Pacific American Coal Limited ABN 83 127 131 604 P: +61 (0) 2 9238 1175 Suite 1002, Level 10, 171 Clarence Street, Sydney NSW 2000 E: info@pamcoal.com GPO Box 1546, Sydney NSW 2001 W: www.pamcoal.com

Elko Coking Coal Project JORC Resource

Increased to 303MT

Highlights

• Increase in JORC Resource - Elko Coking Coal Project JORC Resource increased

by 18% to 303MT - Measured Resource increased by 513% to 117MT

• All upper coal seams confirmed as high-quality low ash coking coal

• Coal seams ranging in mineable thickness from 1.5m - 12m

• 3 new coal seams identified in the Elk Formation, contributing 35.7MT to JORC Resource

• Coal seams correlate across the resource • Permits in place with majority of roads built for further

drilling

PAK Updated JORC 2012 Resource

JORC Resource (Million Tonnes)

Lease Area Measured Indicated Inferred Total West 106.4 70.1 18.6 195.1 Central 11.1 20.9 61.3 93.3 East 0.1 2.2 12.5 14.7

Total 117.6 93.2 92.3 303.1

ASX Release Wednesday 16th January 2019 ASX Code PAK About Us Pacific American Coal Limited (the Company) is focused on the production, development and exploration of metallurgical coal assets in North America. PAK’s strategic focus is on the 100% owned Elko coking coal project in British Columbia. PAK has 100% ownership in 3 Coal Leases in the East Kootenay Coal Field in British Columbia - Canada and tenements in application in low volatile bituminous region of the Arkoma coal basin in Oklahoma. PAK is also actively reviewing other potential investments. Board Non-Executive Chairman – Geoff Hill Executive Director & CEO – Mark Sykes Non-Executive Director – Simon Bird Company Secretary Ian Morgan Management Business Development – Dom Hill Investor Relations – Simon Klimt Project Stage Location Elko Exploration Canada Howe Exploration Oklahoma Bokoshe Exploration Oklahoma Pacific American Coal Limited ABN 83 127 131 604 GPO Box 1546 SYDNEY, NSW, 2001 www.pamcoal.com

ASX RELEASE

2 | P a g e

Pacific American Coal Limited (ASX: PAK) is pleased to announce an updated JORC Resource of 303MT at the Company’s 100% owned Elko Coking Coal Project in B.C. Canada. The results from the 2018 drill campaign have exceeded the Company’s expectations, delivering both additional high-quality coal discoveries as well as a significant increase in total resource to 303MT with 117MT contained in the desirable Measured Resource category. The Company believes that based on these results the Elko Project continues to demonstrate significant shareholder value and warrants further investment.

Increase in JORC Resource

The total JORC Resource has increased to 303MT with the majority of the increase coming from the identification of three new high quality coal seams. The majority (95%) of the JORC resource at Elko sits in the Western and Central blocks where the drilling campaign was focused. The drilling campaign and coal analysis has increased the confidence in the Elko Project with the updated JORC report identifying potential upside in the Central and Eastern Blocks with further drilling.

Figure 1 - Resource block locations

The Elko Coking Coal Project now has a Measured and Indicated Resources of 210.8MT with 117.6MT Measured, 93.2MT Indicated and 92.3MT Inferred Resources.

Lease Area 2018 In-Situ Resource Estimate (MT) 2015 In-Situ Resource Estimate (MT)

Measured Indicated Inferred Total Measured Indicated Inferred Total

West 106.45 70.12 18.64 195.20 19.19 57.04 85.37 161.60 Central 11.11 20.93 61.20 93.25 0.00 0.00 48.14 48.14 East 0.09 2.14 12.48 14.70 0.00 0.00 47.81 47.81 Total 117.65 93.19 92.32 303.15 19.19 57.04 181.32 257.55 % of Total 39% 31% 30% 100% 8% 22% 70% 100%

Table 1 – Comparison against previous Resource Estimate by Coal Lease Area

3 | P a g e

Multiple Coal Seams with Mineable Thickness Drilling confirmed nine coal seams running through the Elko resource with thickness’ ranging from 1.77m-12.70m. The additional three seams in the updated JORC report are identified as belonging to the Elk Formation. These new coal seams E0, E1, E2 have added an extra 35Mt to the total JORC Resource.

Table 2 provides a breakdown of the JORC Resource categories by coal seam:

Seam Seam Thickness

(metres)

In-Situ Resources (MT)

Measured Indicated Inferred Total

E2 2.60 2.9 1.2 0.1 4.1 E1 2.71 15.5 11.1 4.0 30.6 E0 1.77 0.9 0.0 0.0 0.9 SM7 2.41 5.9 5.6 3.0 14.4 SM6 2.39 11.6 7.0 4.8 23.4 SM5 3.06 15.0 9.6 6.1 30.7 SM4 2.97 12.8 7.2 6.4 26.3 SM3 8.45 24.8 18.7 28.1 71.6 SM1 12.70 28.3 32.9 39.9 101.1

Grand Total 7.41 117.6 93.2 92.3 303.1

Table 2 – JORC Resource category by seam

In addition to the three Elk Formation coal seams, the work undertaken by PAK’s geological consultant, Highland GeoComputing LLC (HGC) confirmed the existence and continuity of the six coal seams in the Mist Mountain Formation previously identified. The seams have splits of some degree and are often interbedded with thin mudstone and carbonaceous shale bands. Thin leader and rider coal seams occur below and above the main seams, respectively.

Coal Quality

Coal quality at the Elko Project is better than expected, with moderate to high FSI and low ash. The washed coal quality results confirm that seven of the nine seams are indicative of mid-vol, low ash, coking coal. The bottom two seams are in line with a mid vol, semi-soft coking coal to a PCI metallurgical coal. This new and updated information is supportive that the Elko Project contains a large coking coal resource with the potential ability to produce a range of coking and metallurgical coal products.

Coal Seam Washed Coal

Yield Ash VM Sulfur FSI Specific Energy (Kcal/kg)

E2 54.9% 5.88 33.19 0.56 8.1 8,100 E1 37.5% 8.23 26.94 0.52 7.8 7,870 E0 45.7% 6.50 26.12 0.56 8.5 8,201

SM7 47.5% 6.27 27.25 0.62 8.5 8,219 SM6 67.1% 6.04 22.91 0.45 6.2 8,001 SM5 70.2% 5.59 22.68 0.43 6.9 8,031 SM4 57.8% 6.55 21.14 0.50 6.2 7,995 SM3 58.6% 6.29 21.10 0.38 4.2 8,221 SM1 51.6% 9.43 21.30 0.39 3.2 7,789 Total 55.4% 7.33 22.32 0.43 5.1 7,995

Table 3 – Coal Quality Summary by seam

4 | P a g e

The yields detailed in this report are based on samples taken from the drilling program and may not represent the production yields from mining operations. HGC modelled raw quality and washed quality for an initial estimate of coal quality at Elko. HGC modelled raw dry ash, dry heat (Kcal/kg), dry sulphur and FSI. HGC also modelled clean dry ash, dry heat (Kcal/kg), dry sulphur and FSI. The washed coal characteristics represent the float product using a 1.5 SG.

Figure 2 – Example cross sections through the Elko Project

5 | P a g e

Three New Coal Seams Identified

A highlight of our 2018 drill program is the identification of three high quality coal seams in the Elk Formation. The seams have a thickness ranging from 1.8m – 3.0m and have returned washed quality results supportive of producing a Mid Vol, low ash, high quality coking coal. The identification of an addition 35.7MT of high quality coking coal, that is shallower than previously identified, is of significant importance to the development of the Elko Coking Coal Project.

Seam Seam Thickness (m)

In-Situ Tonnes (MT)

Measured Indicated Inferred Total

E2 2.60 2.9 1.2 0.1 4.1 E1 2.71 15.5 11.1 4.0 30.6 E0 1.77 0.9 0.0 0.0 0.9

Total 7.41 19.3 12.3 4.1 35.7

Table 4 – Elk Formation Coal Seam quantity

Seam Yield Washed Coal

Ash VM Sulphur FSI

E2 54.9% 5.88 33.19 0.56 8.1 E1 37.5% 8.23 26.94 0.52 7.8 E0 45.7% 6.50 26.12 0.56 8.5

Total Table 5 – Elk Formation Coal Seam quality

The Elk Formation coal seams occur at the base of sandstones, the lateral extent of the Elk Formation coal seams might be limited or very lenticular due to erosion.

Coal Seam Correlation

The Elko exploration program intersected numerous coal seams that have been correlated across the resource. These correlations support consistent washed coal quality values and provide the basis for confidence in the resource. The work undertaken by HGC confirmed the existence and continuity of the six coal seams in the Mist Mountain Formation and E1 in the Elk Formation. E0 and E2 from the Elk Formation were only identified in the western Coal Lease.

6 | P a g e

Figure 3 – Correlation of coal intersections across drill holes

The seams have splits of some degree and are often interbedded with thin mudstone and carbonaceous shale bands. Thin leader and rider coal seams occur below and above the main seams, respectively. The Elk Formation coal seams usually occur at the base of hard, thick, massive siliceous sandstone units. The E1 seam has the most consistent occurrence and thickness of the Elk Formation coal seams correlated. E1 and E2 seams have high FSI values in the raw and washed coal quality data.

7 | P a g e

Figure 4 – Composite lithology from the 2018 Drill Hole Data As previously announced on 19 May 2917, the coal seams at Elko can be accessed from the side of the escarpment which provides direct access along the outcropping seams to coal products. PAK has completed a number of studies and will collect data in the next drill campaign to gain a better understanding of parameters that support underground operations including gas levels and roof / floor structure.

Permits In Place

PAK has permits in place that gives access to the resource in the coming Canadian summer for further drilling and exploration work. PAK has invested heavily into the upgrade and building of new roads with most infrastructure needed for exploration in place. PAK is applying for additional exploration permits that will allow further exploration in new areas within our existing Coal Licences.

8 | P a g e

ASX Listing Rule 5.8

Other matters required to be reported by ASX Listing Rule 5.8 are not considered material and are covered in accordance with Table 1 which is attached to this report.

Commenting on the updated JORC Resource statement, PAK Chairman Geoff Hill said:

“PAK’s Board is delighted that we have been able to deliver such a significant increase in our Elko JORC Resource to 303MT. This is a wonderful achievement for our team and shareholders. Most pleasing is the significant increase in tonnage in the high value top seams, including the newly identified Elk Formation coal seams, demonstrating excellent coal quality characteristics. Also encouraging is the increased certainty in the resource, with our Measured JORC Resource growing by 513% to 117MT.”

FOR FURTHER INFORMATION CONTACT

Simon Klimt Dom Hill General Manager Investor Relations Business Development Manager Pacific American Coal - Australia Pacific American Coal - North America info@pamcoal.com info@pamcoal.com

More details are available on PAK‘s website www.pamcoal.com

9 | P a g e

Competent Person’s Statement

The information in this document that relates to JORC 2012 Resources based on information compiled by Mr. Dwight Kinnes, B.Sc. Colorado State University, Geology, who is a Member of a Recognised Overseas Professional Organisation (ROPO) included in a list promulgated by the ASX from time to time, being the Society for Mining, Metallurgy, and Exploration (Registered Member No. 4063295), and American Institute of Professional Geologists (Cert. No. 10244).

Mr Kinnes is Principal Consultant/President of Highland GeoComputing, LLC and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration by them and to the activity which they are undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012). Mr Kinnes consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Previously Released Information

These ASX announcements refer to information extracted from reports available for viewing on the Company's website www.pamcoal.com

• 16.06.2014 TOCC Assets Independent Review

• 02.11.2015 Elko Coal Project Maiden JORC Resource 257.5 Million Tonnes

• 03.12.2018 Initial Drilling Results Exceed Expectation (Update with JORC Table 1)

The Company confirms it is not aware of any new information or data that materially affects the information included in the original market announcements, and, in the case of exploration targets, that all material assumptions and technical parameters underpinning the exploration targets in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings presented have not been materially modified from the original market announcements.

10 | P a g e

APPENDIX

Risk to Resources

As a greenfield exploration project, the Elko Project has numerous risks associated with geology and permitting. The primary geologic risk for the Elko Project is that future drilling reveals that the deposit is more structurally complex than current data indicates. Obtaining exploration and year-round site-access permits takes considerable time and effort. Future exploration programs will be impacted by time taken to grant of permits are if access windows to site are too short.

Geological Modelling and 2018 Drill Hole Results

Resource Parameters: The following limits have been applied to resource estimates:

A 10-metre base of weathering/erosional surface was used as the upper limit to coal seam extents

The coal resources are confined by the Elko Coal Leases boundaries

A minimum seam thickness of 1.5 metres was applied

In-situ coal density assumed at 1.52 g/cc, dry basis for coal seams with analysed specific gravity

A maximum seam depth of 600 metres below surface was applied

Coal within 75 metres of faults was excluded

Valid points of observation were defined using drill holes with detailed known surveyed locations, and either detailed geophysical logs and/or contains reliable coal quality assay results. The limits of the points of observation are detailed be:

Resource / Reserve

Radius of Influence (m)

Maximum Distance between Data Points

(m) Measured 450 900 Indicated 900 2,400 Inferred 2,400 4,800

Table 6 – Resource classification boundary limits HGC created polygonal boundaries for each mineable-seam based on the lease area, seam depth and fault location. A minimum depth from surface of 10 metres was applied to account for oxidation depths. During the 2018 drilling season, PAK drilled nine (9) holes for a total meterage of 3,457m. 3,440.6 metres were R/C drilling and 16.4 metres were core drilling. HGC determined that the 2018 drill holes, the 2018 measured sections, historic drill hole FH-1, and the BC Coal adits can be classified as valid points of observation under the JORC code. HGC excluded the Lodgepole drill hole LP-101 as valid point of observation as it resides across the Harvey Fault and is also too far from other points of observation.

11 | P a g e

Table 7 - 2018 Drill Hole Locations and Details HGC compiled lithological data from the field geologist logs, drillers logs and geophysical logs to prepare detailed lithological descriptions for each drill hole. The geologist and drillers logs provide details regarding the physical characteristics of rock chips extruded from the drill holes. The geophysical logs provide details about the depths of lithological components. HGC studied coal seam correlations using all available data for the Elko Project. HGC built graphical fence diagrams through drill holes within and near the Elko Project. HGC used these diagrams as a reference to guide coal seam correlations. The fence diagrams include drill hole lithology, histograms of ash and FSI, and geophysical log traces of Gamma, Density and Neutron curves. HGC performed numerous iterations of the fence diagrams to determine the most likely, and straight forward interpretation of the coal seams. Drill hole DH_18_03C was the only drill hole chosen for coring during the 2018 field season as the drill rig was only able to collect core from depths less than 150 metres. Most of the coal seams intersected during the 2018 field season exceed 150 metres in depth. Drill Hole DH_18_03 (an R/C hole) was drilled as pilot hole. Coal seams of significant thickness occurred at depth of 37.4 metres and 72.5 metres. These seams were nominated for coring.

1

Table 1 - 2018 Elko – JORC Compliant Resource Report

JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Note: Highland GeoComputing, LLC (HGC) prepared a detailed geological summary of the 2018 Elko Exploration Project in November 2018. HGC prepared a detailed resource report with updated coal resource estimated for the Elko Project in December 2018. This version of the JORC Table 1 combines information from both of these reports to update information in Section 1, Section 2, and Section 3. No coal reserves are being reported for the Elk Project and thus Section 4 has not been updated in any way.

Criteria JORC Code explanation Commentary

Sampling techniques

• Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

• Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

• Aspects of the determination of mineralisation that are Material to the Public Report.

• In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

Historical Data:

• One HQ3 (61.1mm diameter) core hole located in license 418648 with coal quality analyses (FH1).

• Six Adits excavated in license 418648 in summer of 1974. Samples collected for coal quality analyses.

• Two drill holes exist in 418649 (LP101 and LP102) • Two adits adit in 418649 (LP Adit-2 and LP Adit-3)

2018 Elko Exploration Data:

• 8 reverse circulation (RC) holes with chips samples collected of coal. 7 holes drilled in license 418648, one hole drilled in license 418650. The holes were drilled in August and September 2018.

o RC chip samples collected every 0.5 meters within coal zones. The detailed RC sampling protocol is available upon request from PAK and will be located in Appendix A of the Geologic Summary for the 2018 Elko Exploration Project, November 2018 (2018 Elko Geologic Summary).

• All holes geophysically logged. • 1 spot PQ core hole with PQ coal core collected

o Coal core sampling protocol is available upon request from PAK and will be located in Appendix A of the 2018

2

Criteria JORC Code explanation Commentary

Elko Geologic Summary.

Drilling techniques

• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

Historical Data: • One vertical HQ3 core hole utilizing triple tube barrel and

wireline core retrieval (FH1). • The drill holes in license 418649 used convention rotary and

split tube core retrieval. 2018 Elko Exploration Data:

• 8 reverse circulation holes drilled with a combination of hammer, PDC rotary and Tri-cone drill bits.

• The core hole was cored with a convention split-tube PQ size core barrel with a PDC core bit.

Drill sample recovery

• Method of recording and assessing core and chip sample recoveries and results assessed.

• Measures taken to maximise sample recovery and ensure representative nature of the samples.

• Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

• Reverse circulation (RC) chip samples were collected within each coal zone. 0.5-meter sample plies were collected when coal seams were intersected. Coal samples were transported from the RC cyclone across a vibrating screen (200 mesh) to poly mesh sample bags. The vibrating screen reduces surface moisture, while keeping finer grained material. Each sample interval was labeled and tagged. The complete RC sampling protocol is available upon request from PAK and will be located in Appendix A of the 2018 Elko Geologic Summary.

Logging • Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

• Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

• The total length and percentage of the relevant intersections logged.

• Core and chip samples were geological logged by qualified geologists.

• Coal core logging and sampling protocol is available upon request from PAK and will be located in Appendix A of the 2018 Elko Geologic Summary.

• Lengths of core cut and lengths of core recovered were measured by qualified geologists.

Sub-sampling techniques and sample preparation

• If core, whether cut or sawn and whether quarter, half or all core taken.

• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

• For all sample types, the nature, quality and appropriateness of the sample preparation technique.

• Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

• Measures taken to ensure that the sampling is representative of the in

• RC chip samples were processed by SGS laboratories in Denver, Colorado, USA.

• Highland GeoComputing, LLC (HGC) geologists and PAK geologists prepared sample analysis forms for the RC chips. Individual plies were combined to form larger samples.

• SGS split the samples using split-riffles according to ASTM standards.

3

Criteria JORC Code explanation Commentary

situ material collected, including for instance results for field duplicate/second-half sampling.

• Whether sample sizes are appropriate to the grain size of the material being sampled.

Quality of assay data and laboratory tests

• The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

• Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

• SGS performed proximate, ultimate, mineral ash, free swelling index – FSI (CSN) and ash fusion analyses on RC chip samples. This is work in progress, final results are expected in Q1 2019

• HGC selected specific RC samples for preliminary washability testing. Washability tests were performed using a single 1.5 specific gravity split.

• Analyses performed by SGS use ASTM standards. • SGS performs routine and documented Qa/Qc analyses internally.

SGS also participates in regional “Round Robin” programs between numerous labs in the U.S. to maintain analytical standards.

Verification of sampling and assaying

• The verification of significant intersections by either independent or alternative company personnel.

• The use of twinned holes.

• Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

• Discuss any adjustment to assay data.

• All sample plies were plotted in striplogs of each drill hole. The strip logs contain graphic representations of drill hole lithologies and traces of geological logs (gamma, density, neutron, resistivity, and caliper).

•

Location of data points

• Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

• Specification of the grid system used.

• Quality and adequacy of topographic control.

• The Elko Exploration Project uses a map projection of NAD 1983, UTM Zone 11.

• Historical data points were located with hand-held GPS units. Historical locations were converted from NAD 1927 datum to NAD 1983 datum. The converted locations were very close to locations collected using hand-held GPS units.

• The 2018 drill holes were surveyed by Garrett Winkel Land Surveying Ltd. out of Cranbrook, B.C.

• The locations and depths of the 2018 drill hole data is located in Appendix A, below.

Data spacing and distribution

• Data spacing for reporting of Exploration Results.

• Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

• The 2018 drill hole data is widely spaced across the western part of the PAK licenses areas. Hole locations were dictated in some part by rugged and heavily forested terrain.

• Adjacent samples were composited using thickness and ASG

4

Criteria JORC Code explanation Commentary

• Whether sample compositing has been applied. (apparent specific gravity) during coal quality modeling.

Orientation of data in relation to geological structure

• Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

• If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

• The Historical and the 2018 Elko Exploration drill holes were not oriented in any particular direction (started as vertical). The drill holes do deviate at depth. Downhole direction and deviation surveys were collected by Century Wireline Services (Century) as part of their logging services. Drill hole deviation surveys have been included in the drill hole database and the geologic model.

Sample security

• The measures taken to ensure sample security. • RC and core samples were stored in a locked, environmentally controlled core shed in Fernie, B.C.

• HGC and PAK geologists packaged the samples into large (1m cubic meter) shipping bags. The bags were secured with steel straps for shipment. SGS contracted a courier from Fernie, B.C. to Denver Colorado.

• HGC observed the shipping bags at the SGS labs in Denver, CO.

Audits or reviews

• The results of any audits or reviews of sampling techniques and data. • As of November 2018, no reviews or audits have been performed on the sampling techniques and data. However, RC sampling and core logging protocols were compiled and reviewed by several coal geologist CPs.

5

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria JORC Code explanation Commentary

Mineral tenement and land tenure status

• Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

• The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

• In September 2014, The British Columbia Ministry of Energy and Mines granted PAK yearly coal title licenses for three areas that comprise the Elko Exploration area. The three active coal licenses for the Elko area are 418648, 418649, and 418650, commonly known as the “West Block”, the “East Block” and the “Central Block”, respectively. The coal licenses are valid through 2022.

Exploration done by other parties

• Acknowledgment and appraisal of exploration by other parties. • Historical data used and results from previous exploration projects within the current tenements were performed by Kaiser Resources, BC Coal Ltd, Shell Mining, and Cline Mining Corp.

Geology • Deposit type, geological setting and style of mineralisation. • Target coal seams are located in southern end the Crowsnest Coal Field within the Mist Mountain Formation of the Kootenay Group. The main structure is the McEvoy Syncline where strata typically dip 20‐30 degrees to the NE or NW.

Drill hole Information

• A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level – elevation above sea level in

metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length.

• If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

Historical Data:

• GPS coordinates for the location of drill hole FH-1 were obtained during the 2015 field reconnaissance project. Complete drilling, geophysical and coal quality logs exist for FH-1. These data were obtained from CoalFile reports from the British Columbia Ministry of Energy and Mines.

• GPS locations for the drill holes LP101 and LP102 were also obtained during the 2015 field reconnaissance project. Complete drilling, geophysical and coal quality logs exist for LP101 and LP102. These data were obtained from CoalFile reports from the British Columbia Ministry of Energy and Mines.

2018 Elko Exploration Data • Table 7-3 in the 2018 Elko JORC Report summarizes the

locations and depths of the 2018 drill holes. • Detailed descriptive logs and graphic striplogs for the 2018 drill

hole data are available upon request from PAK and will reside in Appendix D and Appendix E.

6

Criteria JORC Code explanation Commentary

Data aggregation methods

• In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

• Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

• The assumptions used for any reporting of metal equivalent values should be clearly stated.

• Sample plies within individual coal seams were weight averaged together using sample lengths and ASG.

Relationship between mineralisation widths and intercept lengths

• These relationships are particularly important in the reporting of Exploration Results.

• If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

• If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

• Coal seam intercepts were logged by drillers and geologists in the field. Detailed top and bottom depths of coal seams were determined by HGC geologists from geophysical logs.

Diagrams • Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

• Detailed maps and cross-sections of the latest geologic interpretation and geologic model are available upon request from PAK and will reside in Appendix F.

Balanced reporting

• Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

• SGS provided all analytical results to PAK in Q4 2018. All of the sample results reside in Appendix E in the 2018 Elko Geologic Summary.

Other substantive exploration data

• Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

• HGC geologists made numerous geologic observations and collected many strike and dip orientations across the Elko project area. A map showing these data is available upon request from PAK, see Figure 7-2.

Further work • The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

• Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

• Additional exploration drilling and geological mapping is planned for the summer of 2019 in the Elko license areas. PAK, HGC and Silenus are currently compiling the details of the 2019 exploration.

7

Section 3 Estimation and Reporting of Mineral Resources

Criteria JORC Code explanation Commentary

Database integrity

• Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

• Data validation procedures used.

• Drill Hole and adit data were entered into the DHDB drill hole database. DHDB is password protected and resides on the HGC secure network.

• Lithological logs entered into DHDB were checked by building graphic logs overlain by geophysical logs.

• Historical coal quality data were checked by HGC and PAK personnel.

• HGC Coal Quality performed linear regressions on various quality parameters. HGC calculated cumulative washability values and compared them with reported values. HGC calculated Mean Max Ro values from vitrinite classes and compared then with reported values.

Site visits • Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

• If no site visits have been undertaken indicate why this is the case.

• Mr. Dwight M. Kinnes, CPG of Highland GeoComputing, LLC visited the Elko Exploration area from August 6, 2018 through August 15, 2018 and again from September 4, 2018 through September 14, 2018.

• Mr. Kinnes performed geological mapping, logged chip samples and coal core, and assisted field geologists with logging and sampling procedures. Mr. Kinnes oversaw sampling of RC chip samples and prepared the samples for shipment to SGS.

Geological interpretation

• Confidence in (or conversely, the uncertainty of ) the geological interpretation of the mineral deposit.

• Nature of the data used and of any assumptions made.

• The effect, if any, of alternative interpretations on Mineral Resource estimation.

• The use of geology in guiding and controlling Mineral Resource estimation.

• The factors affecting continuity both of grade and geology.

• The 2018 exploration drilling provided the basis of the interpretation. HGC was able to correlate coal seams across the extent of drilling. Current coal seam interpretations reside in Appendix E, below.

• HGC created three measured sections across coal outcrops. • Geologic observations at surface in the form of strike and dip

measurements of outcrop were used as supporting data for the geologic interpretation.

• Historic geologic data from adits, strikes and dips and fault locations were ground truthed by HGC and used as supporting data for the geologic interpretation.

• HGC also performed photo-geologic interpretation over the Elko Project area using ArcGIS, Google Earth, and B.C. government imagery.

Dimensions • The extent and variability of the Mineral Resource expressed as • The length of Flathead Ridge across the Elko Licenses is

8

Criteria JORC Code explanation Commentary

length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

approximately 8,000 meters. The length of the SM1 outcrop is approximately 10,000 meters across the Elko Licenses.

• Coal resources were calculated to depths of 600 meters for each coal seam. The width varies for each seam, but averages approximately 1,000 meters from outcrop to the 600-meter depth

Estimation and modelling techniques

• The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

• The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

• The assumptions made regarding recovery of by-products.

• Estimation of deleterious elements or other non-grade variables of economic significance (eg sulphur for acid mine drainage characterisation).

• In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

• Any assumptions behind modelling of selective mining units.

• Any assumptions about correlation between variables.

• Description of how the geological interpretation was used to control the resource estimates.

• Discussion of basis for using or not using grade cutting or capping.

• The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

• HGC created a coal structure model and a coal quality model using the StratModel application in the MineScape geological modeling and mine planning system. MineScape is developed and maintained by ABB. MineScape is used extensively throughout the world on complex coal deposits like the Elko Project. Mr. Kinnes has been using MineScape for more than 25 years and is an expert in the system.

• StratModel uses modeling parameters defined in a schema in conjunction with drill hole data to build a layered gridded model for multiple coal seams and faults. Details regarding the coal structure model reside in Section 9 of the 2018 JORC report.

• Raw coal quality was modeled for total moisture, dry basis: ash, volatile matter, sulfur, heat (Btu/lb.) and FSI. Washed coal quality, for 1.5sg float data was modeled for yield, ash, volatile matter, heat (Btu/lb.) and FSI. All coal quality parameters were gridded using the MESHP interpolator in MineScape for all seams with three or more intercepts. Average coal quality values were determined for the E0 and SM7 seams because only two valid coal quality data points exist.

Moisture • Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

• Total moisture of raw coal samples was included in resource estimates. However, all coal quality results have been reported on a dry basis.

Cut-off parameters

• The basis of the adopted cut-off grade(s) or quality parameters applied.

• No specific limits were determined as a result of coal quality parameters. HGC applied modeled washed yield values (at a 1.5 SG) to recoverable tonnage estimates to determine estimated washed recoverable resources.

• Resource estimated were limited to depths of 600 meters below surface and coal within 75 meters of faults were excluded.

9

Criteria JORC Code explanation Commentary

Mining factors or assumptions

• Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

• HGC did not develop any type of mine design or mine plan. • HGC did apply a global mining loss factor of 0.3 meters to each coal

seam. • HGC applied a global underground mining recovery of 50% to

estimate recoverable coal resources.

Metallurgical factors or assumptions

• The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

• n/a

Environmen-tal factors or assumptions

• Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

• Because the Elko Project is a greenfields project, effectively no work has been performed with respected to environmental impacts of mining, mining waste and preparation plant waste. That said, PAK plans on performing baseline environmental data collection as soon as FLNRO grants PAK year-round access to the project area.

Bulk density • Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

• The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

• Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

• ASG was performed for all coal quality samples sent to SGS. HGC performed a detailed linear regression analysis using the ASG results with respect to dry ash. A very strong linear relationship (2nd order polynomial) was observed. HGC used the coefficients from the linear regression to compare and model ASG values with the Elko Project data.

10

Criteria JORC Code explanation Commentary

Classification • The basis for the classification of the Mineral Resources into varying confidence categories.

• Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

• Whether the result appropriately reflects the Competent Person’s view of the deposit.

• HGC incorporated the guidelines of CGS Paper 88-21 to determine the geologic complexity of the Elko Project and to determine resource classifications.

• HGC determined that the Elko Project currently falls within the “Moderate” geology type of Paper 88-21.

• Under this geology type, the CGS recommends using distances of 450m, 900m, and 2,400m for the measured, indicated and inferred classes, respectively. HGC reviewed these parameters and believes that they represent the Elko Project.

Audits or reviews

• The results of any audits or reviews of Mineral Resource estimates. • No specific audits or reviews of the geological model or resource estimates have been performed beyond the work performed by HGC on behalf of PAK.

Discussion of relative accuracy/ confidence

• Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

• The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

• These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

• Not enough drilling and coal quality exists to perform meaningful geostatistical analysis on the Elko Project. However, HGC performed extensive study on coal seam correlations and analyzed coal quality data in detail.

• As a result, HGC has good confidence in Measured and Indicated resource classes. HGC has less confidence in Inferred resource estimates because these resources occur in areas with very little data.

Section 4 Estimation and Reporting of Ore Reserves

The Elko Exploration project is effectively at the Greenfields stage. No type of feasibility study has been performed. Therefore, under the JORC code, no coal reserves have been compiled or reported.