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<br />, <br /> <br />The Company owns about 37 percent of the ditch. A recent appraisal report for the <br />Company's Agricultural Ditch holdings indicates a value of$16.2 million based on <br />decreed diversions and $20.4 million based on historic depletions. Attached is a copy of <br />my memo of December 20, 1999 explaining the evaluation of the Ag Ditch shares. <br /> <br />The appraisal report by Craig Green indicates that he prefers the $16.2 million value for <br />decreed diversions. Ifwe accept that analysis, we are a little short on collateral. You may <br />want to advise the Board that the collateral might not be equivalent in value to the <br />principal amount of the loan. I don't think this should be a problem, however, since the <br />bottom line here is that Con Mutual is a strong credit and the possibility of problems with <br />this loan are remote. <br /> <br />2 <br />