Allegiance updated that study simplifying the mine plan in the early years of production to reduce start-up and sustaining capital (Updated Study). This also allows Allegiance more time to assess its production ramp-up options including the Primero seam located in the neighbouring Lorencito property, which Allegiance plans to acquire. The Company did this for several important reasons: Keep things simple and focus on becoming efficient and profitable in the early years of production; Reduce the start-up capital requirement and the amount that the Company will have to raise to commence production; Reduce the sustaining capital requirement in the early years of production to invest retained earnings into debt reduction rather than capital expenditure; Keep all expansion options open to enable proper consideration of the best ramp-up options from New Elk coal seams and the Primero coal seam in the adjacent Lorencito property; and Ramp-up with a history of good production, earnings, and with most, if not all, start-up debt repaid. The Updated Study was undertaken by Stantec, who was the lead consultant in the Original Study. The focus of the work was to take out the development and mining of the Allen seam, and to run the Blue seam as a standalone mine plan for the life of its coal reserves, and also delay the timing in relaying the railway track. The Blue seam is a shallow seam that has established portal infrastructure, with its main headings already advanced 350 metres underground. Subject to the refurbishment of mining equipment and minor mine-site rehabilitation, the Blue seam is ready to produce, and with 23Mt of saleable coal reserves at a minimum coal seam height of 4 foot, is a significant mine operation from which New Elk can develop and expand. The image below provides a bird's eye view of the Blue seam portals. The Company entered into binding agreements to acquire New Elk on 21 January 2020, conditional only on Allegiance raising the start-up capital requirement by 14 July 2020. The Company will now expedite discussions with both equity and debt funders in relation to New Elk and is hopeful of closing the funding in the next two months. Assuming the acquisition completes in this time frame, the target date for the commencement of production remains third quarter of 2020 (calendar). Allegiance notes the following in relation to the production targets disclosed in this announcement: All material assumptions on which the production targets and forecast financial information are based are disclosed in the announcement; The coal resources and reserves on which the production targets are based have been prepared by competent persons in accordance with the requirements of the 2012 edition of the JORC Code; and The production targets and forecast financial information in this announcement are underpinned solely by a combination of coal reserves and measured and indicated coal resources. The relevant proportions of probable coal reserves and proven coal reserves is 12:78. New Elk Project Summary: The Mine is located in Las Animas County in southeast Colorado bordering northeast New Mexico, and sits within the Raton Basin which according to U.S Geological Survey Paper 1625-A, has an estimated 15 billion metric tonnes of coal. The Raton Basin has had active coal mines for nearly 150 years producing good quality hard coking coals for domestic steel production. The Raton Basin hosts low sulphur, mid to high volatile hard coking coals, typically with excellent plasticity which is an important element in the blending of coking coals in blast furnace steel production. The Mine was first named the `Allen Mine', and commenced production in 1951 supplying coking coal to the Pueblo Steel Mill located approximately 100 miles north of the Mine. In the late 1970s, the Pueblo Steel Mill transitioned from blast furnace steel production to electric arc furnace no longer requiring hard coking coal. Notwithstanding this, the Allen Mine continued production through to 1989 supplying coal to local power utilities, and the wash-plant continued operating until 1996 servicing neighbouring mines. While existing rail near the Mine could transport coal 850 miles to the Gulf of Mexico, a lack of nearby coal handling facilities at ports meant the coking coal could not access the export seaborne market. That has now changed with three coal and petcoke terminals nearby in the Bay of Houston along with ports accessible to the Mine in Longbeach, California and Guaymas inside the Baja California Peninsula of Mexico. As a result of the prior investment by the original Mine owners and more recently Cline, the Mine is fully built with upgraded infrastructure and generally in a very good state of repair. Coal will be mined with continuous miners adopting the place change room and pillar method. Key items of machinery on each section are illustrated below. Room and pillar mining is the predominant underground coal mining method in the US, unlike Australian underground coal mines where longwall mining is more prevalent. Longwalls are expensive and capital intensive and generally the privilege of the major coal mining companies whose balance sheets can absorb the initial capital investment and the holding costs while a Longwall is either being transferred to a new panel or is not operating because of geological interruptions to production. Theoretically, they deliver lower operating costs and recover more of the coal resource but are inflexible and prone to major downtime through relocations and unpredictable geology. Room and pillar mining is less capital intensive and while perceived by many to be higher in operating cost, can be extremely efficient and low cost if operated as `super sections'. Room and pillar mining is also flexible to unpredictable geology and can easily manoeuvre around geological intrusions when encountered, without disrupting production. For these reasons, the Company has adopted room and pillar mining. A super section involves two continuous miners operating on each section. This can be either with two continuous miners operating concurrently on a section or sequentially, that is, as one machine has completed a cut, the operator will `walk through' to the other side of the section and commence a new cut with the second machine. While the operator is making the new cut with the second machine, a crew-hand will reposition the first machine for its next cut. When the operator has completed the cut with the second machine, he or she will return to the first machine and execute another cut, and so the sequence continues without any, or limited, downtime in production during a shift.