Seymour Property

On 20 December 2012, the Company announced that its 70% owned subsidiary, Kodiak Mining Company, had finalised the formal documentation for the option to acquire additional coal leases at the Seymour Property in Bibb County, Alabama, USA.

The Seymour Property is located approximately 3.5 kilometres south of Attila's existing infrastructure and 81MT Inferred JORC Compliant Resource on its Gurnee Property with the two properties collectively forming the Kodiak Hard Coking Coal Project. The Resource at the Gurnee Property is based on the Atkins and Coke coal seams which continue along strike and outcrop on the Seymour Property. The close proximity to the existing infrastructure, including a wash plant and rail load out facility, on the Gurnee Property will significantly reduce future capital requirements for any potential development on the Seymour Property.

seymore-1
Outcrops on the Seymour Property

The option agreement covers the lease for the underground mining rights to the Atkins, Coke, Upper Thompson and Big Bone coal seams on an approximately 4,000 acre property from RGGS Land & Minerals Ltd LP.

Pursuant to the option agreement, the Company has secured the mining rights to up to 4 coal seams which are found throughout the Seymour Property – the Atkins, Coke, Upper Thompson and Big Bone coal seams. The uppermost of these, the Upper Thompson, underlies the central and eastern portion of the property, with the next lowest, the Coke and Atkins seams, underlying the major portion of the property. The stratigraphically lowest seam, the Big Bone, underlies the entire property. All beds dip to the southeast into the Daily Basin, a sub-unit of the larger Cahaba Basin within which the property lies. All beds with the exception of the Big Bone seam have been surface mined along the majority of their outcrop with the resultant highwalls providing sites for the development of potential low cost underground mines.

Approximately 75 coal bed methane (CBM) wells and 9 diamond core holes are located on the Seymour Property. Additionally, data exists from historic prospecting and sampling along the seams' outcrops. Although the geophysical logs from the historic CBM wells and the geologic logs of the historic diamond core drill logs provide extremely useful information when assessing the thickness of the individual coal seams, further diamond hole core drilling will have to be undertaken in order to estimate a JORC compliant resource.

The coal appears to be of a high quality as determined from historic drilling and prospecting, with washed coal having a low ash and sulphur content and high fixed carbon content, making it suitable for export metallurgical markets or in blending for domestic markets.

Seymour Property – Exploration Target

The Atkins, Coke and Upper Thompson coal seams typically range in thickness between 0.75 metres to 2.1 metres on the Seymour Property, with averages in the range of 1.0 metres to 1.6 metres; these are slightly thicker than the same seams on the Gurnee Property. Based on the historical drilling that is available from the Seymour Property and from adjacent properties, Stagg Resource Consultants Inc has determined that the Seymour Property contains an exploration target in these 3 seams in the combined range of 42 to 48 million tonnes of hard coking coal.

Additionally, based on the historical drilling that is available, Stagg has determined that the Seymour Property contains an exploration target in the Big Bone seam of the order of up to 45 million tonnes1. This seam, which has a slightly higher ash content than the typical ash content of the Gurnee seams of about 6%, is considered to have longer term potential for use as a blend in a hard coking coal product. This seam typically ranges in thickness between 2 and 3 metres. A detailed drilling program will be undertaken to further assess the quality of the coal and define a resource to JORC standards.

Seymour Property – Coal Quality

Stagg has determined that the quality of washed coal on a dry basis from the Atkins, Coke and Upper Thompson coal seams is likely to be in the range of 3 to 8 percent ash, 0.3 to 0.9 percent sulphur, 33 to 37 percent volatile matter, 55 to 61 percent fixed carbon and 7,900 to 8,100 kcal/kg heat content. Although there is extremely limited data regarding the Free Swelling Index (FSI) and fluidities of coal from these three seams, it is Stagg's opinion, based on knowledge from surrounding areas, that FSI's in the range of 6 to 9 are likely to be typical, with fluidities likely to be in the range of 15,000 to 30,000 DDPM over much of the property.

The quality of the washed coal from the Big Bone seam is also very good based on the limited data available. Detailed studies of the Big Bone coal quality and washability will be undertaken to establish its market niches.

The following table contains anticipated typical specifications for washed coal (1.5 SG) for the three primary target coal seams, presented on a dry basis:

Dry Basis

Seam Ash
(%)
Sulphur
(%)
Volatile
Matter
(%)
Fixed
Carbon
(%)
Heat
Content
(kcal/kg)
Free
Swelling
Index
Fluidity
(DDPM)
Atkins 3 - 5 0.3 - 0.6 33 - 36 59 - 61 8,100± 7 - 9 15,000 - 30,000
Coke
 4 - 6 0.4 - 0.8 34 - 36 57 - 79 8,100± 6 - 9 15,000 - 30,000
Upper Thompson 6 - 8 0.5 - 0.9 35 - 37 55 - 58 7,900± 7 - 9 15,000 - 30,000

Further drilling and testing will be undertaken to confirm the chemical and petrographic characteristics of the target seams as indicated by the historical results.

Based on the results of two diamond core drill holes from a drilling program conducted on the property in 1983, the following qualities are suggested for coal from the Big Bone seam at yields of 30 percent or less, presented on a dry basis:

Dry Basis

Seam Ash
(%)
Sulphur
(%)
Volatile
Matter
(%)
Fixed
Carbon
(%)
Heat
Content
(kcal/kg)
Free
Swelling
Index
Fluidity
(DDPM)
Big Bone
10± 0.8± 35± 58± 7,000± n/a 20,000
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