Terra Systems, Inc. Cites Report From National Research Council Examining Coal Waste Impoundment Issues.

Business & Technology Editors

LINDON, Utah--(BUSINESS WIRE)--Dec. 10, 2001

In October, the National Research Council released a report, "Coal Waste Impoundments: Risks, Responses, and Alternatives."

A coal waste impoundment flooding accident occurred at Buffalo Creek, WV in 1972, in which 125 people were killed and 1,100 were injured. In October, 2000, a 72-acre surface impoundment of coal waste near Inez, KY suffered a breakthrough. This released 250 million gallons of coal slurry into nearby creeks and rivers, overflowing them with a dense, black sludge. Although no loss of life occurred at the Inez disaster, environmental damage was significant. This incident caused Congress to ask the National Research Council to examine ways to reduce the potential for similar disasters in the future. There are approximately 600 coal waste holding sites in the U.S.

In the eastern United States, over 500 million tons of coal are mined annually. Before being burned in a power plant, most of this coal is washed to remove noncombustible materials, which can constitute as much as 50% of the raw coal. The washing process leaves a watery slurry consisting mainly of fine coal, small particles of rock, and clay. The slurry is usually pumped into a water impoundment area, where the particles eventually settle. The incremental generation of coal slurry from current coal production adds to the existing volume of coal slurry accumulated over the decades. The slurry in the coal waste impoundments is simultaneously a potential environmental hazard and a source of energy. Settled carbonaceous matter often approximates 30% of the coal slurry volume, a proportion which is usually economical to recover.

The 276-page report was prepared by the Committee on Coal Waste Impoundment, which was appointed by the National Research Council. This is a principal operating agency of the National Academy of Sciences, which was chartered by Congress in 1863 with a mandate to advise the federal government on scientific and technical matters. This report made a number of recommendations, including that: federal agencies should have clear authority to review waste storage basin design; a standard barrier design should be determined; the length of the impoundment review process should be shortened; and economic incentives should be explored to develop alternatives to slurry impoundments.

Commenting on this study, Clayton Timothy, Chairman of Terra Systems, said: "This report by the distinguished National Research Council cites the environmental dangers and economic opportunities inherent in coal waste impoundments. We believe our patented Pneumatic Accelerator technology can become a major technological alternative in the coal waste process. First, by beneficiating coal without the use of water, it can reduce the amount of undesirable coal slurry produced in the future. Second, our technology can remediate existing coal slurry impoundments and simultaneously recover substantial amounts of energy. Thus, the National Research Council report has addressed what we believe can become an additional target coal market for Terra Systems. As a development-stage company, we have not yet commercialized our technology in any of our prospective markets. However, our bench-scale tests results lead us to believe that our technology will be able to economically beneficiate and remediate coal on commercial scale, including that in the coal waste impoundment category."

Terra Systems, Inc. was incorporated in Utah in 1996 and is presently a development-stage company. It is primarily engaged in the development and commercialization of its patented pneumatic accelerator. This device is a gas linear particle accelerator, which conveys and processes bulk materials at high velocity in a particle isolated state, using air as the medium of movement. This technology operates efficiently at ambient temperatures and at low pressures and does not use water, the generally more costly traditional alternative for processing bulk materials. Virtually, all organic and inorganic bulk materials used in basic industries can be more economically separated and classified by our dry-process technology. This capability facilitates a number of associated procedures, including: drying, micropulverizing, mixing, forming, conveying, and loading. In addition, bulk materials can be beneficiated in important ways including moisture reduction, ash reduction, Btu enhancement, and electro-customization. Our system can perform multiple tasks, needs less maintenance, requires no chemical additives, and can improve the surrounding environmental quality. Opportunities are seen for many applications in an array of large industries including power generation, agriculture, mining, environment, construction, ceramics, and materials transportation. We estimate that our technology could generate economic returns to industrial users in the form of revenues and/or cost savings in the area of $2 billion within a few years, if adopted for implementation in several large projects. Terra Systems anticipates it will share in these economic returns through fees, royalties, and profit-sharing from licensing of its technology. TSYI has approximately 18 million shares currently outstanding.

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