partings. Appendix 8 lists the individual sample composite results by drillhole. Table 19 shows the results of the statistical analysis of the combined coal quality data set. Pertinent sections of the analyses will be discussed further.
4.3.1.1 Proximate analyses Raw seam ash, on an air dried basis, is generally between 3 and 25% for 7 of 9 seams. Seams 1 and 2 show the highest average ash content at 30.48% and 42.85% respectively. Volatile matter on a dry, ash free basis is in the medium volatile range (~22-31%), with the exception of Seam 2, which has high volatiles on a dry, ash free basis due to its high ash content. See Table 20 for detailed proximate analysis by seam. The adjusted fixed carbon, normalized to 100%, is fairly consistent, at between 55% and 66%, with Seam 2 being the anomaly again at 36.3%. All moisture contents were within acceptable limits for typically mined seams, at 0.9%- 3.6%
4.3.1.2 Other quality parameters Sample analyses were also conducted to determine sulphur, chlorine, phosphorus and P2O5. See Table 21 for a summary of other coal quality parameters. Sulfur The sulphur content of all seams averages between 0.28 and 0.83%, which is in the acceptable ranges for creating a coking coal as an end product. Chlorine All seams have an extremely low chlorine content, averaging 0.02-0.03%, indicating again, the good coking availability of these coals.
Phosphorus & P2O5 The average phosphorus content is between 0.03 and 0.09%. Coking coals should have a maximum phosphorus content of 0.1% (air dried). Corresponding P2O5 levels are favourable as well.
June 2006 83 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 19: Coal quality summary by seam
Volatile Fixed Carbon Residual Free Swelling Phosphorous ASH %* Matter % ** % ** Moisture % Sulfur % Index Chlorine % ** % ** P2O5** sample composites # coal quality average average average average average average average average average standard standard standard standard standard standard standard standard standard Seam deviation deviation deviation deviation deviation deviation deviation deviation deviation
Seam B 1 2.88 0.92 0.28 4.50
>1 m 0
Seam A 7 8.73 5.25 23.52 3.44 57.61 0.25 3.64 3.83 0.83 0.97 3.70 2.20 0.02 0.01 0.09 0.10 1.00 1.21
>1 m 4 6.93 2.85 3.67 4.99 0.45 0.06 3.50 1.30
Seam 1 4 30.48 28.70 0.91 0.09 0.44 0.27 4.40 3.10
>1 m 3 38.30 29.43 0.89 0.09 0.38 0.29 3.10 3.10
Seam 2 4 42.85 19.71 19.71 42.83 1.12 0.89 0.42 0.22 4.30 3.20 0.03 0.03 0.20
>1 m 4 42.85 19.71 19.71 42.83 1.12 0.89 0.42 0.22 4.30 3.20 0.03 0.03 0.20
Seam 3 9 24.46 20.86 16.46 5.57 34.48 17.63 1.88 1.32 0.54 0.18 3.00 2.40 0.02 0.01 0.09 0.07 0.50 0.29
>1 m 5 31.13 26.04 13.60 3.59 24.57 5.62 2.30 1.70 0.40 0.12 2.76 1.80 0.02 0.01 0.11 0.08 0.48 0.40
Seam 4 12 19.95 10.37 22.91 1.68 52.88 12.94 1.63 1.27 0.56 0.18 4.00 2.00 0.02 0.01 0.06 0.05 0.86 1.07
>1 m 9 20.91 11.42 22.91 1.68 52.88 12.94 1.93 1.34 0.53 0.20 3.78 1.94 0.02 0.01 0.06 0.05 0.83 1.07
Seam 5 10 18.12 10.85 22.29 2.63 55.42 8.41 2.14 1.92 0.59 0.12 3.67 2.66 0.03 0.01 0.02 0.01 0.37 0.18
>1 m 7 15.87 10.11 22.29 2.63 55.42 8.41 2.14 1.92 0.59 0.12 3.67 2.66 0.03 0.01 0.02 0.01 0.37 0.18
Seam 6 5 8.90 4.29 22.72 1.19 62.46 3.21 2.40 1.52 0.74 0.37 4.50 3.76 0.04 0.01 0.04 0.03 0.94 0.80
>1 m 2 12.72 3.79 22.04 0.18 62.38 4.53 2.86 0.93 0.40 0.03 1.25 0.35 0.04 0.01 0.03 0.01 0.49 0.09
Seam 7 7 15.46 17.72 20.61 5.36 56.42 18.17 1.95 1.09 0.59 0.18 3.73 2.74 0.03 0.01 0.04 0.03 0.90 0.77
>1 m 5 9.69 4.71 22.98 3.03 65.40 3.52 2.05 1.12 0.59 0.14 4.28 2.67 0.04 0.01 0.03 0.03 1.10 0.81 * all quality items are on an air dried basis ** these items were only analyzed in 2005 sampling
June 2006 84 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 20: Proximate Analyses
ASH % (air Volatile Fixed Adjusted VM % (dry, dried basis - Matter % Carbon % Fixed Moisture ash free Seam adb)* (adb)* (adb)* Carbon % ** % (adb) * basis - daf) ASTM rank medium volatile Bituminous B 2.88 0.92 (assumed) ***
A 8.73 23.52 57.61 64.11 3.64 25.77 medium volatile Bituminous medium volatile Bituminous 1 30.48 0.91 (assumed) ***
2 42.85 19.71 42.83 36.32 1.12 34.49 high volatile Bituminous
3 24.46 16.46 34.48 57.20 1.88 21.79 medium volatile Bituminous
4 19.95 22.91 52.88 55.51 1.63 28.62 medium volatile Bituminous
5 18.12 22.29 55.42 57.45 2.14 27.22 medium volatile Bituminous
6 8.90 22.72 62.46 65.98 2.40 24.94 medium volatile Bituminous
7 15.46 20.61 56.42 61.98 1.95 24.38 medium volatile Bituminous *values are averages, and are not balanced to 100 % **adjusted fixed carbon, corrected to 100% *** no volatile matter determinations available .
June 2006 85 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Table 21: Other coal quality parameters
Seam Sulfur % Chlorine % Phosphorous % P2O5** Free Swelling Index
B 0.28 4.50
A 0.83 0.02 0.09 1.00 3.70
1 0.44 4.40
2 0.42 0.03 0.03 0.20 4.30
3 0.54 0.02 0.09 0.50 3.00
4 0.56 0.02 0.06 0.86 4.00
5 0.59 0.03 0.02 0.37 3.67
6 0.74 0.04 0.04 0.94 4.50
7 0.59 0.03 0.04 0.90 3.73
June 2006 86 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
4.3.3 Comparison With Geophysical Results
With the availability of coal quality data and corresponding digital geophysical data, an attempt was made to derive a correlation between ash content and the gamma response in holes where both a core or rotary sample were obtained. The consequence of establishing a correlation, which exists in nature (that is, the gamma response is directly related to the concentration of K-bearing clay minerals in the ash of the coal assuming that the concentration of K-bearing clay minerals is proportional to the total ash content of the seam), would be the establishment of a method to predict ash content from the gamma signature of a coal seam. Scatterplots shown below were analyzed to see which provided the best correlation. The data had a fairly wide scatter, but a definite correlation exists. Other factors that are not taken into consideration but are most likely responsible for the wide scatter in the data are: 1. Borehole conditions such as caving or mud caking can have an adverse affect on the geophysical log response. 2. Thin coal seams generally don’t respond as well as thicker ones, due to the geophysical tool configuration Despite the limitations discussed above, the data analysis does lend itself to the conclusion that such a correlation exists within the data set, however, further investigation involving analysis of other log parameters such as density and resistivity, may help refine this method. Graphs 1-4 are scatterplots and statistics which illustrate the correlation between the gamma and ash values for core and rotary samples, as well as all samples together.
June 2006 89 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Graph 1: Scatterplot of gamma value vs ash content for CORE samples
June 2006 90 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Graph 2: Scatterplot of gamma values vs ash content for ROTARY samples
June 2006 91 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Graph 3: Scatterplot of gamma values vs ash content for ALL samples
June 2006 92 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Graph 4: Scatterplot of gamma value vs ash content for all samples greater than 1 m intersected thickness.
June 2006 93 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
From these observations, it would appear that the best correlation is where samples are considered together (R2=0.54). This led us to the calculation of a new item, know as GASH (Gamma Predicted Ash) value, which served as an estimate of the likely ash content from seams where no coal quality is available. This method requires some fine tuning, as the data shows that it tends to overestimate the ash content from lower gamma seams less than 35% ash, and underestimate the ash content for seams greater than 35% ash. See Graph 5.
ASH versus (GASH-ASH)
50
40
30
20
10
GASH-ASH 0 0 10203040506070 -10
-20
-30 % a s h
Graph 5: Cross plot showing difference between the gamma predicted (GASH) and actual ash as a function of ash content from composite data.
June 2006 94 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
4.3.4 Block Modeling of Quality Parameters
Coal quality was interpolated using the drillhole data composited on a whole seam basis, including partings. Three steps were taken to interpolate the block quality from the composite data. 1. Performing inverse distance interpretation with a factor of 0 (or averaging) on a 2500 m search radius for all coal quality items from the sampling, including a GASH value (representing the calculated ash value based on the log response (GASH=0.3139 * GAMMA + 13.506), matching on a seam by seam basis. 2. Performing inverse distance interpretation with the above parameters on the true thickness (TTK) and parting thickness (PTK) for all seams ONLY where their true thickness is greater than 1 m, which was the cutoff for the solids model. This will give us a rough guide as to the expected seam thickness and parting amount in any given block. The ratio of PTK to TTK is calculated and stored into the PRT items as a percent. 3. Any blocks not assigned a coal quality value, were assigned a default value using the procedure Modfil.dat in Minesight. See Table 23: Default coal quality values for filling model grades.
Table 23: Default coal quality values for filling model grades
CODE SEAM ASH VM RM FC S CL P P2O5 FSI
110 Seam A 8.73 23.51 3.64 64.12 0.83 0.02 0.09 1 3.7
111 Seam B 2.88 23.19 0.92 73.01 0.28 0.03 0.06 0.66 4.5
101 Seam 1 30.48 19.89 0.92 48.7 0.44 0.03 0.05 0.66 4.4
102 Seam 2 42.85 19.71 1.12 36.32 0.42 0.03 0.03 0.24 4.3
103 Seam 3 24.46 16.46 1.88 57.2 0.53 0.02 0.09 0.49 3
104 Seam 4 19.94 22.91 1.63 55.52 0.56 0.02 0.08 0.68 4
105 Seam 5 18.11 22.29 2.14 59.6 0.59 0.03 0.02 0.37 3.7
106 Seam 6 8.9 22.71 2.4 65.99 0.74 0.04 0.04 0.94 4.5
107 Seam 7 15.46 20.61 1.94 61.99 0.59 0.03 0.04 0.9 3.7
* all quality items are on an air-dried basis
June 2006 95 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
6 Conclusions and Recommendations
The Pine Pass Property was the subject of an extensive exploration program in 2005. This program of drilling, mapping and sampling The coal is of good quality and suitable for producing a soft to semi-soft metallurgical coal product. It is recommended that a feasibility study be carried out in order to further evaluate the deposit’s mining potential. The following items need to be addressed in support of a detailed feasibility study. 1. bulk sampling should be undertaken in at least two locations for each seam; 2. there are several discontinuous seam intersections encountered which were of significant thickness, that may be modelled in future, detailed models confined to smaller areas; and, 3. additional drilling should be completed on the west limb of the Cleveland Creek anticline. Taking these items into consideration, a program of coring and/or bulk sampling in areas of specific economic interest should be conducted. The bulk sampling may be carried out from surface, or potentially using large diameter core (9”-12”). The coring may be carried out using a rotary / core drill, drilling a pilot hole, and then coring selected intervals in an adjacent hole. Coring may also be carried out to obtain geotechnical parameters for pit design along proposed highwalls. Additionally, further rotary drilling and sampling should be carried out in areas where the surface resources are inferred or indicated in order to upgrade these to the measured category.
June 2006 126 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
7 Statement of Qualifications
I, Ronald R. Parent, P.Geo, of 9328 Larkspur Ave. Mission, BC, do hereby certify that: 1. I am a Professional Geologists, and co-owner of ResourceEye Services Inc. with offices at #715-675 West Hastings St. Vancouver, BC. 2. I am a graduate of the University of Alberta with a B.Sc (Honours) in Geology (1990). 3. I am a member, in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC), license #27031. 4. I have worked as a professional Geologist / Geoscientist for more than 15 years since graduation. 5. I have read the definition of “qualified person (QP)” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of education, experience, independence and affiliation with a professional association, I meet the requirements of an Independent Qualified Person as defined in National Policy 43-101. 6. The 2005 Exploration Program described in this report was carried out under the management of ResourceEye Services Inc, with myself, Chief Geologist, responsible for all project activities. 7. I spent several weeks on the property over the course of the program between April and November of 2005. 8. Neither myself, nor ResourceEye Services Inc., or any of its owners or affiliates have an interest, directly, or indirectly in Pine Valley Mining, Falls Mountain Coal, or its associates. 9. The information contained in this report is free of any significant errors or omissions that would or could negatively impact the potential economics of the property, as indicated in the report. 10. I consent to filing this Assessment Report with the Ministry of Energy and Mines as required under sections 8, 13, and 18 of the Coal Act.
Dated this June 1, 2006.
Ron Parent, P.Geo
June 2006 127 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
Stott, D.A; 1982; ‘Lower Cretaceous Fort St John Group and Upper Cretaceous Dunvegan Formation of the Foothills and Plains of Alberta, British Columbia, District of McKenzie and Yukon Territory’; Geol. Surv. Can.,Bull 328.
Trenholme, N.S. (for Brameda Resources Ltd); 1969; ‘1969 Summary Report, Pine Pass Coal Project’’; Geological Branch Assessment Report 00 560.
White, A. and Fietz, D (for Crows Nest Resources Ltd); 1983; ‘Pine Pass - Coal Exploration 1983’; Geological Branch Assessment Report 00 591.
White A. & Fietz D., (for Crows Nest Resources Ltd); 1985; Geological Branch Assessment Report 00 592 – Pine Pass - Coal Exploration 1984
June 2006 129 ResourceEye Services Inc. Pine Valley Mining Corporation Pine Pass Coal Property
8 References
Acott, C; Odegaard, V (Norwest Corporation); 2003: ‘Technical Report, Pine Pass Block, Northeast British Columbia’.
B.C. Ministry of Energy and Mines; 2004; ‘Coalbed Gas Potential in British Columbia’; Resource Development and GeoScience Branch 2004, iV.
(Bielenstein et al, 1979)
Hughes, J.D,, Klatzel-Mudry, L., Nikols, D.J.,: 1989: ‘A Standardized Coal Resource/Reserve Reporting System for Canada’; Geological Survey of Canada Paper 88-21; Energy, Mines and Resources Canada; Vancouver, British Columbia.
Hughes, J.E; 1964; ‘Jurassic and Cretaceous Strata of the Bullhead Succession in the Peace and Pine River Foothills’; BC Dept. of Mines and Petroleum Resources Bulletin no.51.
Hughes, J.E; 1967; ‘Geology of the Pine Valley, Mount Wabi to Solitude Mountain, Northeastern British Columbia’; BC Dept. of Mines and Petroleum Resources Bulletin no.52.
Jordan, G: Acott, C; (Norwest Corporation); 2005: ‘Technical Report, Willow Creek Property’.
McKechnie, N.D; 1955; ‘Coal Reserves of the Hasler Creek – Pine River Area; B.C.’ Dept. of Mines, Bull.36.
McKinstry, B (for Crows Nest Resources Ltd); 1989; ‘Pine Pass Project, NE British Columbia, Coal Exploration 1989’, Geological Assessment Report 00 757.
McLearn, F.H. and Kindle, E.D; 1950; ‘Geology of Northeastern British Columbia’; Geol. Surv. Can.,Mem.259.
Norwest Mine Services Ltd; 2002; ‘Pine Valley Coal Ltd - Regional Geology Review’; (Confidential internal report).
Panchy, E. (for Crows Nest Resources Ltd); 1979; ‘Pine Pass Coal Property, Noman Creek Area’; Geological Branch Assessment Report 00 586.
Singhai, G.C (for Crows Nest Resources Ltd); 1980; ‘Pine Pass – Coal Exploration 1980’; Geological Branch Assessment Report 00 589.
Singhai, G.C (for Crows Nest Resources Ltd); 1980; ‘Pine Pass – Coal Exploration 1980; Including Noman, Willow, Falling and Beaudette Creek Areas’; Geological Branch Assessment Report 00 590.
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l ( ! a M n ! d ( ! C ! r ! e ! Legend _N ( 6161500 e ! 6161500 k 50 _5 ! C ( E ! S Highway !
! Fisher Creek Forest Service Road ! ! N !
0_
Other Roads/Tracks 0 ! r 4 ve F _ i C ! R E e !!!Gas Pipeline S ! Pin !
!
BC Hydro Line !
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! Seam B : Normal Fault ! ! 7 9 ! ay Seam A ! Syncline Axis hw MMM ! ig ! H
Anticline Axis ! FFF Seam 1 ! 6161000 Section Lines ! 6161000 ! f! 2005 Core holes Seam 2 ! ! !> ! 2005 Rotary holes (no samples) Seam 3 540000 540500 541000 541500 Falls Mountain Coal542000 Inc. !> 2005 Rotary holes with ARD Sampling Seam 4 Pine Pass Property &3 2005 Rotary holes with Coal Quality Sampling 70 Figure 15: Surface Geology Map Bedding Dip/Strike Seam 5 0 125 250 375 500 Gething Formation Dwn by: H. Mullin UTM NAD83, Zone 10 June 2006 Seam 6 m Moosebar Formation
Undifferentiated, Pre-Gething Formation Seam 7