Annual Coal Review 1987 COAL REPORT QUINTETTE

The Quintette coal project is near Tumbler Ridge in northeastern British Columbia. It has long-term contracts for the supply of 5 million tonnes pe r year (plus or minus 5%) of high-quality metallurgical coal to the Japanese ste el industry buying group. The coal is transported by B.C. Railways and cnr to th e new Ridley Island Coal Terminal at Prince Rupert. The rail infrastructure services the northeast area developments and transports some seven mill ion tonnes of coal per year to Prince Rupert. The Ridley Island Terminal has a loading capacity of 14 million tonnes per year and is capable of handling vessels up to 240,00 0 dwt.

In 1986 Quintette produced a total of 5.2 million tonnes of metallurgical coal for sale to the Japanese steel industry. During the second quarter , production at the mine reached the full design capacity of 6.3 million tonnes of coal per y ear. A new 3-year labor agreement was signed in August, 1986, without labor inte rruption.

Sales of metallurgical coal for the 1986 coal year will be 4.75 million tonnes , which is a 5% reduction from the full contract tonnage, as permitted under the sales agreements. Sales for 1987 will remain at the same level.

Reserve estimates for the property were upwardly revised to 162 million tonnes of proven and probable recoverable product in 1986. Most of the increase has been credited to areas now being mined. Other work in 1986 identified the existenc e of a potential resource known as the “Transfer Area.” A comprehensive explorat ion program is planned for 1987 to further delineate structure and establish a v iable reserve.

The benefits of a detailed mine- planning and equipment-scheduling approach were realized in 1986, as well as equipment modifications and increased operator training and education. Productivity was significantly improved in shovel- truck operations. Production of metallurgical coal, which fully met con tract specific ations for the year, was at the planned output level. All production coal was mi ned from the Mesa and Wolverine pits, with the combined amount of coal and waste moved amounting to 41 million bank cu m. The operation consists of four 23- and 25- cu-m cable shovels, seven 14-cu-m hydraulic shovels and four hydraulic load ers. A fleet of 50 154-tonne trucks delivers waste to dumps and raw coal to a gr izzly, conveyor loading station. A 13.3-km overland conveyor transports run-of-m ine coal to a dense media preparation plant and unit train loading facility.

In keeping with long-term coal requirements, a new reserve area called the Shikano Pit was approved and development began in the last quarter of 1986. By year -end, essential water management structures were in place with other infrastruct ure in various stages of completion. Some 351,000 bank cu m of pre-strip waste h ad been removed. This pit, when developed to a planned annual production level o f one million clean tonnes of met coal by the end of 1987, will provide increase d flexibility of operation and will reduce equipment densities and congestion in the Mesa Pit.

The Quintette work force at the end of 1986 was 1,405 employees compared with 1,527 at the end of 1985. This reduced manpower level was made possible by improvements in production planning, worker efficiency, equipment availability and p lant performance. These improvements combined to cause higher production levels.

The year 1986 represented a significant advance in establishing Quintette as a capable and reliable supplier. These achievements leave the company well-placed to meet the challenges of 1987 and beyond.

The Quintette project is 50% owned by Denison Mines, which is also manager of the project.