CQNFIBENilAl

2009 ASSESSMENT REPORT FUEL PEAT RESOURCE

FOR PEAT EXPLORATION LICENCES 705:

839,840,847,848,849,851,852,853,854,855,856,857,858,859,860,861,862, 863, 953 LOCATED IN WESTERN AND CENTRAL NEWFOUNDLAND

Submitted to:

Government of Newfoundland and Labrador Department of Natural Resources

Mines Branch, Mineral Lands Division

Submitted by:

Peat Resources Limited 4 King Street West, Suite 1103

Toronto, ON Canada M5H 1 B6

December, 2009

m

Assessment Report Fuel Peat Resource, NL Peat Resources Limited

TABLE OF CONTENTS

1.0 INTRODUCTION

2.0 PROPERTY DESCRIPTION AND LOCATION

3.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

4.0 HISTORY

5.0 GEOLOGICAL SETTING

6.0 ACTIVITIES IN 2009

7.0 LABORATORY RESULTS

8.0 EXPENDITURES

9.0 INTERPRETATION AND CONCLUSION

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Addendum 1: 2009 Pilot Plant Activities Report Addendum 2: Update on 2009 Assessment Report

2009  Pilot Plant activities report. 

STRATEGIC OBJECTIVES AND ACTIONS (January‐April) 

Objectives: 

Preparations to start‐up the system. 

Actions: 

De‐winterizing the plant equipment. 

Replacing faulty elements of the system, installation of new parts to upgrade the system, 

troubleshooting: 

1. Installation of a shredder (installed by Shawn Boyd, April 24th.)  The shredder is used 

to shred coarse wooden material found in peat. 

2. Installation of a new conveyor to feed material from the screw press to the dryer 

(installed by Shawn Boyd on April 30th).  Old conveyor (screw type) had been 

plugging up with coarse material chronically. 

3. Screw press rotary joint leaks.  Taken apart, cleaned out and re‐assembled together 

by Shawn Boyd crew on April 29th. 

4. Propane metering system installation.  Propane burner adjustment and tune‐up.  

Installed and tuned‐up on April 29th and 30th by a qualified technician from the 

North American Company. 

5. Attempted to fire burner up.  No propane pressure.  Faulty control on propane 

vaporizer.  Replaced by a Superior Propane technician on April 30th. 

6. Peat Chlorine, Fluorine and Moisture tests. 

Suppliers and contractors: 

Vifam (Montreal), Boyd & Bungay Construction Ltd. (Stephenville, NL), All Seasons Small Engines 

(Toronto), Fives North American Combustion Inc. (Bolton, ON), Intertek Laboratory (BC), NL Power, 

Superior Propane. 

Costs: 

Parts and deliveries – $5,400.57 

Installation and tune‐up ‐ $17,330.71 

Lab work ‐ $215.78 

NL Power ‐ $3,013.65 

Superior Propane ‐ $14,165.56 

AMEC (mapping, etc) ‐ $1,240.93 

Project management + travel/expenses ‐ $42,000.00 

 

Comments:  

The objectives have been met.  All parts and elements were delivered and installed.  External shredder, 

conveyor and screw press are ready for start‐up. 

STRATEGIC OBJECTIVES AND ACTIONS (May) 

Objectives: 

Finish de‐winterizing of the plant equipment and start‐up. 

Actions: 

Further preparations of the plant equipment for start‐up: 

1. Replacing faulty steam trap (installed by Shawn Boyd, May 4th).  The old one was 

leaking. 

2. De‐winterizing and start‐up preparations of pelletizing equipment (done by Shawn 

Boyd, May 5th). 

3. Head box level switch and signaling light to prevent overfeeding screw press was 

installed by Dominic Alexander, electrician, on May 20th. 

Start‐up: 

1. First attempt to start‐up the screw press.  (Shawn Boyd and crew on May, 11th.)  

Steam pressure is satisfactory (20 psi).  Feed rate 9 Hz.  Motor load 8.2 Amp.  

Moisture of the processed peat is above 70%.  Screw press manufacturer (FKC) 

recommended installing a set of stiffer springs to improve press’s performance. 

2. Set of springs (#3) is installed.  Another attempt to operate the machine made on 

May 12th.  Steam pressure is 20 psi.  Feed rate is 11.9 Hz.  Motor load is 9.2 Amp.  

Moisture and throughput is not satisfactory. 

Suppliers and contractors: 

Boyd & Bungay Construction Ltd. (Stephenville, NL), Dominic Alexander, Electrician (Stephenville, NL), NL 

Power, Superior Propane. 

Costs: 

Parts and deliveries – $847.84 

Electrical work ‐ $2,450.00 

Peat excavation, delivery and operation of plant equipment ‐ $9,691.14 

NL Power ‐ $724.04 

Superior Propane ‐ $2,534.50 

Project management + travel/expenses ‐ $17,220.98 

Comments: 

The objectives have been met.  Plant equipment was de‐winterized and operated.  The performance of 

the screw press is not satisfactory.  Designed capacity of the machine has not been met.  The moisture 

of the discharged material is above 70%, capacity – under 50% of required throughput.  Manufacturer 

(FKC) designed and recommended modification to the screw press. 

STRATEGIC OBJECTIVES AND ACTIONS (June‐July) 

Objectives: 

Continue to tune‐up the system to ensure it will meet its designed capacity. 

Operate the system for long enough to collect data and to calculate peat pellets production cost. 

Actions: 

Construction of the office and outside wet peat storage bin. 

Peat testing. 

Screw press modification work was done by Paul Cote on June 16th and 17th.  Pictures of crucial 

elements of the repair were taken and submitted to the manufacturer.  Approved. 

Modified screw press test was performed from July 22nd – 25th.   

Suppliers and contractors: 

PJ Cote Ltd. (Stephenville, NL), AHE Enterprises Ltd., Intertek Lab (BC), Vifam (Montreal), Russell and 

Jerry Tulk Labour, (Stephenville, NL), Gerald Flynn, Plant Supervision (Kippens, NL), GMJ Enterprise, Mini 

Excavator (Stephenville, NL), EFCO Enterprises, Materials (Stephenville, NL), NL Power, Superior 

Propane, North Atlantic, Furnace Oil (Stephenville, NL). 

Costs: 

AHE Enterprises Ltd., Peat excavation and delivery, construction services ‐ $15,676.75 

Intertek Lab, Peat testing services ‐ $2,177.75 

Vifam, Supplying parts ‐ $252.00 

Russell and Jerry Tulk, Labour ‐ $1,080.00 

Town of Stephenville, Taxes and water ‐ $5,599.25 

GMJ, Mini excavator – $3,231.80 

Gerald Flynn, Plant supervision ‐ $3,662.50 

EFCO Enterprises, Supplying materials ‐ $157.64 

Gov‐t of NL and Labrador, Permits & Fees ‐ $360.00 

NL Power ‐ $594.72 

Superior Propane ‐ $221.21 

North Atlantic, Furnace oil ‐ $862.04 

Project management + travel/expenses ‐ $28,668.30 

Comments: 

The objectives have not been completely met.  The modification to the screw press was done but the 

performance of the screw press is still not satisfactory.  Due to that, it was impossible to operate the 

system long enough to calculate production cost.  Another screw press adjustment may be required. 

STRATEGIC OBJECTIVES AND ACTIONS (August‐November) 

Objectives: 

Operate the system continuously for 2 week period to verify the effect of performed modification and to 

calculate current production cost of peat pellets. 

If necessary, perform modification #2 to improve screw press performance. 

Continue to troubleshoot and tune‐up various components of the system to improve its overall 

efficiency. 

Produce inventory of pellets to have substantial quantities on hand to send to various potential 

customers for testing and promotion of the peat fuel. 

Conduct a comparison test between wood and peat pellets to identify the opportunity to sell peat 

pellets locally to residents who own pellet stoves. 

Actions: 

Septic system was installed. 

The plant operated for extended periods of time during August‐September.   

Various components of the system (electrical, conveyors, etc.) were upgraded or fixed.   

Data on the performance of the screw press was collected and shared with FKC.  It was demonstrated 

that the screw press is still underperforming.  Manufacturer had to agree to provide another 

modification plan to improve screw’s performance. 

The modification procedure was performed on September 23rd by JDK Industrial Services (Stephenville 

Crossing, NL), with the assistance of AHE Enterprises Ltd. and Reg Bennett Constr. Ltd. 

Control test was performed on Sep. 30th to analyze current performance of the press. 

A load of pellets (24 bulk bags) was sent to CBPP for testing. 

An experiment was conducted with peat obtained from a local cranberry grower on Oct.5.  New, grassier 

material went through the screw press well but plugged dryer’s discharge conveyor. 

An experiment with pre‐squeezed material was done on Oct. 6.  Peat, previously cold squeezed to 85% 

moisture, was processed through the screw press.  The screw press performed much better – steam 

pressure and motor load were up.    

Comparison test of wood pellets/peat pellets was performed in wood pellet stove on Oct.8. 

Suppliers and contractors: 

AHE Enterprises Ltd., Eric Flynn (Plant Supervision), Whalen Enterprises Ltd. (Stephenville, NL), Reg 

Bennett Construction Ltd. (Stephenville Crossing, NL), GMJ Enterprise, EFCO Enterprises, Galen Gypsum 

(St. George’s, NL), Superior Propane, NL Power, North Atlantic, TCI Bulk Bags (NB), BDI Canada (Corner 

Brook, NL).  

Costs: 

AHE Enterprises Ltd., Sewer installation and permits ‐ $3,729.00 

AHE Enterprises Ltd., Plant supervision and labour ‐ $32,672.85 

Eric Flynn, Plant supervision‐ July23‐Aug.17 ‐ $2,171.25 

Whalen Enterprises, Material handling ‐ $3,384.35 

Reg Bennett Construction Ltd., Peat excavation and delivery ‐ $18,921.86 

GMJ Enterprises, Mini excavator – $7,638.81 

Galen Gypsum, Peat excavation and delivery ‐ $2,700.70 

Superior Propane ‐ $13,199.73 

NL Power ‐ $3,790.85 

North Atlantic ‐ $6,369.13 

EFCO Enterprises, Materials ‐ $152.84 

Gerald Flynn, Miscellaneous expenses ‐ $208.69 

Bell Mobility ‐ $768.45 

TCI, Bulk Bags ‐ $1,674.66 

BDI Canada, Bearings, belts, grease ‐ $517.00 

Intertek Lab, Peat tests ‐ $2,177.07 

Project management + travel/expenses ‐ $30,826.79 

Comments: 

All of the objectives have been achieved.  The system was operated continuously for extended periods 

of time that allowed us to collect sufficient data to be able to calculate current production cost and to 

produce a process flow diagram. 

Screw press was tested and, unfortunately, its performance is still unsatisfactory.  The outcome 

moisture is ranging from 72 – 78% (under 70% was guaranteed), and the throughput is approx. 400 kg of 

bone dry vs. 500 kg per hour as per performance guarantee.  Another modification is required and will 

be performed early in 2010.  A visit from FKC’s head office in Japan to help clarify the issue and suggest 

better improvement plan has been arranged. 

Many components of the system have been improved.  However, there are still several elements to be 

improved/replaced.  This will be discussed in more detail in “Deficiencies identified and next steps” 

section of this report. 

Approx. 70 tonnes of pellets was produced.  24 tonnes were shipped to CBPP for testing.  Peat fuel 

performed very well in their boilers. 

A successful run with pre‐squeezed material suggested that installing a pre‐squeezer, that will remove 

portion of free water in peat, will improve overall performance of the system.  Steam, generated for 

better performance of the screw press, will be used more efficiently. 

A comparison test between wood and peat pellets was conducted in a pellet stove of one of the local 

residents.  The test demonstrated that peat pellets ignite faster and burn for approx. 30% longer.  Our 

pellets are now being sold at a local Co‐op store in Stephenville. 

DEFICIENCIES IDENTIFIED AND NEXT STEPS 

Peat harvesting operation 

An excavator with extended arm is recommended for 2010 season.  Regular excavator does not have 

enough reach to successfully conduct vegetation transplant.  A total of approx. 50 square meters of bog 

were restored in 2009.   

Peat processing plant 

Outside shredder combination: the shredder works with little interruption (plug ups by wooden 

material).  Experienced operator can keep the system going for long periods of time without 

stopping.  For long time full time operation it is recommended to replace the current shredder.  

An option of shredding/pumping peat is being researched with Montreal company. 

An outside drag conveyor used to feed the screw press worked steadily most times.  It is 

believed belt conveyor could be a cheaper, more reliable option due to light construction of the 

current conveyor.  It is recommended to replace the conveyor if a very inexpensive used belt 

conveyor is found. 

Underperformance of the screw press considered to be single most significant issue with the 

system.  2 previous modifications have not solved the issue.  The manufacturer has proposed 

modification #3 which is believed will bring the press’s performance up to specifications.  

Regardless of what another modification will do to the press, it is recommended to research a 

press to pre squeeze peat.  It is strongly believed pre‐squeezing will further improve the 

efficiency of the whole system. 

There are a few issues with the dryer other than normal wear and tear.  Dryer’s screw feeder is 

constantly plugging with coarser chunks of peat/wood being discharged from the screw press.  

Installing a shredder should solve the issue.  A quote on rent/purchase of the suitable machine is 

still pending.  The shredder was located at Vifam, Montreal. 

Since screw press produces higher than it should moisture material it is difficult to estimate 

dryer’s parameters in terms of power consumption.  It is believed that the dryer’s performance 

will significantly improve when screw press is fixed.  Next step to improve system efficiency 

should be switching the dryer from its current propane power to peat power.  To do so it is 

necessary to equip the dryer with peat solid biomass burner.  Research on potential suppliers 

was conducted and 2 suppliers were identified.  One located in Russia.  Another ‐ our current 

dryer manufacturer HTF (Wisconsin).  As it was indicated by our contact in Russia they will be 

able to build a system for us for $70,000.00 US.  Shipping and installation extra.  A quote from 

Wisconsin came at $150,000.00 US + shipping and installation.  Due to complexity of the issue it 

is recommended to accept proposal from HTF.  They will guide us through the whole process, 

including manufacturing the system, testing it and installing it in NL.  A trip to Russia is 

recommended to investigate their approach and equipment. 

Discharge conveyor from the dryer to pelletizer will have to be replaced.  It was breaking and 

plugging constantly.  The conveyor is a centerless flexible screw type.  It is proposed to replace it 

with metal screw conveyor.  A quote from a company in Corner Brook on supplying a conveyor 

was received. 

No significant issues other than normal wear and tear were registered with pelletizing 

equipment.  

 

 

 

 

 

Update on 2009 Assessment Report for renewal of Peat Exploration Licenses 705: 839-840, 847-849, 851-863, 953 in Western and Central Newfoundland Background Slava Golod is employed by Peat Resources Limited to manage its peat fuel activities in Newfoundland. Mr. Golod is a professionally educated Peat Mining Engineer from National Technical University of Belarus. He has more than 20 years of experience in the peat mining industry in Belarus, Baltic States, Russia and Atlantic Canada, and for the past six years with Peat Resources Limited, establishing the company’s peat fuel resource base and developing the wet harvesting system and peat fuel drying process. He is an expert in assessing peat bogs, peat humification levels, and vegetation and topographic information, including hydrology, which influences decisions about the development potential of the sites. The methodology Mr. Golod has been using to implement permitting of the Newfoundland bogs from the provincial government has been to make a general assessment of the peat bogs, followed by more detailed surveys and studies by qualified consulting firms engaged by Peat Resources Limited. This was the procedure used in previous years. Mr. Golod conducted a reconnaissance of the lands, applied for permits, and followed it up with studies by AMEC Earth & Environmental, A Division of AMEC Americas Limited (reports are on file with the Department of Natural Resources). 2009 Field Program In 2009 Mr. Golod conducted a further reconnaissance survey of the bogs listed above in the Western and Central regions of Newfoundland. This was done by visiting the sites over several months during his time overseeing the company’s pilot plant operations in Stephenville. This work was done in part to complement the previous resource evaluation surveys by AMEC at some of the sites and examine features (vegetation, hydrology) that were not part of AMEC’s mandate.

Vegetation survey – The bog areas were assessed for tree cover which is one of the key factors affecting their suitability for wet harvesting. The survey also looked for any unusual deviations from the normal bog vegetation which could affect harvesting and subsequent processing methods or which could point to sensitive environmental conditions. No sites that could pose potential problems to development were discovered.

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Hydrological survey – The surveys assessed the general topography of the bogs,

noting drainage patterns, and determining at a reconnaissance level of scrutiny, if there were any difficulties in positive drainage for the bogs. Again, this reconnaissance was aimed at the practicality of harvesting certain sites and at identifying any potentially harmful environmental impacts that should be avoided. No sites that could pose potential problems to development were discovered.

Test holes – Enclosed maps show the location of ten test holes in the Western Region and two test holes in the Central Region. Using his previous experience with the Newfoundland bogs and topography, and the information from the previous AMEC reports, Mr. Golod hand-drilled these twelve test holes and took continuous samples to final depth in each of the holes. The sampling provided initial information on peat humification and depth or thickness of the fuel grade peat horizon. The samples were also used to provide initial analytical information on chlorine and fluorine content. (These samples were used primarily to determine chlorine and fluorine content. Information on thickness and humification was provided by AMEC in their reports). The samples were sent to the Intertek laboratory in British Columbia and the analytical results were provided to you in a previous report. Results show a relatively high level of chlorine across the Newfoundland bogs compared to similar sites in central Canada. These results are considered due to the maritime influence on the chemical character of the Newfoundland sites. This characteristic of the peat fuel affects some types of burners (e.g. fluidized bed burners) but is not a problem in large pulverized-fuel burners at pulp and paper mills and generating stations.

2009 Stephenville Program

Wet mining operation – Wet mining or wet harvesting does not require ditching and drainage of the bog before harvesting. The upper zone, or acrotelm, is first removed and set aside in windrows. The underlying fuel-grade peat layers, the catotelm, are transported to the dewatering plant by a combination of truck and/or pumping operation. The acrotelm is replanted and the peat bog regenerates itself. In 2009, the wet harvesting at Stephenville has used the gravel base to allow trucks to transport the wet peat fuel to the plant. Many of the Newfoundland bogs are on a gravel base, allowing extensive backhoe and trucking operations to be used for harvesting. Peat Resources Limited has also been in discussion with a Quebec company to investigate pumping of the wet peat slurry as a future alternative. The wet catotelm can be pumped significant distances with existing pump technology.

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Peat dewatering process – As described in our previous submissions, the

Stephenville operation is using a three-stage process to dewater the peat. The wet peat is squeezed in a screw press to reduce the moisture content to the 65-70% level. It then enters a dryer where the moisture is reduced to the 25-30% level (dictated by market requirements), and is then pelletized to provide a product suitable for transportation and future pulverization at the burner location. During the 2009 operations at Stephenville, peats of varying type and quality from several different bog locations were tested in the facility.

Market tests – In 2009 the Stephenville plant produced approximately 70 tonnes

of pellets for market testing. The pellets have been successfully test burned at the Corner Brook Pulp and Paper Mill, which reported that it is an acceptable fuel for its boilers. A comparison test between wood and peat pellets was conducted in a pellet stove used for home heating by a Stephenville resident. The test demonstrated that peat pellets ignite faster and burn for approximately 30% longer than an equivalent volume of wood pellets. Our pellets are now being sold at a local Co-op store in Stephenville.

Expenditures A detailed breakdown of costs incurred in 2009 has been submitted to you previously. A summary of these expenditures is as follows: Plant operation (labor, parts, excavation, delivery, energy costs, etc.) $179,818.84 Field mapping 1,240.93 Laboratory analyses 4,570.60 Town of Stephenville, Taxes & Water 5,500.25 Government of Newfoundland and Labrador, Permits & Fees 360.00 Project Management & Travel/Accommodation 118,716.07 $310,305.69 Most of the expenditures were spent locally on contractors and supplies. Mr. Golod’s management fees and expenses while managing the plant operations and conducting the field surveys has been shown as a single amount. Operation of the Stephenville facility is an integral part of the overall Newfoundland peat fuel program. Activities and results at the facility have a direct influence on decisions regarding the permitted peatlands. For example, the testing of different types of peat from different locations allows us to determine which peat and which peatlands are most suitable for future development. Conversely, the performance of the different peats allows us to adjust and modify the dewatering and pelletizing process for maximum efficiency. As noted above, the peatland surveys include

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assessment of vegetation cover to determine the practicality of harvesting certain sites but vegetation cover is also a guide to the possible quality of the accumulated underlying peat which influences the adjustment and improvement of the processing system. The field and facility activities and their associated expenditures are closely linked. For these reasons, Peat Resources Limited considers the Stephenville facility as one part of the total operation so that expenditures at the facility can legitimately be allocated pro rata to the permit areas as part of our spending requirements.