EXECUTIVE SUMMARY / NARRATIVE DESCRIPTION of GUNNISON COUNTY, COLORADO COAL RESERVES

Two indisputable facts make an investment in U.S. coal reserves, or at least high quality coal reserves, more than a merely sound investment, as the reserves can either be: a) land banked until the inevitable effects of the acceleration of both demand and inflation increase the price at which the coal reserves may be resold, either in the near term or in the long term, resulting in a profit and rate of return which will far exceed having held the money on deposit in the banking system; or b) developing the reserves through a mining operation, as the coal mining business is and will continue to be a very profitable business endeavor for properly financed and sensible businessmen.

The first fact, which makes the foregoing conclusions inescapable, is that the world is running out of oil, its primary / most used fuel. In as little as one year, to no more than three years, the world will be consuming more oil than it is finding, developing, and producing. Even worse, the major source of the supply of the world's oil is located in the most turbulent and troubled region, wherein armed conflict threatens the source of supply on a daily basis, with no serious prospects for improvement in the near term. A sound alternative to oil, for use as a hydrocarbon based fuel, is in fact coal, both due to the ability to burn coal directly to produce heat / steam and electrical power, as well as for coals ability to be converted into liquid fuels through various coal gasification technologies.

Initially, coal can be gasified into syngas, and from syngas it is easily convertible, through the addition of carbon, into DME (di-methyl ether), which in turn can then be further converted into diesel fuel, jet fuel, and even high grade gasoline, in the relative proportions, respectively, of 49: 40: 11. One of the newest gasification methods, recently developed and patented by the University of Utah, is quicker and quite economical as compared to prior gasification technologies, while it also removes all sulfur from the coal during the gasification process and before any combustion process occurs (which emits sulfur into the atmosphere if sulfur is present). Yet another relatively new gasification process could be used to produce ethanol, should there be a desire to do so. Current estimates indicate that there are, sufficient coal reserves in the United States to provide all power consumed within the United States for more than two hundred years. Of course, the conversion of the country's entire source of energy from oil to coal and other alternative fuels will take many decades, and no one is suggesting that oil will not continue to be the primary source of the world's energy for many decades to come.

The second fact which makes the initial premise irrefutable, is that more than 52.0% of the world's electrical energy is now produced by burning coal, and with the various new gasification technologies which can convert coal to cleaner burning, less polluting liquid fuels, while eliminating the sulfur / pollution problems, even more coal will be used in the future for this purpose, rather than less. Further, the subject reserves are high grade (high BTU content), and therefore in demand to mix with other lesser grades of coal to bring up the average BTUs. Coal, like oil, is in fact available only in a finite / limited supply, although the world doesn't seem to act accordingly. The author suggests this discrepancy is due to both the large reserves of each resource which are available, as well as on society's seemingly callous, general disregard and rejection of all measures involving long term conservation of resources in favor of immediate gratification / pleasure / profits. It is, however, an absolutely unavoidable fact that once the current world's reserves of oil and coal are used, no more can be produced artificially. Notwithstanding the fact that there are enormous reserves of both oil and coal remaining, the appetite and economic demand for power to run the world is increasing at a geometric rate which far exceeds the (lineal) rate of population growth, and there cannot be too many sources of power / fuel available. Based on sound economic principles of supply and demand, and the reality of the world's ever increasing power needs, the demand for coal, and therefore its price, whether as reserves or after conversion to a mined product or a gasified liquid fuel, can only increase in the decades to come, notwithstanding any short term or seasonal fluctuations which may occur. Even should our current automotive-centric society ultimately convert to all electric vehicles for environmental purposes, the author would submit that hybrids or hydrogen driven vehicles are not the answer, or are at best illusory, as it requires power ñ usually in the form of electricity ñ to create hydrogen in the first place, so the cost / efficiency ratio is not nearly as exciting as all of the enthusiasts who picture driving around on "free" water, would like to portray. Further, there is no bulk distribution and point of sale infrastructure in place or likely to be developed over the coming few decades, except that which already exists for coal and liquid hydrocarbon fuels. All of the hydrogen proponents seem to forget these inherent limitations of their imagined nirvana. Solar power and wind power will certainly make inroads, but the economic viability of coal ownership will last for many decades.

Moving from the macro economic considerations favoring coal ownership to the micro economic considerations, i.e., the evaluation of the subject property and reserves, it should be noted that there is coal, and then there is coal. Coal comes in four grades or varieties, namely lignite, sub-bituminous, bituminous, and anthracite, wherein each of the next higher grade produces more BTUs (British Thermal Units, i.e., energy) per pound, with lignite being the lowest energy producing grade at around 7,000 BTUs per pound, with bituminous and anthracite coal generating the most energy, at around 14,000 to 15,500 BTUs per pound, or more than double the energy in lignite coal. Additionally, contaminants including ash and sulfur are considerations in determining the quality of coal reserves, with the less of each contaminant the better. Virtually all coal reserves will have a percentage of ash and sulfur when the chemical composition of the coal is analyzed.

Turning then to an analysis of the reserves in question, it is unarguable that the Gunnison County, Colorado coal reserves, which are the subject of this executive summary, are of a premium quality under all the applicable standards and tests. The reserves are bituminous coal, which is sufficient for coking, and which is sometimes referred to as metallurgical grade coal. Obviously, this grade of coal commands a higher price in the market than the price of lesser grades (lower BTU content). Further, the Gunnison County, Colorado reserves in question have a very low average sulfur content, as well as a very low relative ash content. It is unlikely that there are many, if in fact there are any, better quality reserves remaining in the United States than the subject reserves / deposits. Further, the subject reserves are in fact is one of the largest known remaining reserves of metallurgical grade coal now available in the United States.

The deeded mineral is available for purchase at what can only be considered a bargain price, due to the owners age and health status, as he is not up to overseeing the long term development of the property through the instigation of a mining operation. Further, his family urgently wants him to sell, even at a discounted price, to obtain liquid funds for other family purposes. The reserve is therefore available for purchase, at the price of USD $25,000,000 (twenty five million U.S. dollars).

Based on the geological reports which confirm the existence, quality, and amounts of coal which comprise the subject reserves, the computed reserves in place are being purchased far below current in ground value at $0.40 (Forty Cents) per ton, which compares favorably to lesser quality (lower BTU) reserves which the U.S. Government recently sold through a lease auction, while reserving a royalty in addition to the sales price, in the Powder River Basin in Wyoming at $0.35 (thirty five cents) per ton. The coal reserves in question are located partially on private ground (i.e., 400 deeded mineral acres), and partially on BLM (Bureau of Land Management) property, which will comprise approximately an additional 2,668 acres of land, to be leased for purposes of the creation of a Logical Mining Unit (LMU), in conjunction with the privately owned mineral acreage. There will be no royalty payable to the government on the coal produced from the 400 deeded mineral acres, while there will be a royalty of 8% due on coal produced from the BLM acreage.

The subject reserves, being metallurgical grade coal, command a market premium compared to other grades of coal, with the latest price range being approximately $90.00 to $110.00 USD per short ton, Utilizing a recovery factor of only 63.0%, which is a historical average and likely a low figure based on current mining techniques and modern equipment, the more conservative of the two significant geological studies performed on the subject reserves (including significant core drilling) indicate a minimum of 65,845,000 tons of raw, recoverable coal, representing the aforesaid 63.0% of the total of 104,515,000 total tons of raw coal in place. The gross sales revenues to be generated from the high grade metallurgical coal reserves in question, at today's prices, are approximately Six Billion Five Hundred Million Dollars $6,500,000,000.00 to over Ten Billion Dollars $10,000,000.000.00 depending on which geology report trusted. Therefore, the acquisition price of the reserves, namely USD $25,000,000, is a small fraction (less than 1%) of the minimum gross sales value of the reserves, with no royalties or overrides being reserved to the seller. Obviously discounts for the costs of mining, recovery, and preparation of the coal, together with a discount for the time until production and sales of all the reserves occur would be applied to any economic analysis beyond the computed gross sales value of the recoverable reserves.

One of the surveys was performed by the United States Government in the 1940ís, and the results were published in the U.S. Bureau of Mines Bulletin #501, which established drill proven reserves of approximately 121,000,000 tons (which is more than the figures used above, which were taken from the second geological study, as conducted in the mid 1970ís by the renowned ñ and very conservative ñ mining engineering firm, the John T. Boyd Company.) Both the U.S. Government and the John T. Boyd surveys refer to their figures as conservative, and there are "likely" some 300,000,00 plus tons in the LMU under consideration located under the Gunnison National Forest controlled by the BLM.

The legal description of the 400 acres of the deeded property is: All coal and mineral rights in tracts Thirty-Eight (38); Forty-Seven (47); and Forty-Eight (48), in Township 13 South, Range Eighty-Nine West of the Sixth Principal Meridian, Gunnison County Colorado, comprising 400 acres, more or less. The owner owns all (100.0%) of these rights, and will provide title insurance at closing with respect to the 400 deeded mineral acres.

The nearest towns are Paonia and Glenwood Springs, Colorado, and the U.S. Government mineral survey determined that the ideal place to sink the shaft to access the coal is on 400 acres of private property, as it is very near a year round state highway, (Colorado 135) and there is rail service within one-half mile, as well as a coal loading facility within three miles. The coal is in three seams, the first of which is approximately 600 feet underground, and the seams range from three to fourteen feet in width and depth. The average BTU-MAF content of the coal is above 14,900 for all three seams. Most of the coal shipped from this long time producing coal mining district is shipped raw or with minimum preparation due to its high quality. The average ash content for each of the three proven seams, from upper to lower, is 3.9%, 6.8%, and 8.4%, respectively, and the average sulfur for each of the three seams, from upper to lower, is 1.0%, 0.6%, and 0.6%, respectively. Each of these numbers represents outstanding quality coal, and it is clear that the high quality is pervasive and consistent throughout the reserves. The John T. Boyd company ran FSI tests on each seam and determined that all three seams exhibited appropriate coking qualities.

The U.S. Bureau of Mines Bulletin #501, and the John T. Boyd report / geological survey, are each available to any reader who may desire to conduct a further due diligence review in respect to the subject reserves.

In conclusion, the subject reserves are of sufficient size and quality that both the U.S. Bureau of Mines and the John T. Boyd Company concluded that a substantial, long term mining operation was not only feasible, but eminently practical, and recommended the same be instigated. In fact, the U.S. Bureau of Mines report includes a specimen mining plan for the lower bed. The availability of the adjoining BLM acreage to create the LMU, together with the proximity of the railway, the loading facility, and the state highway make these reserves a truly outstanding acquisition target, even if the purchase price was much higher than the actual selling price of the reserves, i.e., USD $25,000,000 (twenty five million U.S. dollars). Owner terms are a $250,000 nonrefundable deposit to tie up the project and take it off the market with 30 to 45 days to close. The price is a firm $25 million dollars and the $250,000 deposit will be deducted at closing

Town of Paonia, Colorado, USA

Paonia is located at 38°52′3″N, 107°35′33″W (38.867630, -107.592579)^[5].

The town is situated on the North Fork River, about 10 miles up from neighboring Hotchkiss, Colorado. It lies near the head of the North Fork Valley, an area about 150 miles southwest of Denver, Colorado's capital. The valley lies at the foot of Mount Lamborn (peak elevation 11,397) and the Grand Mesa. This valley forms the North fork of the Gunnison River watershed.

According to the United States Census Bureau, the town has a total area of 0.8 square miles (2.0 km²), all of it land