Description of Business

Lipari, through its wholly owned subsidiaries, mines, processes and sells bituminous steam coal from mines located in Clay, Perry, Owsley and Leslie Counties, Kentucky representing approximately 13,700 acres of land in the Commonwealth of Kentucky.

Lipari's core subsidiary, B&W Resources Inc., has in excess of 10 yearsí operating history as a producing coal company in Eastern Kentucky. To date Lipariís revenues have resulted primarily from the sale of coal to electric utility companies in the Southern and Eastern United States.

Lipari commenced production in 2008 after the acquisition of B&W. Since that time, Lipariís mines have produced approximately 2.5 million tons of coal, all of which was produced at surface mines located in Eastern Kentucky.

Substantially all of Lipariís revenue was generated from coal sales to electric utility companies in the United States. Lipariís largest customers in 2009 were four utilities, representing substantially all of its revenues.

As of September 30, 2010, Lipariís active (or to be active in 2010) mining complexes included four surface operations, one highwall operation, preparation plant, loading facility, repair and maintenance facility.

As at May 31, 2010, Lipari had a total of approximately 32,000,000 tons of measured and indicated coal resources and 15 million tons of proven and probable coal reserves which is allocated to the properties listed below.

About Lipari

Lipari, a Delaware corporation, was formed in the fall of 2008 for the purposes of identifying and acquiring an established coal producer in the Central Appalachian region that offered Lipari the following investment criteria:

ē    Established and profitable coal operations

ē    Seasoned labor force

ē    Strong management team

ē    Quality reserves

ē    Facilities (preparation plant and load out)

ē    Opportunity to expand and diversify reserve and production base

Lipari identified B&W Resources Inc., a Kentucky corporation, as its initial target for acquisition and completed the purchase of all of the issued and outstanding shares of B&W in September 2008.

Lipari, through its wholly owned subsidiaries, mines, processes and sells bituminous steam coal from mines located in Clay, Perry, Owsley and Leslie Counties, Kentucky representing approximately 13,700 acres of land in the Commonwealth of Kentucky.

While Lipari has a limited operating history, B&W has in excess of 10 yearsí operating history as a producing coal company in Eastern Kentucky. To date Lipariís revenues have resulted primarily from the sale of coal to electric utility companies in the Southern and Eastern United States.

Lipari commenced production in 2008 after the acquisition of B&W. Since that time, Lipariís mines have produced approximately 2.5 million tons of coal, all of which was produced at surface mines located in Eastern Kentucky.

Mission

Lipari Energy is a socially conscious Company focusing on the production and development of Natural Resources founded on the philosophy of measuring returns through three verticals: safety, environmental and financial performance.

Company History

Although Lipari was formed in 2008, its subsidiary, B & W Resources, was formed in 2001. Lipari acquired the company in August 2008 from one of the three original owners. The Company has been in a growth mode in terms of their reserve base since that time.

B & W has been conducting surface mining operations in this general area of eastern Kentucky since 2001.


Management

John Liperote, Chief Executive Officer: Mr. John Liperote joined B&W as Chief Executive Officer in August 2008 and has over 30 years of experience in the coal industry. Prior to joining B&W, Mr. John Liperote also served as President of Darmac Coal Inc. and was the former director of underground operations at Darmac Associates Inc.

Richard Liperote, President: Mr. Richard Liperote joined B&W as President in August 2008 and has over 15 years of experience in the coal industry. Prior to becoming President of B&W, Mr. Richard Liperote held the position of director (Coal Sales and Acquisitions) at B&W. Mr. Richard Liperote previously also served as Vice President of Liperote Coal Sales.

Thomas Liperote, Chief Operating Officer: Mr. Thomas Liperote joined B&W as director of surface operations in 2008 and has over 25 years of experience in the coal industry. Prior to joining B&W, Mr. Thomas Liperote also served as Vice President of Darmac Coal Inc. and was the former director of surface operations at Darmac Associates Inc.

Scott Warren, Chief Financial Officer: Mr. Warren joined B&W as Controller in 2004 and has over 20 years of experience in the coal industry.  Prior to joining B&W, Mr. Warren served as Controller for BLC Properties, LLC (a coal land & mineral holding company) from 2001 until 2004. From 1999 until 2001, Mr. Warren was a financial accountant at BAE Systems, NA (a publicly held global defense company). Prior to working at BAE Systems, NA, Mr. Warren worked for 10 years at Manalapan Mining Company, Inc. Mr. Warren obtained his Bachelor of Science in Accounting and Business from Union College in 1988 and his MBA from Lincoln Memorial University in 1997. 

Board of Directors

John Liperote, CEO

Rich Liperote, President

John Sabine: Mr. Sabine has been a Partner and Counsel in the Toronto office of the law firm Fraser Milner Casgrain LLP since November 2001. Mr. Sabine is recognized as a leading mining practitioner in Canada with experience in mining and resource law and corporate finance. Mr. Sabine will serve as an independent director.

Peter Mordaunt: Mr. Mordaunt has over 25 years of experience in mining, mine development and advanced exploration. He founded Stingray Copper and served as its Chairman of the Board from October 28, 2003 until December 2009 and Chief Executive Officer from October 28, 2003 to January 2010. Mr. Mordaunt will serve as an independent director.

David Warner: Mr. Warner was a Partner of KPMG LLP from June 1980 to September 2010. Mr. Warner will serve as an independent director.

Governance

Lipari believes that there are four essential factors that allow any entity to succeed, to navigate difficult and challenging environments, to achieve a competitive advantage and to meet shareholders expectations. Those factors are: people, product, profitability and potential.  Lipari has remained true to this ideal by developing the following business strategies:

Strong Management Team.  Lipari believes that a fundamental driver of any companyís success is the strength of the management team, and with the complexities of the mining industry having a management team that are focused and disciplined is critical to the success of Lipari.  Lipari has recruited and developed a seasoned, experienced and diverse management team with an average experience in the energy industry in excess of twenty years.  The team assembled provides leadership to the company in areas of operations, coal sales, finance, legal and accounting.

Diversified and Expandable Reserve Base. At May 31, 2010, Lipari controlled approximately 15 million tons of recoverable coal reserves, 32 million tons of coal resources and had approximately 13,700 acres of land under lease. Lipari has grown its reserves from approximately 6.1 million tons to 32 million tons during the past two years.  Lipariís mining operations in Kentucky are located in close proximity to numerous currently mines operated by small, privately-held companies with limited access to the capital markets and Lipari has explored opportunities to diversify its operations by acquiring additional reserves and operations in other states. Lipari believes that its past experience with raising capital from outside sources gives Lipari the opportunity to expand current operations through strategic acquisitions. In addition, Lipari believes that the opportunity exists to opportunistically acquire nearby mines to further leverage its railroad access and wash plant facility.  Lipari believes it has unproven deposits on its leased property and it intends to aggressively explore and develop acreage which geologically proves economically feasible to mine. Lipari plans to continue to expand coal production in 2011 and beyond by continuing to increase production at existing mines and by opening new mines under permit. Lipari also will expand total tons mined through strategic acquisitions.

Profitable and Sustainable Operations.  Through the direction and leadership of Lipariís management team, itís positioning and acquisition of a diverse reserve base and the maintaining of a modern fleet of equipment, Lipari has generated strong earnings and profitability since acquiring B&W. At September 30, 2010, Lipariís active (or to be active in 2010) mining complexes included four surface and one highwall mining operation, along with its preparation plant, repair and maintenance facility and load-out facility. Lipari holds or controls 22 permits associated with mining operations including three permits related to processing facilities. Lipari has exploited its strong reserve base and active permits by (1) ramping operations from two to five active surface mining operations over the past 18 months; and (2) commenced a new highwall mining operation in September 2010. Lipari owns, leases and maintains a modern equipment fleet which enables Lipari to achieve production efficiencies which provide Lipari with a competitive advantage over many of its competitors.  In September 2010, Lipari acquired a state of the art maintenance facility in London, Kentucky.  Lipari expects the maintenance facility to further reduce cost and expenses associated with major repairs and maintenance of its fleet. The maintenance facility is also expected to have a focused program to cycle equipment through the facility on a preventive maintenance program.

Continued Long Term Customer Relationships. Based on the extensive experience and reputation of Lipari and its reputation for reliability, consistent quality and customer service, Lipari has been able to secure long-term sales contracts with coal supply agreements with major utilities. Lipari intends to further develop its strong relationships with other regional customers to enhance its market position and secure Lipariís planned coal production under favourable long-term contracts.