The Merritt Coal property is located 1 kilometre south of Merritt and approximately 250 kilometres east of Vancouver.

The Merritt coalfield consists of several areas of isolated Tertiary sedimentary outcrops that occur with a 15-kilometre radius and cover an area of 105 square kilometres. More recent volcanics overlie some of the Tertiary sediments. Faulting and rapid lateral changes in stratigraphy have made seam correlation and underground mining very difficult. Up to ten coal seams containing high-volatile bituminous B-rank coal occur in the Eocene Coldwater Formation (Princeton Group), interbedded with sandstone, shale and conglomerate. The timing of the coal deposition coincides with the Laramide orogeny. Due to the instability of the depositional environment, coal seams can reach extraordinary thicknesses but exhibit extreme variation over short distances with seams tending to merge, split and exclude lots of partings. This has the effect of creating small areas with excellent coal development conditions. The seam numbers and thicknesses vary across the Merritt coalfield with seams lensing out into shale laterally and commonly containing seam splits. The number and thickness of coal seams decreases slightly from Coal Gully Hill (MINFILE 092ISE066) to Coldwater Hill (MINFILE 092ISE081), and significantly more toward the Normandale mine (MINFILE 092ISE061) in the east and the Sunshine mine area to the north of the Nicola River.

The structure of the basin in the southwest (Middlesboro–Coal Gully area) consists of a series of northwest-trending folds and faults. The faults dip to the southwest and northeast. In the Coldwater Hill area, the structure is less complicated with some broad flexures and a northeast-trending anticline disturbing the predominantly northeast dips (20 to 35 degrees) of the strata. In the Diamondvale area, the strata are monoclinal, striking 235 degrees and dipping approximately 27 degrees southwest toward Coldwater Hill. A broad syncline might separate these two areas. In the Hamilton Creek area, a northeast-trending syncline is present, while to the north at the Normandale mine, strata strikes north and dips close to vertical. Both the west and east margins of the basin appear to be structurally most complex. The basin overlies a Triassic volcanic surface and is partially overlain by younger basalts.

The Merritt coalfield underlies the same flat-bottomed valley that hosts the city of Merritt. Coal seams outcrop in the southwest and northeast regions of the coalfield. The best outcrop of the coal measures occurs in the Coal Gully area (MINFILE 092ISE066), where four seams are present in a 229-metre section. In the adjacent Middlesboro mines (Coldwater Hill, MINFILE 092ISE081), up to eight seams ranging from 0.76 to 7.9 metres thick were recognized in 235 metres of section. The quality of coal has been rated as high-volatile B bituminous by the American Society for Testing and Materials. The coal is not coking coal on its own but has some coking potential if mixed with other coals. The processed quality of the coal is 2.7 per cent moisture, 9.5 per cent ash, 37.4 per cent volatile matter, 50.4 per cent fixed carbon, 0.7 per cent sulphur and with a calorific value of 7200 kilocalories per kilogram.

According to an evaluation by Imperial Metals in 1983, Coal Gully Hill was the only location on the Merritt coal property with enough volume to consider surface mining. The Crows Nest pit was tentatively delineated in the northern foreground of Coal Gully Hill. The pit contained an estimated 4.63 million tonnes (5.1 million short tons) of indicated reserves. Another potential pit, the Prospect pit, was identified further up Coal Gully Hill to the west of the Crows Nest pit. No holes had been drilled in the area but geological projections made from old workings and surface exposures gave an estimated inferred reserve of 6.3 million tonnes (Coal Assessment Report 762).

Other small mines within the Merritt coalfield include the Normandale mine (MINFILE 092ISE061) to the east and the two Sunshine mines to the north. In the Normandale area (MINFILE 092ISE061), two holes drilled by Crows Nest Resources in 1982 intersected six and eight coal seams ranging in thickness from 0.2 to 1.6 metres and 0.5 to 2 metres, respectively. A small tonnage was mined from this area in the early 1900s.

Three coal seams outcrop in the Coldwater Hill area and up to six intersections were encountered in drillholes. In addition, several shaly coal units are present. The Number 2 mine (MINFILE 092ISE081) is located here. Seven seams were mined by Middlesboro Collieries on Lot 166 (containing MINFILEs 092ISE066, 092ISE141 and 092ISE081 and now contained within Coal License 389548). All of the mines started from coal outcrops and did not require shafts to be sunk. Mining was carried out in all seams in the western portion of Lot 166, but in the northeast only seams Numbers 2 and 3 were worked while the main lower seams remained untouched. The seams and mines were numbered in the order in which they were discovered and worked. In stratigraphic section, the seams were (in descending order) Numbers 2, 3, 6, 8, 4, 5 and 7.

The seams contained a total coal thickness of 3.44 metres (37 feet). The Number 2 seam was 1.52 metres (5 feet) thick and worked in the Number 2 and Number 2 North mines. 21.34 metres (70 feet) below the Number 2 seam, the Number 3 seam was 0.76 metres (2.5 feet) thick and worked in the Number 3 mine. 17.98 metres (59 feet) below the Number 3 seam, the Number 6 seam was 1.22 metres (4 feet) thick and worked in the Number 6 section of the Number 4 and Number 3 North mines. Sixty four metres (210 feet) below the Number 6 seam, the Number 8 seam was 2.13 metres (7 feet) thick and worked in the Number 8 and 9 sections of the Number 4 mine. 54.86 metres (180 feet) below the Number 8 seam, the Number 4 seam was 3.048 metres (10 feet) thick and worked in the Number 7 and Number 4 East mines and the Number 4 section of the Number 4 mine. 36.58 metres (120 feet) below the Number 4 seam, the Number 5 seam was 1.37 metres (4.5 feet) thick and worked in the Number 3 East mine and the Number 5 section of the Number 4 mine. 54.86 metres (180 feet) below the Number 5 seam, the Number 7 seam was 4.27 metres (14 feet) thick and worked in the Number 1 and Number 3 West mines.

East of the town of Merritt and south of the Nicola River are the Diamondvale Numbers 3 and 4 mines (MINFILE 092ISE142). Six coal seams occur in 94 metres of strata, of which two were mined in the abovementioned mines.

The Geological Survey of Canada first reported coal in the area between 1877 and 1878. From 1892 to 1904, three holes were drilled and coal outcrops along the Coldwater River were mined. In 1906, the rail connection to the main TransCanada rail line was completed and regular commercial coal production began. That year, the Nicola Valley Coal and Coke Company and the Diamondvale Coal & Iron Company began coal mining operations in the area. Nicola Valley Coal founded the Middlesboro Colliery approximately 1.6 kilometres southwest of Merritt. Most of the coal produced was sold as railroad coal. The Coldwater River formed the property boundary between the Middlesboro Collieries and the Diamondvale Coal & Iron Company holdings. The Middlesboro Collieries Number 2 mine in the Number 2 seam on the western end of Lot 166 (containing MINFILEs 092ISE066 and 092ISE081 and now contained within Coal License 389548) was driven toward the Coldwater River. The mine reached the property boundary at several points and was still in coal at these locations. Even though a significant amount of coal remained, the mine was eventually abandoned and allowed to fill with water. Middlesboro Collieries operated two mines on Coldwater Hill until 1944. The Diamondvale Coal & Iron Company sank several shafts on Lot 122 (northeast of Lot 166) near the boundary of the Number 2 mine belonging to Middlesboro Colliery. Coal was reached but the mine was abandoned in favour of smaller seams on the eastern side of the basin. Seams at the Diamondvale operation were mined intermittently, but as of 1948 total production was less than 45 360 tonnes (50 000 short tons; Coal Assessment Report 150).

In 1910, the Coal Hill Syndicate began mining operations on Lot 1227 on the western boundary of the Middlesboro Colliery. Mining took place in the same seams as the Middlesboro mines. Yearly production was entirely dependent on railroad demands and in 15 years the mine produced more than 453 590 tonnes (500 000 short tons) of coal. Pacific Coast Coal Company later sank a shaft immediately north of Lot 166. A coal seam was reached within 30.48 metres (100 feet) of the surface; however, the coal was not of satisfactory quality or thickness and only a minimal amount of work was completed before the operation was abandoned.

After 1945, Samuel Gerrard continued small-scale mining on Coldwater Hill. In an effort to rejuvenate coal mining in the Merritt area, the BC Department of Mines sponsored a 1946 drilling program that targeted the area between Coal Gully and Coldwater hills. Results of this drilling proved the continuity of coal measures between the two hills and on the eastern side of the Coldwater River. In the 1940s, Coldwater Coal Mines acquired the lots formerly owned by the now-dissolved Middlesboro Collieries and Diamondvale Coal companies. The lots formed a continuous property running approximately northeast to southwest through the Merritt coalfield. Coldwater Coal Mines dewatered the abandoned Number 2 mine on Lot 166 to within 213.36 metres (700 feet) of the portal. Very little caving was encountered and moderate amounts of coal were successfully recovered from the pillars. By 1948, a total of more than 2 million tonnes of coal had been produced by coal seams mined on the southwest side of the basin. Most of the coal was produced from several medium-sized mines rather than a single large operation. One mine projected more than 609.6 metres (2000 feet) from the portal, but most extended a much smaller distance. Seven larger coal mines and numerous small coal mines were in operation in the area. The last coal mine in the area closed in 1963.

Imperial Metals acquired Lot 166 from Samuel Gerrard and in 1960 drilled 16 rotary drill holes totalling 1157 metres on Coal Gully and Coldwater hills. Two of the sixteen holes were later deepened by diamond drilling. From 1968 to 1969, Sumicol Consultants Company Limited of Japan Co. evaluated the property, providing an estimate of 35 million tonnes indicated resource on Coldwater Hill and recommending an underground mining operation. A detailed coal-sample analysis was conducted in 1970.

Shell Canada Resources and its subsidiary company, Crows Nest Resources, optioned the property from Imperial Metals from 1978 to 1982. During this time, 24 holes were drilled, most on the north end of Coal Gully Hill. From 1978 to 1979, exploration work included detailed geological mapping, bulldozer trenching on coal occurrences and a location survey that included all locatable coal occurrences, drillholes and mine portals. Geophysical surveys, including reflection and refraction seismic and resistivity surveys, were conducted on Coal Gully and Coldwater hills. Results from the surveys were considered questionable. During this time, 3877 metres were drilled in 20 rotary drill holes. All but one of the holes were drilled on Coal Gully and Coldwater hills. Most of the drilling was completed on the south end of Coal Gully Hill and on the flat foreground where a small potential pit had been delineated. The delineated pit contained an estimated 5.1 million tonnes of geological in-place coal reserves. At the request of the District Mining Inspector, Crows Nest Resources bulldozed all the old portals that could be found on the property in 1979. In 1980, Crows Nest Resources drilled three holes totalling 663 metres in the Normandale area without encountering any coal seams of commercial mining potential.

As of 1983, coal was reported to be burning underground on Coldwater Hill and hot steam was escaping from shafts on Coal Gully Hill, although coal exposed by old mining operations was standing well at many other locations. In 1991, the BC Geological Survey drilled four holes. Analysis of the drilling results determined that the Merritt coalfield had good potential for methane gas.

Forum Ventures Limited acquired a 50 per cent interest in the property from Imperial Metals Corporation in 2001. Shortly thereafter, Forum Ventures acquired additional claims in the vicinity of the property, including the Diamondvale property. Forum intended to investigate coalbed methane and conventional coal mining opportunities. At the time of acquisition, the property was in the very early stages of evaluation for coalbed methane potential. Shortly thereafter, the company changed its name to Forum Development Corporation. By early 2002, Forum had acquired 100 per cent interest in the Merritt coal property. In 2003, Forum retained Westwater Mines Limited to guide coalbed methane activities on the property. A Notice of Work and Reclamation was submitted later that year, which proposed a work program consisting of three drillholes totalling 962 metres to test the full thickness of coal measures in the Coldwater Hill area and assess the potential for coalbed gas production and coking blend or thermal coals. In 2004, the company had initiated a baseline ground-water survey and planned to drill a 455-metre borehole to test the potential quantity and flow rates of natural gas from coal seams and to recover samples for coal quality and gas desorption testing. By 2006, Forum Development Corporation had ceded their interests in the property. As of 2010, the Merritt Coal property was owned and operated by Robert Frederick Weicker.

Between 1906 and 1963, approximately 2.6 million tonnes of coal were produced from underground mining operations in the area (Coal Assessment Report 762). Approximately 80 per cent of the coal production in the area occurred at Coal Gully Hill. From 1932 to 1936, Middlesboro Collieries produced 124 150 tonnes (136 852 short tons) of coal (MacDonald, 1936). Between 1906 and 1944, Middlesboro Collieries was able to recover more than 9071 tonnes (10 000 short tons) of coal per 0.4 hectares (1 acre) of ground broken (Coal Assessment Report 150). In 1983, an unofficial resource estimate indicated 11.4 million tonnes (5.1 million tonnes of indicated and 6.3 million tonnes of inferred in-place reserves) of surface resource at Coal Gully Hill and 120 million tonnes (40 million tonnes of indicated and 80 million tonnes of inferred in-place reserves) of underground resource in the Coal Gully Hill, Coldwater Hill and Diamondvale areas (Coal Assessment Report 762). In 1989, a resource estimate for the Merritt coalfield (not National Instrument 43-101 compliant) was released stating measured geological reserves of 10 million tonnes, indicated reserves of 20 million tonnes and inferred reserves of 40 million tonnes of high-volatile bituminous B-rank coal, respectively (Open File 1992-1; Geological Survey of Canada, Paper 89-4). The predominant rank of coal in the Merritt coalfield is high-volatile A to C bituminous coal.