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Report on GCC Energy Coal Transport Options <br />Considering the state of the coal industry, this is a very expensive product to the customer and <br />there must be significant benefit to the customer for using this coal. Other coal available in the <br />market, such as Powder River Basin Wyoming production, is much less costly to produce. As an <br />example, spot coal pricing shown in Argus as of early 2015 for CO, UT, WY and Powder River <br />Basin was $29.00/ton and $12.76/ton, respectively. The heat value of King II Mine coal is about <br />13,200 to 13,500 Btu/lb. as compared with 11,300 Btu/lb. for CO, UT, WY and 8,800 Btu/lb. for <br />Powder River Basin coal. Spot prices are fob rail car at the mine site. <br />A projection of recoverable coal resources remaining for mining by King II Mine is shown <br />below: <br />Existing State of Colorado lease — 0.4 million tons (estimate) <br />Existing federal lease COC62920 — 7.05 million tons (as leased prior to mining) <br />By-pass lease modification of COC62920 — 10.52 million tons <br />Total under lease or in process of leasing — 17.97 million tons <br />Less mined to date by King II Mine — 4.78 million tons <br />Available for mining — 13.19 million tons — 13 years of operation <br />Exploration area — 26 million tons — estimate subject to results of drilling, geology, mapping, etc <br />Possible remaining coal resources could support continued underground mining for about 25 <br />years but this is speculative given the information that is available. The mine plan layout <br />provided to OSMRE by GCC Energy is the basis of available coal resources which have been or <br />are being permitted for mining. The issue that GCC Energy has is that they do not have <br />permission to mine coal in the lease modification or the exploration area. This would leave them <br />about 2.67 million tons to mine. This situation is a time problem given the schedule for permit <br />modification assuming the lease modification can be issued within the next year. This is critical <br />for GCC Energy and most likely influences their decisions on commitments to capital <br />expenditures for mitigating impacts associated with use of CR120. <br />Transportation Options to Avoid CR120 <br />Generally, transport methods used for moving coal and other bulk commodities include over -the - <br />road trucks, off-road trucks, conveyor belts, aerial trams/conveyor and pipelines. Each of the <br />methods has advantages and disadvantages. These methods can be described as discontinuous <br />(mobile equipment) or continuous with relative attributes as summarized in the following table. <br />MINE ENGINEERS, INC. 4 December 15, 2015 <br />