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I I I I I I I I I I I OPINION OF FEASIBILITY There do not appear to be significant roadblocks which would keep the GMS Land and Cattle, LLC from successfully completing this project, The project does significantly increase their level of indebtedness but will not significantly reduce the yearly profitability of the Company. Following is a cost to benefit analysis of the project. Total Proiect Cost including interest = $296,307 Cost Per Acre-foot Of Water Stored For An Average Year $296,307 + (140 A-Ft x 30 yrs) = $95 The current value of the water along the Front Range varies dramatically depending on the source, priority number, and use, Water is being sold for $5,000 to $20,00 per acre-foot. Based on the source of water owned by GMSLCC and the expected firm yield, we believe this water would conservatively have a current value of at least $5,000 per acre-foot. What its value will be at the end of the 30 year loan can only be guessed at but will obviously be much greater than the current value, Based on the value of $5,000 per acre-foot the benefit to cost ratio of the reervoir and dam repair is as follows. . Benefit/Cost = [$5,000 x 140 A-Ft] + $296,307 = 2.36 COLLATERAL I As security for the loan the GMSLCC will pledge the west If2 of Section 18, TlON, R66W containing approximately 320 acres offarmlranch land. This property has an approximate dry-land value of $975 per acre, based on a recent comparable sale (total value $312,000.) A Certified General Appraiser will confirm the land value. The appraiser's report on the valuation of the land is included in Appendix G, IMPLEMENTATION SCHEDULE The following schedule is proposed for implementation of the project based on the two phases as outlined above. Task 1. 2. 3. Feasibility Study Loan From CWCB Finalized Complete Construction Target Completion Date 1/17 !O3 3/1/03 5/1/03 Giffin Reservoir-Feasibility Study Page 7