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December 23, 2011 <br />Mr. Don Loloff <br />P.O. Box 518 <br />Kersey, CO 80644 <br />RECFIVPn <br />JAN 2 0 2012 <br />V O► ry s►ot' w and Safety <br />Mining <br />Re: Estimate of GIC & NCLPIC Shares Required for a Potential Augmentation Plan <br />Dear Mr. Loloff: <br />Per a request made by your water attorney, Kim Lawrence of Lawrence Jones Custer Grasmick <br />LLP, I have conducted a preliminary investigation into the number of Greeley Irrigation <br />Company (GIC) and New Cache La Poudre Irrigation Company ( NCLPIC) shares that would be <br />required in a potential augmentation plan to cover evaporative depletions at the Loloff Pit (M -85- <br />1 12). Our previous analysis of potential augmentation plans, dated May 25, 2010, assumed that <br />a long -term lease of augmentation water from the City of Greeley could be obtained. Based on <br />your recent discussions with personnel at the City of Greeley, the availability of such a long -term <br />lease is now in doubt. Assuming a lease with the City of Greeley is indeed unavailable, a <br />potential augmentation plan would require other water rights to make replacements for <br />depletions resulting from evaporation of groundwater at the Loloff Pit. Given their locations <br />relative to the Loloff Pit, shares in the GIC and NCLPIC systems are the most likely replacement <br />sources. <br />Our investigation focused first on identifying the steady -state depletions to the Cache la Poudre <br />River that will occur assuming the Loloff Pit is mined according to the current mining plan on <br />file with the Division of Reclamation, Mining, and Safety; these depletions are equal to your <br />augmentation requirement. Next, we estimated how many GIC shares would need to be obtained <br />to cover summertime depletions from the Loloff Pit. Finally, we estimated how many NCLPIC <br />shares would need to be obtained to cover the remaining depletions not covered by the G1C <br />shares. <br />AUGMENTATION REQUIREMENT <br />Based on prior discussions with you, we assumed the total amount of exposed groundwater at the <br />Loloff Pit will be 34 acres once mining and reclamation is complete. According to the current <br />SWSP, the net evaporation rate in the area is 2.92 feet per year. Therefore, total annual <br />evaporative losses at the pit would be approximately 99.28 acre -feet per year post - reclamation. <br />Because the Loloff Pit is located approximately V2 mile north of the Cache la Poudre River, these <br />evaporative losses do not affect the river instantaneously but rather have a delayed affect. The <br />timing of depletions at the river is determined by lagging the monthly evaporative losses using a <br />Stream Depletion Factor of 60 days, a method approved in the SWSP. The resulting steady -state <br />