The Mount Klappan (Hobbit-Broatch) deposit consists of multiple coal seams found along the Hobbit and Broatch creeks and inferred to underlie the broad plain between Didene Creek and the Skeena River, about 93 kilometres southeast of the village of Iskut or 152 kilometres north-northeast of Stewart. The deposit forms part of the Groundhog Coalfield, an oblong (30 by 80 kilometres) area extending southeast from the headwaters of the Klappan and Little Klappan rivers to Groundhog Mountain. Mountainous terrain with broad valleys is characteristic of the Skeena Ranges.

Coal exploration in the region began in 1903 with intensive prospecting, surveying, trenching and drifting on coal exposures in the southeast Groundhog Coalfield on mapsheet 104A. In 1948, Buckham and Latour of the Geological Survey of Canada conducted mapping and data collection and documented 192 coal occurrences (Geological Survey of Canada Bulletin 16). Interest in the potential of the northwest Groundhog Coalfield (Mount Klappan area) began in 1979. Gulf Canada conducted exploration on the Mount Klappan Project in the 1980s, including the Lost, Fox, Summit, Hobbit-Broatch, Nass and Skeena areas.

See 104H 021 (Arctos (Lost-Fox)) for details of the exploration history and geology of the northwest Groundhog (Mount Klappan) Coalfield.

Exploration at the Hobbit-Broatch prospect between 1981 and 1984 included nine diamond-drill holes for a total of 1339 metres, 742 metres of trenching, and detailed geological mapping. A 21,000 tonne bulk sample was mined from an open pit at Hobbit-Broatch over the winter of 1984 to 1985. It was processed on-site along with a larger bulk sample from a pit on Lost Ridge, and shipped in 1986.

At the Hobbit-Broatch prospect, seams A through K are present. In Hobbit Creek, seams I to K are exposed at several locations due to folding. Samples collected from these seams (Coal Assessment Report 109) gave the following range of coal quality values:

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                            Range              Average
Fixed Carbon          41.40  -     83.10         67.20
Ash content            8.90  -     52.30         21.80
Volatile matter        6.10  -     16.40         11.30
Sulphur content        0.34  -      0.76          0.55
Calorific value     7354.00  -   4205.00       6092.00
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The above values are based on raw coal and are stated in per cent except for calorific value which is in calories per gram. Coal rank, based on the fixed carbon to ash content ratio, is generally semi-anthracite but varies from low volatile bituminous through to anthracite.

Gulf Canada reported combined (measured, indicated and inferred) resources of 405,700,000 tonnes in 1985 (Coal Assessment Report 709).

Conoco acquired the property through acquisition of Gulf Canada in 2001. Fortune Minerals Limited acquired the property in July 2002 from Conoco and reported new resource figures based on the earlier work by Gulf Canada Properties Limited (Press Release - Fortune Minerals Ltd., July 12, 2002).

In 2007, Fortune Minerals reported 3,400,000 tonnes of indicated resources and 64,600,000 tonnes of inferred resources at the Hobbit-Broatch prospect, based on data collected during the Gulf Canada exploration projects of the 1980s (Technical Report on the Lost-Fox Area Thermal Coal Supply Pre-Feasibility Study, for Fortune Minerals, Marston Canada, March 2007).

The nomenclature of the coal-bearing rock units in the Mount Klappan area has a complex history. It has been variously referred to as the Currier Formation (Bustin and Moffat, Canadian Society of Petroleum Geologists Bulletin 1983; Macleod and Hills, Canadian Journal of Earth Sciences 1990), the Groundhog-Gunanoot facies (Eisbacher, Geological Survey of Canada Paper 73-33), the Gunanoot Assemblage (Richards and Gilchrist, Geological Survey of Canada Paper 79-1B), and the Groundhog-Gunanoot Assemblage (Evenchick and Thorkelson, Geological Survey of Canada Bulletin 577, 2005). Gulf Canada referred to the coal-bearing unit as the Klappan Series during their exploration programs in the 1980s (Coal Exploration Report 740). Evenchick and Thorkelson (Geological Survey of Canada Bulletin 577) provide a history of stratigraphic nomenclature in the coalfield, and a discussion of the debate over the age of the coal-bearing unit, which they refer to as the Groundhog-Gunanoot assemblage. The age is not well constrained, and may vary by area, however, it is mainly between latest Jurassic and late Early Cretaceous.

In August 2012, Fortune Minerals and Posco Canada renamed the Mount Klappan project as the Arctos Anthracite Project. Fortune Minerals reports a collective 231 million tonnes of measured and indicated resources and 359 million tonnes inferred resources across the Arctos Anthracite Project (Fortune Minerals 2011 Annual Review; See 104H 021 Arctos (Lost-Fox)). Located in four areas (Lost Fox, Hobbit-Broatch, Summit and Nass), there are 33 coal seams up to 11 metres in thickness to a depth of 380 metres (Fortune Minerals News Release - June 25, 2012).

Fortune Minerals voluntarily pulled out of the exploration area to allow for continued talks between the Tahltan First Nation and the B.C. government concerning land development around the headwaters of the Nass, Skeena and Stikine rivers (Fortune Minerals News Release - September 24, 2013).