The presence of an important coal deposit on Hat Creek has been known for many years. It was first reported by G.M. Dawson of the Geological Survey of Canada in 1877 and again in 1894. The first attempt to work the deposit was in 1893 when a rancher, George Finney, sank a 38-metre shaft and supplied coal to local residences and the village of Ashcroft. The next activity began in 1923 when a Chinese syndicate started a more ambitious operation, planning to use the nearby Pacific Great Eastern Railway (now BC Rail) to ship the coal to the coast. The syndicate ran out of funds before much was accomplished. The Clear Mountain Coal Company Ltd. took over and shipped three carloads of the coal, but the marketing of it in Vancouver proved a failure and the company went into bankruptcy. Early in 1925 the Hat Creek Coal Company acquired the property; to this point total development included three shallow exploration shafts, two tunnels driven 35 and 50 metres from the west side of Hat Creek, and seven drillholes which tested an area of about 45 hectares located approximately 1.5 kilometres south of Marble Canyon. The property lay dormant until 1933 when it was secured by L.D. Leonard. In the period 1933 to 1942 a few hundred tonnes of coal were mined each year and sold locally. This activity ceased because of World War II and no further work was done until 1957. In the mid-1950s, the B.C. Electric Company Limited asked its geological consultant, Dr. Victor Dolmage, if he could recommend a coal property in southern British Columbia that might be amenable to large-scale mining to support a major thermal power generating plant. Dr. Dolmage had previously examined the Hat Creek coal property for its owners, the Wilson family of Vancouver, and had noted the widespread occurrence of thick coal in a few scattered drillholes and the structures exposed in the mine that suggest unusually thick coal layers. Accordingly, he recommended the Hat Creek property and, in 1957, it was optioned to Western Development and Power Limited, a subsidiary of B.C. Electric Company Limited. The area of the exposed portion of the Hat Creek coal deposit was explored by eight reconnaissance diamond-drill holes and the investigation continued in 1959 when some trenching and six additional holes were completed west of Hat Creek near the old workings. Acquisition of British Columbia Electric by the Province ended further exploration until mid-1974 when British Columbia Hydro and Power Authority, a Crown-owned company, began systematic drilling. Twenty-five diamond-drill holes and two rotary holes totalling 11,418 metres were completed in 1974. FSI, petrographic, plasticity, washability, grindability, fusibility tests and proximate and ultimate analyses were performed on the coal. In addition, chemical analyses of the ash were done. Some of the holes were logged with varying combinations of caliper, density, gamma, neutron and resistance tools. Infra-red heat sensing and magnetometer surveys were run and test programmes were conducted for electromagnetic, resistivity and gravity techniques. In 1975, 76 diamond-drill holes totalling 22,556 metres were drilled. In addition, ground level magnetometer and gravity studies were undertaken covering the entire length of the valley. In 1976, 89 diamond-drill holes were completed totalling 20,422 metres, all of which were logged by gamma ray-density instruments and where possible, by caliper-resistance devices. Fifteen auger holes were drilled totalling 265 metres, yielding 108 tonnes coal for sampling. In the spring and summer of 1977, some 6350 tonnes of coal from two test trenches were transported by rail to the Battle River Powerplant of Alberta Power Ltd. Burning and other tests carried out there demonstrated that typical Hat Creek coal can be handled, pulverized and burned in a 32 megawatt commercial-scale powerplant unit (Final Report, Bulk Sample Program, August 1978).

The valley formed by the upper reaches of Hat Creek, site of the coal deposits, is a northerly trending topographic and structural depression 22 kilometres long and 3 to 5 kilometres wide. It is an open basin bounded by the rugged Clear Range on the west and Cornwall Hills on the east. Except for the coal beds now exposed at the north end of the valley, bedrock is rarely seen on the valley floor. Reconnaissance drilling shows that the average till cover is 51 metres thick.

The principal lithological units in the Hat Creek area consist of Tertiary coal and clastic sedimentary and volcanic formations which rest unconformably on Cretaceous volcanic rocks and metamorphosed Paleozoic carbonates and greenstones.

Two main coal deposits are present in the Hat Creek area, the No. 1 reserve (the original deposit) south of Marble Canyon, and the larger No. 2 reserve about 7.5 kilometres to the south along Hat Creek. Three main coal seams containing sub-bituminous rank coal are present in approximately 425 metres of strata of the Eocene Hat Creek Formation (Kamloops Group). The coal is interbedded with claystone, siltstone, sandstone and minor conglomerate. The coal is almost everywhere overlain by a thick claystone sequence which in turn is overlain unconformably by a variety of volcanic rocks including lahars and dacite, basalt, rhyolite and trachyte lavas. Andesitic volcanic rocks of the Kamloops Group and Cretaceous Spences Bridge Group, exposed peripherally in the valley, appear to form the base of this succession. The age of the coal measures is believed to be early Tertiary, bracketed by a date of 51.2 +/- 1.4 Ma on overlying rhyolite of the Kamloops Group and a 91.6 +/- 3 Ma determination on much older feldspathic basalt tentatively assigned to the Spences Bridge Group which underlies unconformably below the Tertiary beds (Canadian Journal of Earth Sciences, Volume 16, Number 9 (1979), page 1883).

It was noted by Church (Geology 1975) that some of the coal at Hat Creek appeared to be burnt, evidence of this being yellow and reddish altered rocks and soil near coal seams. This observation was subsequently confirmed by British Columbia Hydro and Power Authority during excavation of a large trench for bulk sampling purposes. The term bocanne-buchite has been applied to high temperature metamorphic rocks and pseudo-volcanic rocks above the No. 1 coal deposit. According to Crickmay (1967) bocanne is the process of autogenous combustion of carbonaceous shale or coal-bearing strata, and buchite, by glossary definition, is a partly fused shale or clay resulting from intense thermal metamorphism. The extent of the burnt zone has been established by drilling. The thickest section, about 75 metres deep, underlies the Dry Lake gulch near the base of the coal measures. Other profiles of the burnt zone give an average thickness of about 25 metres, although thinning and some discontinuity is apparent. The present area of the burnt zone amounting to about 3.5 square kilometres is evidently only an erosional remnant of a once much broader area of altered rocks. Similar reddish rocks and soils can also be seen 8.5 kilometres to the south near the No. 2 coal deposit. The age of the bocanne appears to be interglacial; the burnt zone is covered by till and glacial alluvium indicating a minimum age of at least 10,000 years, the time of retreat of last glaciation. Maximum age, shown by a polarity test of magnetite-rich lenses in the burnt zone, is evidently less than 700,000 years, the time of the last major magnetic reversal (Fieldwork 1979, page 99). The phenomena of spontaneous combustion of low rank coal is widely known and it is suspected to be the ultimate cause of the Hat Creek bocanne. Tests have demonstrated that loose stacking of the coal promotes oxidation. Within several days temperatures can rise sharply causing ignition. It seems most likely that the original fire at Hat Creek may have begun in this manner in talus accumulations adjacent the coal measures.

The Hat Creek coal basin occupies a narrow depression bounded by steep faults. The central zone has been downwarped along a series of north-south tensional faults forming a graben. Locally the walls of the graben have been offset somewhat by a series of northwest and northeast striking conjugate shear faults. The basin is crosscut by an important system of east trending younger gravity faults. The strata in the No. 1 reserve generally dip approximately 25 degrees south with local divergences being due to faulting and minor folding. Beds in the No. 2 reserve dip 20 to 30 degrees west and strike north, parallel to a number of major gravity faults which downthrow the strata to the west.

The coal at Hat Creek is one of the most competent rocks in the succession. Physically, there is a full range of coals from bright to dull brown, but most of it is massive, compact, fine grained, relatively solid, dull brownish black rock. It is flaky where sheared or weathered. Relatively continuous horizons of resin beads and petrified wood fragments are common in the coal. Parts of the coal are characterized by small lenses, globules and irregular-shaped masses of light yellow semi-transparent fossilized amber or retinite.

The uppermost seam, approximately 160 metres thick (A zone), constitutes more than one-third of the formation and consists of a relatively impure sequence of interbedded coal, claystone and siltstone and sandstone lenses. The bands and partings represent approximately 28 per cent of the seam. The middle seam (B zone) is 50 metres thick while the lowermost seam (D zone) is 70 metres thick, and is separated from the former by sandy siltstone, conglomerate, sandstone, and a number of thin coal bands (C zone). Approximately 23 per cent of the seams consist of impurities. The lower portion of the lower seam, approximately 30 metres, consists of clean coal (approximately 14 per cent impurities) and represents the best quality coal in the Hat Creek coal measures. The mean composition of the coal is as follows: 32.6 per cent ash, 34.0 per cent fixed carbon, 34.4 per cent volatile matter and approximately 0.55 per cent sulphur.

Proven and probable coal reserves of the No. 1 deposit (for selective mining with a 2 metre cutoff) with a heating value of 17.71 megajoules per kilogram, ash content of 34.82 per cent and sulphur content of 0.51 per cent are 739,523,000 tonnes. Possible (inferred) reserves constitute an additional 45 million tonnes. The volume of coal in the No. 2 reserve will surpass the No. 1 reserve and the coal also appears to be of better quality (approximately 15 to 25 per cent impurities). The potential for surface mining is greater in the No. 1 reserve, where seams are closer to the surface (Coal Assessment Report 142).