Pochahontas


Forestry Acreage (35,000+/-)	Oil & Gas Rights	Limestone
Sandstone	Iron Ore	Manganese
Water

The 85,000 acres of mineral rights are located in Pocahontas and Greenbrier counties in southeastern West Virginia. They are divided about 60/40 with the biggest portion in Greenbrier County. The property is largely in one block, almost 33 miles long by 4 miles wide, containing about 132 square miles. Of the total 95,000 acres, approximately 35,000 acres fie under surface that is owned by the Federal Government, in what is called the Monongahela National Forest.

The mineral rights can be traced back to 1796 when the original owners of record got the land in fee from the Commonwealth of Virginia. A large timber company, the Sherwood Company purchased the land around 1890. In 1910 they separated the minerals from the surface and deeded them to a subsidiary company named the Sherwood Mineral Company. It was this separation, in one piece that has enabled such a large tract of mineral rights to stay together all these years.

The property is located in one of the most scenic areas of the Appalachians. National forests and state parks are on all sides. In 1984 the National Forest Service purchased 39,000 acres of mineral rights from the owners in what is now known as the Cranberry Back Country for $14.7 million dollars. This area is just west of the Pocahontas county line and is within just a few miles of the property. Again, in 1991, the National Forest Service purchased only the coal rights to 16,000 acres in the Cranberry Back Country for $1.7 million dollars. The owners of the 16,000 acres reserved the rights to the oil and gas, limestone, sandstone, and other minerals.

A geologist was retained to do a rough once-over of the property to explain the potential for oil and gas, as well as limestone, iron ore, and other misc. minerals. He studied the aerial photos put out by the United States Geological Survey, and also the information provided by the State of West Virginia. Although what he found was interesting, we need to have a comprehensive study done. The massive amount of property involved could contain tremendously valuable deposits of minerals that could never be found in aerial surveys.

The geologist related that, in just limestone alone, he estimated around 4 billion tons was recoverable. Obviously this amount of limestone will never be mined because there is no market for quantities of this magnitude. However, Interstate 64 is within a few miles of the south end of the property and the new "Corridor H" highway system is only a few miles North of our property, so the potential for rock sales will remain viable for many years. Although it was not done using normal BLM guidelines, we obtained a "Preliminary Appraisal" conducted for the Bureau of Land Management, in July of 1999, that valued Limestone in grace at 10 cents per ton.

The Martin-Marietta Company recently purchased a stone quarry in Lewisburg, WV, which is only about 6 miles south of the property. West Virginia Paving Company just purchased another quarry that is just 6 or 8 miles north of our property. Apparently these large companies believe there is an economically significant market for road stone in the area.

There may ultimately be a substantial market for limestone of different qualities other than the kind used for road beds. Certain limestone deposits are made into cement, and others into high grade explosives. NASA even uses a special quality of limestone on the landing pads of the space shuttle. High quality silica sand is being made into expensive glassware and is being sold by the bag to be made into computer chips from sand deposits just a few miles north of our property. Our geologist believes we may have huge amounts of this same high quality, expensive, sand.

The geologist also noted deposits of iron ore that were being mined around the turn of the century before large deposits of cheap ore were discovered near the great lakes. Manganese deposits are also found here. A few off and gas wells have been drilled on or near the property. Tidewater Oil Company drilled a well on our property in 1963 that encountered 1.3 million cubic feet of natural gas from the Trenton/Black River formation. The price of gas was very low in those days and after having trouble on the well, it was abandoned. This is the same formation that is currently generating all the excitement in West Virginia due to the new wells just drilled by Columbia Natural Resources Inc. Not enough drilling has been done in our area to prove anything, one way or another, as to how much, but we know the gas is there as a result of the Tidewater well. In 1983, Atlantic Richfield paid $1.3 million dollars for a five year lease and had some seismic work performed. When the oil and gas business went on the decline in the late 1980's, they relinquished about a million acres of exploratory leases in the "Eastern Overthrust", including our property. We plan to find a company to lease the property to who will drill additional wells using modern techniques to properly define the potential for oil and gas.

The opportunity to enter into a short term lease for oil and gas, limestone or other minerals will bee as well as our own development options, or even the sale of the property. Leasing the property is best in the long run as we would be paid for the minerals that were extracted while retaining ownership of the mineral rights. We will also look into selling the mineral rights under the National Forest property to the U. S. Government. We believe they have already established a price with the 39,000 acre mineral rights purchase in the Cranberry Back Country that totaled $14.7 million dollars in 1984. 14.7 million dollars divided by 39,000 acres equals $376.92 per acre, and that was 15 years ago. If we sold the portion of the mineral rights that are under the National Forest to the Government, we would still have 50,000 acres under private lands that could be sold or developed later.

The next step will be to have the property examined and the minerals appraised in order to determine what the actual fair market value might be. Because mineral rights have been purchased in large blocks, next to ours, we believe this will help establish a minimum price. Although we are firm in our beliefs, we know that the time frame from appraisal to consummation of a sale may be up to three years.

Approximately 35,000 acres of the total 85,000 acres underlies the Monongahela National -Forest. It is our belief that this portion of the Mineral Rights will ultimately be purchased by the U.S. Government or a Conservancy Group, and that the sale price will exceed 20 million dollars. (See comparable sale as shown in summary sheet) As with all government activities the sale of the mineral rights will take considerable time ( two to three years estimated). Our plan is to separate the estimated 35000 acres of mineral rights underlying the National Forest, to be marketed only to the government or conservancy group. The remaining 50,000 acres to be marketed to a non-government commercial enterprise.

Forestry Department personnel were contacted concerning the subject acreage. They expressed a keen interest in obtaining the mineral rights, but would not make any commitment to purchase. They of course, would prefer that the property be DONATED.

Senators, Representatives and several Conservation Groups have been contacted, and preliminary disclosures made. Sufficient time has not passed to generate any positive response.

Recently a large Conservancy Group was contacted. They have expressed a keen interest in working with us to effect a sale to the Government. They are currently doing their "Due Diligence" which they estimated would take a few weeks. They explained that what this involved was conversations with the various Government agency's and certain members of Congress to ascertain the interest in acquiring the mineral rights and the probability that Congress will appropriate the funds. If all goes well we will receive an option to sign related to the sale during the year 2000, and the sale would be consummated in March or April of 2001 or 2002.

The week of May 22nd 2000, we were contacted by the Conservation Group. They are sending us a draft of an option they would like us to sign. Although this does not guarantee the sale of the minerals to the Government, they previously told us they would not ask for an option unless they were fairly certain they could make the sale. (They get 5% of the Sale price.) Back to Top

We plan to offer the oil and gas mineral rights for sale or lease, (possibly excepting those underlying the national forest). The last lease on this property %vas in 1983 and was leased by Atlantic Richfield oil and gas corporation for five years. They paid 1.2 million dollars for the lease. We feel that a lease would bring at least $5.00 per acre, per year, for a five year period. ($250,000.00 per year) An outright sale of the oil and gas mineral rights should bring much more than the lease amount. In the event of an outright sale of the mineral fights, we could retain an overriding royalty interest for all oil and gas sold from any wells drilled. If leased, the royalty interests would generate substantial cash flow if successful oil and or gas wells were discovered on the property.

Example: 50 mmcfpd (million cubic feet of gas sold per day) @ $2.00 per mcf (thousand cubic feet) is $100,000.00 total daily income. Overriding Royalty of 12 I/'2% would be $12,500.00 per day, free and clear of any operating costs. (Gas today, June 7, 2000, is over $4.00 per MCF)

Columbia Natural Gas, has recently drilled five wells to test the Trenton/Blackriver formations in West Virginia. The first well reported an initial open flow of 55 million cubic feet of gas per day. The others are reported to be 20 to 50 million cubic feet of gas per day. The actual gas delivered into the pipeline from all the wells will most likely be in the 50 to 100 million cubic feet of gas per day range, This, from only five wells.

A well was drilled on the subject property in 1962 by the Tidewater Oil and Gas Company. Actual well Logs and other information about this well, have been obtained from the State of West Virginia, that prove the Trenton/Blackriver formations are present and do contain gas. The "Tidewater" well had an initial open flow of 1.2 million cubic feet of gas per day. This well was drilled on down to a depth of nearly II 000'. Gas shows were reported in a dozen zones below the Trenton/Blackriver At that time the price of gas was very low, and there were no pipelines close-by for delivery of the gas. The well was plugged and abandoned. If the well were drilled today, it most assuredly would be completed as a producing gas well. Back to Top

Limestone is presently the second most important economic resource, next to timber, in Greenbrier and Pocahontas counties. This may change soon as the new Corridor H highway from Elkins to the State of Virginia, is now in the process of being constructed. In the coming year, right-of-ways are being secured and the construction phase should begin after the paper work is filed. Construction grade limestone for road beds could easily be moved from this area to the adjoining counties where the roadway is to be cut and filled, and this limestone could come from the land where we have the Mineral Rights.

The Helderberg Limestone is the most important limestone in the subject area. This limestone outcrops along the Browns-Michael-Beaver Lick Mountain areas, all in the subject area. This limestone is most often bluish-gray in color, occasionally crystalline or siliceous, but mostly a quite pure limestone. Thickness varies from 150 to 300 feet depending on location. This limestone could be used for concrete aggregate or road material, cement or fertilizer, among other uses.

The Bossardville/Rondot limestone underlies the Helderberg limestone and extends the lengths of the Michael-Brown-Beaver Mountains, these limestone's attain a thickness of 600 feet and in some areas their thickness is repeated due to faulting. These limestone's contain a high calcium carbonate content and make an excellent limestone for burning and for making cement.

A second Geologist retained to perform an evaluation of the property reported a high quality limestone from only 15000 acres has reserves of 1,065,512,448 tons and his estimated in placevalue is $106,551,245.00. An outright sale or a lease of the limestone mining rights would result in significant income to the LLC. While an outright sale of the Limestone in place will result in a large up front influx of cash, a "lease" plus an override on tonnage actually sold, could result in a lot more, income although over a longer period of time. A recent sale of 400 acres containing a limestone quarry that was no longer licensed, netted the owner over $400,000.00. Although this was a seemingly high price to pay for 400 acres, this same quarry (with a new license to mine) was recently sold again to the West Virginia Paving Company from Charleston, WV for a reported 12 million dollars. (Charleston newspaper article)

A Pre-Appraisal was performed in the State of California for the US Government (BLM) in order to ascertain the, value, of "minerals in place" prior to the sale of mineral rights to private companies, (The exact reverse of the present situation) This document placed a value of 1 0 cents per ton on Limestone in-place. Using this valuation, prorated for minerals under private lands, equates to $20 million dollars.

We are currently in discussions with a company that is interested in starting a limestone quarry in the area of the mineral rights. After many conversations with different companies related to the 85000 acres of mineral rights, this company is interested in acquiring 500 acres containing accessible limestone. We plan to pursue this discussion. Back to Top

The Oriskany sandstone outcrops in several areas covered by the Mineral Rights. Huge deposits of this high-grade sandstone are visible from the surface. Just North of us, because of the high quality silica content, several million tons are being produced each year to be used in the manufacture of high-grade glass and more recently in "chips" for the computer industry. Back to Top

The Oriskany sandstone which is exposed along the browns Mountain Anticline and other anticlinal structures of the, same contour often carry de-posits of limonite ore. These ores are limestone replacement ores rather than original in-place ores. Nodules of this ore are visibly present in many outcrops of the Oriskany sandstone, and in many locales this ore was mined before the iron ores of the great lakes were discovered, which provided an easier access to the mills of Pittsburgh than from this area. A portion of the, 1909 Pocahontas County report shows the ore composition analysis of the ore from an Oriskany quarry on the subject acreage, this analysis shows a metallic iron concentration of better than 50%. The Oriskany sandstone contains ore in sufficient quantity to be of economic value but we need more detailed prospecting done on the subject acreage to determine the amount and value of available ore. Back to Top

Manganese is found in varying proportions in association with the iron ores of the Oriskany sandstone.. Large deposits of this ore may be discovered with future prospecting as some of the psilomelane ore contain as much as 40% metallic manganese. Back to Top

The second Geologist reported that the area covered by the mineral rights includes several highly prolific "springs". One such spring is reported to be capable of producing 1.5 million gallons of water per day. Another report indicates that during the days when traveling by dining car on the railroad was the "height of luxury" all the. water served on the C&O dining cars came from a Spring originating on our property.

The water that flows to the world famous "Greenbrier Resort at White Sulphur Springs, WV is a "mineral" and is included with the- Mineral Rights.

We are not sure what value owning the underground water will add to the scenario, however, it has to be substantial. The immediate or most obvious value would be to use the water rights as an additional incentive for the Government or Conservancy Group to purchase the mineral rights underlying the. National Forest. "Protecting" the water for future generations could easily become a top priority for the Government Agencies involved. In answer to a question to our attorney related to "does ownership of the mineral rights include underground water such as a spring"? We received an excerpt from a West Virginia code book, as follows:

The term "mineral," when employed in conveyancing in this state, is understood to include every inorganic substance which can be extracted from the earth for profit, whether it be solid, as stone, fire clay, the various metals and coal, or liquid, as, for example, salt and other mineral waters and petroleum oil, or gaseous, unless there are words qualifying or limiting its meaning, or unless from the deed, read and construed as a whole, it appears that the intention was to give the word a more limited application.

B. Approximately 15000 acres of the mineral rights underlie three West Virginia State Parks. (Within the National Forest boundaries) We believe the best use for this portion of the mineral rights may be as an additional incentive for political assistance, by offering to donate the minerals to the State of West Virginia. This would be a feather in the hat of the responsible politician. Another approach might be to donate the minerals ourselves in return for a substantial tax write-off, equal to the appraised fair mark-et value.

C. An oil and gas lease on all or a portion of the property would be seriously considered if the company wanting the lease were substantial enough financially, to properly evaluate and develop the minerals. Back to Top