2008-01-07_GENERAL DOCUMENTS - M1989056

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When referring to the tables facing the preceding page, the information presented shows that production commenced in 1997; and during that year (or part of the year), 116,788 tons were sold out of the pit. Production peaked in 1999 at 340,905 tons. Since 2002, production declined from 199,726 to 135,119 tons. Based on production records from November through April of 2004 through 2006, from 33.12 to 36.84 percent of the aggregate is sold during those six-month periods. Production data available from November of 2006 through April of 2007, indicated that 33,822 tons of aggregate were sold during that six-month time period. Using amid-point of 35.0 percent being produced during the first six months of fiscal year 2007 results in forecast aggregate production of 96,634 tons (33,822 tons/0.35) for the entire fiscal year, rounded to 100,000 tons. During the mining operations, 18 percent of the aggregate mined on the average is waste material and not saleable product. Therefore, in order to produce 100,000 tons of saleable product, it is necessary to mine 121,951 tons [100,000 tons/(1.00-0.18)]. Commencing in fiscal yeaz 2007 the amount of aggregate mined is estimated to increase 5 percent annually; and at this rate of production, it will take 20 years to mine out the pit. Royalty -During the mining process, the pit operator typically reclaims the pit in an ongoing process based on the reclamation plan that the United States Department of Army Corps of Engineers has established and approved. As a result, reclamation costs can have a material influence on what the mazket will bear with respect to the royalty an operator is willing to pay. An average cost of $30,500 per acre is estimated to reclaim the Kehn Pit wetlands and establish open space in conformity with the United States Department of Army Corps of Engineers 404 permit. FOSTER VALUATION COMPANY LLC -31-