The Quinsam area is underlain by the Upper Cretaceous Nanaimo Group (Comox Formation) and contains three separate sedimentary basins containing coal-bearing strata. The basins are termed Middle Quinsam Lake area, Lower Quinsam Lake area and the Chute Creek area. The latter is described separately as Chute Creek (092F 316).

Structurally, the area consists of a series of downfaulted blocks of Comox Formation sediments which trend northwest and dip 3 to 17 degrees northeast. Several secondary, west trending transverse faults branch off the main southeast trending faults. Minor high-angle reverse faulting occurs on the western margin of the basin where the Comox Formation is in contact with granites of the Early to Middle Jurassic Island Plutonic Suite.

The most important of the coal bearing strata is in the Middle Quinsam Lake area. In the Middle Quinsam area, three coal seams of high volatile bituminous A rank coal occur interbedded with mudstone, siltstone and sandstone. Two lagoonal cycles of deposition have been identified. The lower cycle, with a total thickness of 30.5 to 48.8 metres, contains the #1 coal seam and extends up towards the base of the #2 seam. The second cycle contains the #2 seam and the #3 seam.

The #1 seam shales out along high points in the underlying, irregular paleosurface. The seam consists of a zone 3.0 to 4.9 metres thick containing 2.0 to 3.7 metres of coal separated by two or three mudstone partings and bone layers, all less than 0.3 metre thick. The #1 seam is thickest in the central part and gradually thins and pinches out along a northern depositional margin. In the south-central part of the area, a thin rider seam, 0.5 to 0.8 metre wide, lies 0.3 to 3.7 metres above the #1 seam.

The #2 seam occurs 18.2 to 24.4 metres above the #1 seam and comprises a zone with a maximum thickness of 1.8 metres that contains between 0.3 and 1.4 metres of coal, averaging 0.6 metre. The seam is generally split by a thin mudstone parting. The upper part of the seam increases in thickness towards the north of the occurrence.

The #3 seam lies 30.5 to 39.6 metres above the #2 seam and consists of a zone 3.7 to 4.6 metres thick which contains 1.8 to 3.0 metres of coal. The coal occurs in 4 bands separated by mudstone partings. The #3 seam has extreme lateral variability, and was explored mainly in the area south of Quinsam River.

Average analyses for the #1, #2 and #3 seams in the northern part of the area near Middle Quinsam Lake are 2.63, 2.58 and 2.19 per cent moisture, 16.13, 16.44 and 23.01 per cent ash, and 0.56, 3.99 and 3.51 per cent sulphur respectively. The dry, ash-free heat value of the coal averages 33.5 megajoules per kilogram (Geological Survey of Canada Paper 89-4, page 33).

At Middle Quinsam, measured geological (proven) in-place reserves of coal are 18,350,633 tonnes. At Quinsam East, combined (proven and probable) in-place reserves are 8,934,935 tonnes (Coal Assessment Report 67, page 3).

The coal in this area is dirty and split into three major tongues. Average analyses range from 9.05 to 14.73 per cent ash and 0.65 to 2.91 per cent sulphur and contains an average heat value of 28.64 megajoules per kilogram (Paper 1986-3).

Proven and probable reserves of thermal coal at Quinsam exceed 37 million tonnes. An additional geologic resource is estimated at 140 million tonnes (Northern Miner - May 29, 1995).

Quinsam Coal Corporation produced about 600,000 tonnes of thermal coal in 1995, up from 550,000 tonnes in 1994. Production in 1996 was 903,000 tonnes. The wash plant expansion originally scheduled for mid-1996, is currently in progress as a result of the strong demand from Asia Pacific countries. A successful exploration and drilling program in 1995 has increased reserves to more than 40 million tonnes from the previous level of 35 million tonnes (Information Circular 1996-1, page 8).

In the first six months of 1997, Hillsborough Resources produced 730,000 tonnes of raw coal and 535,000 tonnes of clean coal.

In 1997 Quinsam Coal Corporation produced approximately 1.1 million tonnes of clean coal. The company spent approximately $440,000 on exploration in the vicinity of the 4 South and 2 North mining leases. The definition of existing reserves was improved. A few drill holes were completed to delineate new reserves; results are being evaluated. Coal is being shipped from the Middle Point loadout, north of Campbell River. This facility can store 12,000 tonnes of coal and load at the rate of 1800 tonnes per hour. Quinsam Coal Corporation is 63 per cent owned by Hillsborough Resources Ltd.

In April 1998, Balaclava Enterprises Limited gained control of Hillsborough Resources Limited which, in turn, controls Quinsam Coal Corporation. The operation has a resource of approximately 44 million tonnes (Exploration in BC 1998, page 48). It had planned to produce 1.2 million tonnes in 1998, however it encountered stability problems underground and also faced deteriorating economic conditions in Asia. By year's end, the mine had produced 702,450 tonnes of clean coal, of which approximately 88 per cent had come from the 2N production block. The remainder came from 4S area.

Z.D. Hora of the B.C. Geological Survey Branch has determined that a 1-metre thick seam of gritty claystone (mudstone) occurring at the footwall of the main #1 coal seam has properties of moderate to high grade refractory clay. The laboratory testing on sample material proved the following properties (Letter by Z.D. Hora, August 7, 1987): 1) XRD (x-ray diffraction)- kaolinite > quartz > pyrite > minor chlorite > trace calcite (where ">" means greater than); 2) calcined specimen in reduction environment at 900 degrees Celsius- porous, non-vitrified, tan-colour; 3) calcined specimen in oxydation environment at 1200 degrees Celsius- vitrious yellow with brown spots; 4) PCE (pyrometric cone equivalent - refractoriness)- 31 1/2 (1699 degrees Celsius or 3090 degrees Farenheit), coffee brown colour.

Quinsam Coal shut down the mine on May 20, 1999 and reopened June 15, 1999.

Reserves at January 1, 2000 are 33.3 million tonnes (Information Circular 2001-1, page 6).

In 2001, Hillsborough Resources Ltd. discovered additional reserves of low sulphur coal as a result of a 10 hole drill program. The reserve are to the southeast of the 2N mining area but separated from it by the valley of the Quinsam River; this area is termed the 7-South Area.

Estimated total exploration drilling in 2002 is 4,360 meters, a reduction of 81 per cent from 2001 drilling. In 2003, the company planned a 900-metre exploration drilling program in the South 4 area, as well as some in-fill drilling for reserves. In 2004, the company drilled 470 metres at the mine property in the search for more coal that resulted in an addition to its resource base.

The forecast 2005 production is about 760,000 tonnes of raw coal or 532,000 tonnes of clean coal, up 30 per cent on the 410,000 tonnes produced in 2004. In 2005, the company started on a long-term exploration strategy to significantly increase resources and reserves to expand the Quinsam Coal mine life beyond the current 11 years. About 1200 metres of exploratory drilling was planned for 2005 to support detailed mine planning, further test the Quinsam North area and test for coal quality and thickness trends in the Quinsam East area.

Hillsborough Resources Ltd press release for January 16, 2006 reported that a year ago the reserves and resources stood at about 25.64 million tonnes. The thermal coal mine operates at an annualized rate of about 765,000 raw tonnes, or about 520,000 clean tonnes. Results from the fall 2005 drill program at Quinsam were being compiled and were being incorporated into an updated resource estimate and National Instrument (NI) 43-101 technical report.

Updated reserves and resources were included in Hillsborough Resources Annual Information Form released March 31, 2009 p.10 (www.sedar.com)

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Combined
Proven & Probable                 22,073,000 tonnes
Combined
Measured and Indicated             5,810,000 tonnes
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The Quinsam North zone is located north east of the Quinsam mine underground workings and extends to the southern shore of Campbell Lake and comprises the No. 4 coal zone, part of the Dunsmuir Member of the Comox Formation. Mineable thicknesses of coal of the Quinsam No.4 coal zone have been observed in 14 out of the 17 boreholes which have been drilled by Quinsam Coal between 2005 and 2008. The gross thickness of the No.4 coal zone in these boreholes ranges from 1.895 to 6.95 metres, consisting of coal with interbedded rock bands; mineable thickness is generally-less, owing to the presence of interbanded coal and rock near the floor of the coal zone, and also owing to a widespread medial rock parting, which in some areas is too thick to be readily included in a working-section. Depths at which potentially-mineable thicknesses of the No.4 coal zone was found in these boreholes range from 141.7 to 336.5 metres. The No.4 coal zone contains two major coal beds, the No.4 (Upper) coal bed and the underlying No.4L (Lower) coal bed. Both coal beds contain high-volatile A to high-volatile B bituminous coal.

In 2009, Hillsborough Resources Ltd. reported a resource of 23.797 million tonnes of measured and indicated coal (inclusive of associated internal rock partings) with an additional 1.498 million tonnes of inferred coal for the Quinsam North zone (Cathyl-Bickford, C.G. (2009-04-15): Second Geological Report on the Quinsam North Property).

No Reserve or Resource Estimate information has been released to the public since 2009, as Hillsborough Resources is a public company. The mine is capable of producing 0.5 million tonnes of clean thermal coal per year (Information Circular 2016-1).

In January 2012, Quinsam Coal Ltd (a subsidiary of Hillsborough Resources) obtained an amended Mines Act Permit for production from the 7-South mine area. Exploration and production carried through 2015. In 2013, 2212 metres were drilled in the 4-South and 6-South areas, targeting the #3 seam. Percussion and core drilling of 14 holes (514.34 metres) and 4 trenches (100 metres) were completed in 2014. Approximately half of the workers were laid off in 2014, leaving about 69 workers at the mine. Operations shut down for 8 weeks in the summer of 2015, and although production resumed in late August 2015, operations were suspended indefinitely in early January 2016 (Information Circular 2016-1).