Mining

COLCCO has obtained a grant of more than 2,000 acres, with an option to extend the title of an adjacent property of 3,000 hectares to reach a total of 5,000 hectares. This for a total of 2,000 hectares of the 3,000 hectares Property 1 and Property 2 in.

FLL Concession Contract Number: 082 for the exploration and exploitation of coal and other minerals, granted by Ingeominas, according to the Mining Code Act 685 of 2001, in December 2005.

The contract has a term of 30.0 years, renewable if necessary. Coal concessions in Colombia are generally for a period of 30.0 years.

The location of the concession in the municipality of Carmen de Chucuri, in the Department of Santander. Granting San Vicente is located in the area called Carmen de Chucuri.

In obtaining these resource estimates, Ingeominas used data from the exploratory work done by mining companies and state and private oil companies in the authorized areas, including surface geology, seismic programs and exercises. Ingeominas also took into consideration the estimated production and reserve adjacent productive areas.

The initial wells confirm the existence of an immediate area containing 3.2 million metric tons, which will be for the initial coal in San Vicente.

COLCCO carried out early phase coal which involves the termination of achieving permissions.

The initial exploration early coal reserves, and the total cost to start and complete the initial coal phase is in excess of $ 3.0 million, which was fully anchored by COLCCO shareholders.

Initially, 13 exploratory wells were drilled to provide a broad indication of the thickness of the layers of coal quality and to confirm the reasonableness of the estimated resources initially. Once mining operations begin, the drilling of 19 additional wells in the missing area of the concession of 1,500 hectares will be held.

Trying to further increase the potential coal reserves, COLCCO constantly evaluates opportunities to acquire mining rights in areas adjacent to the concession, with a view to ensuring high quality resources.

1.1. Geological Survey

COLCCO has created an exploration team, which is responsible for the coordination, analysis and guide exploration program in Colombia. This team consists of geologists recognized aided COLCCO foreign consultants.

From the beginning of its activities, has used COLCCO valuable resources to prospect coal. Indirect research methods, such as seismic testing, resistance and gravity have been used in conjunction with direct methods such as field geology and boreholes.

1.1.1. Geology

1.1.1.1. Regional Geology

1.1.1.1.1. Cretaceous rocks

The stratigraphic sequence in the study area includes chalk cliffs as Moon Formation, Turonian-Santonian and Training Umir, assigned to the Campanian-Maestrichtian. In Map 1-5 below shows the regional stratigraphy of the Middle Magdalena Valley, with spatial location in Training Umir, carrying coal deposits.

1.1.1.1.2. Moon Formation

The name comes from the Quebrada La Luna NW Perija, Zulia (Venezuela). The unit consists of limestone, dark gray, clayey, gray to black shale, limestone, thin and dark gray shales interbedded with thin argillaceous limestone, calcareous concretions with fossils, which reach more than two meters, and thin films of black quartz and phosphatic beds towards the top.

The marine depositional environment is shallow, with little ventilation on the bottom. The thickness varies between 275 and 575 m. The contact of the La Luna Formation Simití deck is consistent. Formations between the moon and there is a discontinuity stratigraphic Umir mild. It has been assigned an age of Turonian to Santonian in the Middle Magdalena Valley.

1.1.1.1.3. Training Umir

The type locality is in the Quebrada Umir, east of the hill of the same name in Santander. It consists of gray shales to black, carbonaceous, micaceous, with ferruginous concretions, lead gray to dark gray clays with ferruginous nodules, interbedded sandstones and siltstones, gray, carbonaceous and micaceous. Common is the presence of mineable coal seams from 0.60 to 5.00 m thick. The paleoenvironment of deposition of this formation are the type and neritic coastal lagoons. Because foraminifera studied, it has been suggested Maestrichtian age, and confirms the idea that Umir Formation represents the final record of large marine sedimentary cycle, which began in the early Cretaceous in the eastern basin of Gran Colombia. It also determines the presence of pyrite, and sub-spherical shapes and discoidal in the bottom of the sequence, in contrast to its absence in the top, where there is a significant increase in the organic matter and siderite.

The thickness of the formation is estimated between 1,000 and 1,400 m. The training is based on stratigraphic discontinuity Umir Galembo member of the La Luna Formation and in the area that is generally present in the defective contact system Salina. The upper contact with the overlying formation is consistent Lizama.

1.1.1.1.2. Quaternary

Within the Quaternary deposits there and colluviums floodplains.

Riverbed alluvial deposits and the Plain, deposits resulting from the action of the beds of the streams in the area. There were no accumulations of several valleys of Rancho Grande gorge and some drains which flow into the River Cascajales, as in the valley formed by the confluence of the rivers of India and the White Water River Oponcito.

Colluvial or slope, accumulate deposits, generally on the basis of escarpments, and the shedding of material adjacent tracks, by the action of gravity. Most phenomena are caused by landslides type rockfall, landslides and rollovers. Both Quaternary deposits cover large areas Umir Training.

1.1.1.2. Structural Geology

The province Middle Magdalena Valley is tectonically characterized by structural style folded in anticlines and synclines are large and soft structures, limited by reverse faults staggered, preferably eastward tilt.

The study area is part of the eastern flank of the Nuevo Mundo syncline, misses cut in La Salina in Oponcito river level, position of strata outcrop allows members belonging to middle and top of the moon and Umir Formation.

1.1.1.2.1. Structures

They correspond to the western region of the structure of the Department of Santander, deep and moderately deformed. He is represented by the Tertiary and Cretaceous rocks and is covered by 65% by recent sediments. This province is bounded on the east by the failure of La Salina and west (outside the Department of Santander) by Morales Mulatos and failures.

1.1.1.2.2. Failures

Failure La Salina is located in the West of the Department of Santander. Its direction is NE-SW regional, but locally, as has happened in this area varies NS and NW. Its length is recognizable from the Boyacá border southward to North Santander Department.

It is a reverse fault with high angle, tilted to the east and also shift to the right (Ingeominas, 1988), which forms the boundary between the Middle Magdalena Valley and the Cordillera Oriental.

East of there address and Upper Cretaceous rocks west is in contact with the Tertiary rocks. There is a distance (jump) to 1200 m at the contact between the Lisama Umir and Training. This fault is shifted to the left because of Landázuri and displaces Putana The Lebrija and failures.

Among the first-order faults identified in the study area, it is necessary to emphasize the Fault System The Salina (SFLS), Fault and fault Putana Lebrija including blocks are studied.

1.1.1.2.2.1. The Salina Fault System

It covers an area strip draw a series of parallel fractures with minor faults (Fishbone), very straight in NS, suggesting its hill pie. So faulting is parallel to the direction of the layers and having planes of friction between them. In parallel to the main line, which goes by the Luna-Umir contact in this southern portion of the area, has detected a fault in the upper stream Tagui and parallel to the other West Wells No. 1 and No. 2.

This ruling has been interpreted as an inverse of the blame high slope, down to the west, along which the South block has risen to the west, the placement of the La Luna formation in contact with rocks the average member of the Training Umir. The eastern flank of the synclinal structure of the New World, occurring north of the study area and Los Andes syncline that extends south of the river Cascajales.

In the southern section, which has been treated, there are effects of this failure and the failure of Lebrija westward as Umir Training folds back as a series of narrow anticlinal and synclinal structures, where the beds are explored in this sector. In addition, a series of transverse faults, almost perpendicular, intersecting the failure of Salina.

All this, as the sector Rancho Grande angular wedge between the ruling and Faults Putana and Lebrija. The system is located on the western edge of the polygon, which have clearly identified two different footprints of parallel faults, spaced 250 meters, where the streams and Choirs Picho are aligned, and through them the road runs Sabanales-The Marcito.

1.1.1.2.2.2. Cross faults

This is a series of failures, which are established in this study, its direction is N 60 ° W, in parallel with each of the flaws, listed from south to Norte1, 3 and 4, while Falla 2 is N 75 ° W apparently upright

These faults produce a dislocation of course, layers and folds, such as longitudinal faults, since it is clear that they occur after previous structures. Generating therefore crossed faults, a series of limited mining blocks themselves.

1.1.1.2.3. Geology of coal beds

The beds occur between lead slate gray, medium-hard, as is clear from the support given to the tunnels made. Coal deposits occur interbedded between 0.05 and 0.50m thick layers and lenses, thicker in diameter reaches 0.50m, as happened with the bed of the trench three, where as in a pit with a depth of three feet was dug, appeared a couple of glasses of the magnitude observed. Abrupt changes have been observed in the inclination and direction of the beds, with geological structures which were drawn on the map and plan with transverse profiles geological structures, each 250 meters.

It has not been possible to establish the date of classification of the beds until we know the complete sequence.

1.2. Results

Below is a summary of the differences between the geological classifications, according to the progress of the Geological Survey:

· Mineral Resource Potential: classification given where there is evidence of existence of mineral resources, but studies in the preliminary stage and resources can not be certified yet. Estimates based on seismic work and single samples.

· Inferred Mineral Resource: is that part of a mineral resource pair wings that quantity and quality can be estimated on the basis of geological evidence and limited sampling and reasonable assumptions, but not verified, geological continuity. The estimate is based on limited information and sample removed through appropriate techniques from locations such as outcrops, trenches, pits, and drilling work.

· Indicated Mineral Resource: is that part of Mineral Resource for which quantity, grade, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support the plan mining and evaluation of the economic feasibility of the deposit. The estimate is based on the information of exploration and detailed evidence and reliable through appropriate techniques from locations such as outcrops, trenches, pits, holes that are made close enough and gradual geological continuity to be reasonably assumed.

· Measured Mineral Resource: is a part of Mineral Resource for which quantity, grade, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support the planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information brought through appropriate techniques from locations of outcrops, trenches, pits, holes that are made close enough and gradual geological continuity to be reasonably assumed.

· Mineral Reserve: is the economically mineable part of Measured or Indicated resource shown in the Feasibility Study (Study). This Study must include adequate information on mining, processes, metallurgy, and economics, and other factors relevant to demonstrate, at the time of reporting that economic extraction can be justified. A Mineral Reserve includes diluted material and provisions for losses that may occur when the material is mined.