70 East Main Street, Suite F  Greenwood, IN 46143  317.889.5760  pinnacleactuaries.com    John Wade, ACAS, MAAA  jwade@pinnacleactuaries.com      June 7, 2017    Mr. Michael Sliva  Chair – Ohio Reclamation Forfeiture Advisory Board  2045 Morse Road, Building H‐3  Columbus, Ohio  43229‐6693      Re:  Actuarial Analysis of the Ohio Reclamation Forfeiture Fund – June 2017 Report    Dear Chairman Sliva:    Attached is our report documenting our analysis of the financial soundness of Ohio’s Reclamation  Forfeiture Fund (Fund).  This report represents the combined efforts contributed by the Ohio  Reclamation Forfeiture Fund Advisory Board, the Ohio Department of Natural Resources – Division of  Mineral Resources Management, and Pinnacle Actuarial Resources, Inc.    As we state in our report, we believe the Fund currently meets the criteria for long term solvency to  cover expected liabilities and expenses.  This is not to say that the current Fund balance is adequate to  cover catastrophic events, such as taking on the liabilities resulting from the failure of one of the  largest operators in the state, but it can cover the reasonably expected liabilities.  Additional details are  contained in our report.    It has been a pleasure working with you on this study.  Please feel free to contact anyone from the  engagement team should you have any questions.    Best regards,   John E. Wade, ACAS, MAAA  Consulting Actuary  jwade@pinnacleactuaries.com      Enclosure    cc:  Lanny Erdos, Chief ODNR‐DMRM  Commitment Beyond Numbers        Analysis of the   RECLAMATION FORFEITURE FUND     Oversight by the   Reclamation Forfeiture Fund Advisory Board    Maintained by the  Ohio Department of Natural Resources  Division of Mineral Resources Management      Issued June 7, 2017      70 East Main Street, Suite F  Greenwood, IN 46143  317.889.5760  pinnacleactuaries.com               Commitment Beyond Numbers      Table of Contents      Section  Page  Purpose ....................................................................................................................................................... 1  Qualification to Provide Actuarial Report ................................................................................................... 1  Distribution and Use ................................................................................................................................... 1  Reliances and Limitations ........................................................................................................................... 2  Executive Summary ..................................................................................................................................... 4  Summary of Findings ................................................................................................................................... 9  Ohio Reclamation Forfeiture Fund Background ........................................................................................ 11  Changes in the Data since Previous Report .............................................................................................. 13  Historical Forfeitures ................................................................................................................................. 14  Analysis Overview and General Comments .............................................................................................. 17  Actuarial Analysis ...................................................................................................................................... 21  Long‐Term Water Treatment and Alternative Water Supply ................................................................... 31  Financial Capacity of the Fund .................................................................................................................. 34      Exhibits  Appendices    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 1  Purpose  Pinnacle Actuarial Resources, Inc. (Pinnacle) has been retained by the Reclamation Forfeiture Fund  Advisory Board of the State of Ohio (the Advisory Board or RFFAB) to review the Reclamation  Forfeiture Fund’s (Fund’s) financial soundness.       Qualification to Provide Actuarial Report  This report is provided to the Advisory Board by John E. Wade, ACAS, MAAA.  Mr. Wade is a member in  good standing of the American Academy of Actuaries and meets its qualification standards to prepare  this report.       Distribution and Use  This report and conclusions contained herein are being provided to the RFFAB for its use in connection  with our actuarial analysis of the current and estimated future Fund’s liability in comparison with the  current and estimated future assets.  This report has been prepared to support the Advisory Board in  complying with the Ohio legislation which established the Advisory Board as the oversight organization  with respect to the Fund.  The legislation also required a report be made to the Governor of the State  of Ohio by the Advisory Board on a biennial basis.     We understand that copies of this report may be provided to the state auditors and other regulatory  authorities along with other parties in compliance with Ohio’s open records policies.  Permission is  hereby granted for this distribution on the condition that the entire report, including all exhibits, is  distributed rather than any excerpt.  These third parties should recognize that the furnishing of this  report is not a substitute for their own due diligence and should place no reliance on this report or the  data contained herein that would result in the creation of any duty or liability by Pinnacle to the third  party.    The attached exhibits in support of our findings are an integral part of this report.  These sections have  been prepared so they document our actuarial assumptions and judgments.  Judgments about the  conclusions drawn in this report should be made only after considering the report in its entirety.  We  remain available to answer any questions that may arise regarding this report.  We assume that the  user of this report will seek such explanation on any matter in question.    Our conclusions are predicated on a number of assumptions as to future conditions and events.  Those  assumptions, which are documented in subsequent sections of this report, must be understood in  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 2  order to place our conclusions in their appropriate context.  In addition, our work is subject to inherent  limitations, which are also further outlined and discussed later in this report.      Reliances and Limitations  We have prepared this report in conformity with its intended use by persons technically competent in  the areas addressed and for the stated purposes only.      We have relied upon data and information supplied by members of the Ohio Department of Natural  Resources – Division of Mineral Resources Management (ODNR‐DMRM) staff including Permitting &  Bonding, Forfeiture and AML, Regulatory and Data Management.    There is a limitation upon the accuracy of these estimates in that there is an inherent uncertainty in  any actuarial estimate of future costs.  This uncertainty is due to the fact that the ultimate liability for  claims is subject to the outcome of events yet to occur, e.g., the likelihood of permit holders running  into financial difficulty and default, the size and cost of reclamation, changes in the standards of  reclamation and desired speed of reclamation.  While there are no standard techniques for which to  develop estimates for these specific issues, in our judgment, we have employed techniques and  assumptions that are appropriate and the conclusions presented herein are reasonable, given the  information currently available.  However, it should be recognized that future loss emergence will likely  deviate, perhaps materially, from our estimates.      We have relied on the data provided without independent audit or verification on the part of Pinnacle  to develop our estimates of potential future reclamation cost.  We also worked with the ODNR‐DMRM  staff to understand the operation of the Fund, the reclamation process and the underlying data  provided but only to the extent such information may have affected our analysis.  While we have not  anticipated any extraordinary changes to the economic, legal, or social environment which might affect  the cost and frequency of default, we have recognized the current state of the Ohio coal mining  industry in selecting our near term forfeiture rates, relying on the RFFAB’s judgement of the impact of  current economic conditions.    Our estimates are provided net of underlying performance security (also known as performance bonds  or bonds).  We have made no attempt to evaluate the quality of security provided.  Should such  providers be unable to fulfill their obligations, the Fund would be responsible for this additional  reclamation cost.     Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 3  We estimate nominal costs at an expected level (50% likely that actual costs will be below our estimate  and 50% likely they will be above), then apply inflationary factors, and finally discount to present  values using investment rates derived from the US Treasury, recent returns of the Fund, and  discussions with the RFFAB.  Discounting is reliant upon the investment rate and timing of payments,  both of which are assumptions in this model and are subject to potentially high variability.  Looking at  future payments on a discounted basis could unintentionally remove a level of conservatism not  intended by the RFFAB.  For financial statement purposes, the Fund’s liabilities might be better stated  on an undiscounted basis.  Exhibits 2.2 and 2.3 show the claims liabilities for land reclamation and  water treatment before the impact of cost inflation and discounting (Columns 1 and 4), after the  impact of cost inflation but before discounting (Columns 2 and 5), and after both cost inflation and  discounting (Columns 3 and 6).  The difference is most profound on the water treatment liability,  where a 75 year payout is assumed.    Please note that for the purposes of this report, the Performance Security Estimate (PSE) and Central  Tracking System (CTS) data was provided as of February 27, 2017.      Further reliances and limitations are contained in the subsequent text, and in the exhibits  accompanying the text.            Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 4  Executive Summary  There are several ways to view financial soundness.  We find that the Fund is solvent on a short term  basis as the current Fund assets ($25.9 million) exceed the current Fund outstanding liabilities and  obligations for forfeited reclamation projects ($5.8 million).  For longer‐term solvency, the  measurement compares the current available Fund assets with the Fund’s long term expected  exposure or liability ($25.1 million on a present value basis of expected land reclamation and long‐term  water treatment costs of current permits plus the administrative expense to settle the liabilities).  We  believe the Fund currently meets the criteria for long term solvency to cover expected liabilities and  expenses.  This is not to say that the current Fund balance is adequate to cover catastrophic events as  described in the next paragraph.  This is an improvement over our 2015 actuarial analysis wherein we  estimated that it would take seven more years of no forfeiture costs before the Fund could accumulate  enough surplus to cover expected liabilities and expenses.  The primary driver of this improved  forecast is a more optimistic selection of the future forfeiture rates of permits, discussed in greater  detail later in this report.    Another indicator of financial soundness is the Fund’s ability to withstand a shock loss.  It would take  two more years of non‐forfeitures before the Fund could cover an average loss and nine more years to  cover the forfeited permits of the failure of the fifth largest permit holder.  The 2015 analysis resulted  in projected Fund balances that would cover the failure of either an average loss or the failure of the  fifth largest permit holder.  These increased time periods are primarily a function of increased average  potential liabilities due solely to a decreasing number of permits while overall potential liability  remained basically unchanged.  If the largest permit holder fails, the fund would need over 150 years  of non‐forfeitures in order to cover the loss.  See Exhibit 1 for additional details.    To further describe the situation, if the Ohio law was changed somehow closing the Fund at this time  to any new permits, the future expected revenues from the severance tax from the operating permits  currently covered by the Fund for future forfeiture potential plus the current Fund balance would  appear to provide sufficient capital to finance the estimated reclamation cost from the long term  expected forfeiture of some of the 168 permits included in the Fund today.  However, an average  shock loss today, on top of the expected forfeitures, would move the Fund into a negative cash flow  position within thirteen years.  Our long term solvency measure is intended to compare the current  balance with the exposures currently in place in a fashion similar to the method used to judge the  solvency of insurance or bonding companies.    As with the prior study, through the efforts of the engineers with the ODNR‐DMRM, we have  developed an estimate of the total potential cost to reclaim all of the subject mining operations  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 5  covered by the Fund.  This effort had historically only been undertaken once a site had been forfeited.   In general, we note that underlying performance security provided through the private  insurer/bonding community reduces the potential liability of the Fund.     Thus, the total potential cost to the Fund equals the total potential cost for all reclamation efforts less  the underlying performance security.  This potential Fund figure should be viewed as the maximum  possible cost or the worst case scenario (although should a provider of the performance security also  default, the Fund would also be obligated for the reclamation cost covered by that provider).      The Fund is involved in assuming financial risk for an exposure that is categorized as low frequency of  claims but very high severity in dollar terms, when an event (default) does occur.  There are currently  25 mining companies with coal mine related permits in the state of Ohio covered by the Fund and  included in our study.  Some of the operators have only a single permit while other larger operators  have a dozen or more mining permits.  The operator with the most coal mining permits in Ohio  currently has 63 permits in the Fund.      The small number of operators and the tremendous potential liability from a few of the larger  operators create a significant risk to the Fund from a concentration of risk perspective.  For example,  should one of the permit holders with only a single coal mining permit become financially unable to  meet their reclamation obligations, the cost to the Fund might fall anywhere from no cost (liability  covered through bonding) to almost $4 million.  See Exhibit 7.1a.  With the current Fund balance, the  reclamation cost of a forfeiture of a single permit holder can be financed.      On the other side of the spectrum, should one of the permit holders with a large number of sites  become financially troubled, the cost to the Fund for reclamation could easily exceed $35 million, with  the largest potentially exceeding $206 million.  See Exhibit 7.1b.    Our analysis includes the development of the Expected Cost to the Fund.  We define the expected cost  as the long run average that considers both the potential of a permit holder’s forfeiture along with the  potential cost of that forfeiture.  If the Fund was collecting a single “premium” from the operators at  the start of each project for providing this financial security as do insurance and bonding companies,  this Expected Cost (along with any operating expenses) would be the basis for the “premium” required  from each site and operator.      With this analysis, we have developed estimates based upon an annual forfeiture rate of 0.50%, as  developed in Exhibit 5.2.  Our method of estimating expected ultimate loss applies the selected  forfeiture rates to every permit every year to determine an average expected loss.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 6    The forfeiture rate selection is based upon historical Ohio forfeiture information and forfeiture rates  developed by using Kentucky and West Virginia information.  Applying the same procedure as the 2015  analysis, Ohio’s data received 60% weight in the selection, and the other states combined received  40% weight.  The selection also considered the current economic and operational state of the Ohio  coal mining industry as gleaned by discussions with the RFFAB.      To say it another way, with our recent analyses the forfeiture rate selection is heavily driven by actual  historic Ohio forfeiture experience which was omitted from both our 2009 and 2011 studies.  The  previous omissions were intentional because the recent years of no forfeiture activity was not thought  to be very credible.  While it would not be prudent to assume that the future forfeiture rates over the  long term would remain as low as they have been in recent years, the stability of the program should  be recognized, hence the application of the 60% weight to Ohio’s long term average forfeiture rate.    New to the 2017 actuarial analysis is a range of land reclamation cost estimates.  Pinnacle has  developed a low estimate and a high estimate based on adjusting the forfeiture rate.  For the low  estimate, the forfeiture rate is based on a 75% weight to Ohio and a 12.5% weight to both Kentucky  and West Virginia.  The result is a low scenario forfeiture rate equaling 0.33%.  The high estimate is  based on a 45% Ohio weighting and a 27.5% weighting to Kentucky and West Virginia.  This weighting  results in a high scenario forfeiture rate of 0.67%.  These low and high forfeiture rates are applied to  the land reclamation cost calculations to produce a range.  See Appendices A and B which include the  development of the low and high forfeiture rates, respectively.    We include a direct reflection of reclamation cost inflation and discounted the future liabilities to  present value using interest rates based on recent US Treasury information.  The cash flow tables in  Exhibit 1 are presented on a discounted to present value basis.    Based on our analyses, we have developed a net land reclamation Fund Expected Cost estimate for the  permits currently included in the Fund of $22.8 million in Exhibit 2.2.  This estimate compares to our  range estimates of $17.1 million on the low end and $28.5 million on the high end.  See Appendices A  and B which include the summary of the land reclamation expenditures under the low and high  forfeiture rates, respectively.    Also, we have developed a long‐term water treatment Fund Expected Cost estimate for existing  permits of $0.7 million in Exhibit 2.3.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 7  In Exhibit 1, Cash Flow, we display the expected revenues that will cover the above costs.  Tonnage  fees from the permits associated with the above costs are expected to accumulate to $9.9 million over  the next 75 years (the projected time period to work through the long‐term water treatment  liabilities).  During that same time, interest income earned on the positive fund balance would be  expected to accumulate to $21.9 million.  This report does not study the potential of new permits,  either for income or for costs.    In order to cover the expected costs for land reclamation and long‐term water treatment of the  current permits, the Fund should have an approximate $25.1 million balance ($22.8 million for land  plus $0.7 million for water plus $1.6 million for operating expense).  This can be thought of as the  funding level to be 50% confident that the funds will adequately cover expected costs, that is, half the  time this level of funding would be adequate, and half the time it would be insufficient.  It is reliant on  the assumptions explained throughout this report.      We have incorporated a shock loss scenario that examines how the forfeiture of an average‐sized  permit holder would affect the Fund: resulting in an estimated $25.7 million in additional liability to the  Fund.  See the derivation in Exhibit 7.1b and the cash flow play‐out in Exhibit 1 ‐ Shock Loss.  For  practical considerations, the cash flow exhibit incorporates a $3.5 million cap on land reclamation costs  per year.  This spreads the shock loss out over a twelve year period.  It is unlikely that the activities  required to reclaim the land associated with the hypothetical shock loss could be performed in a  shorter time period.    To adequately cover the expected cost of the current permits and the shock loss of an average‐sized  permit, the Fund would need to build to a balance of $50.8 million ($22.8 million for land plus $0.7  million for water plus $1.6 million for operating expense plus $25.7 million).  It is informative to note in  Exhibit 1 – Shock Loss that even a shock loss as described above with reclamation costs beginning in  2020 would move the Fund to a negative balance in 2029.  Given the current economy and the  financial condition of some of the coal operators in Ohio, the RFFAB should consider to what extent it  wants to fund for a shock loss, whether it be an average loss or one far greater as displayed in Exhibit  7.1b.    Please note that the current analysis and immediate prior analysis considered the possibility that a  permit in danger of forfeiture could be taken over by another more financially secure operator, who  would potentially assume the previous permit holder's assets, mining rights and reclamation  responsibilities.  This replacement action eliminates the reclamation cost to the Fund, potentially  saving millions of dollars for the Fund.  By using Ohio’s historic forfeiture experience, we account for  that activity to the extent it has occurred in the past, including the recent activity for Valley Mining.  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 8    There are advantages that insurers have that are not available to the Fund.  The most obvious  advantages include:      The spread of risk across insureds, locations, industries and lines of business;    The ability to individually underwrite and price each risk; and, maybe most importantly,   A level of surplus (available capital) in addition to the collected premium which allows an  insurer to survive years and periods where the actual costs exceed (and sometimes greatly so)  the expected long run costs.  When actual annual costs exceed long‐term expected annual  costs, the insurers have this operating capital.  In contrast, the Fund until recently had been  using recent proceeds to pay for the current reclamation projects.  The Fund has now begun  and continues the capital accumulation process.          Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 9  Summary of Findings  Based upon the methodology and assumptions described above, we have estimated the present value  of potential expected liability of the Fund as follows:    Liability     Land Reclamation  Water Treatment  Administrative Expense     Total  Net Present Value  Expenditures     $22,815,272          701,843       1,590,000     $25,107,115        The above calculations are found in Exhibit 2.1.  This compares to our 2015 total estimate of $36.3  million, and our 2013 total estimate of $18.9 million.    There can be considerable variation around this estimate due to:      The limited number of coal operators within the state of Ohio,    The uncertainty with respect to future forfeiture rates,   The emergence of water treatment liability,   The number of operators with multiple permits,    The relationship of the performance security provided by the private insurance market and  estimated cost to reclaim the various sites along with the large size of some of the  operators.      For example, should one of the largest operators be unable to meet its obligations, the potential cost  to the Fund from a single operator could approach $206.2 million.  An additional $25.7 million would  be needed to cover an “average” shock loss.  Please see Exhibit 7.1b.    In actuarial and insurance regulatory language, the Fund has significant risk of material adverse  deviation from the estimated expected loss.  This risk can easily be seen in two contexts.  The first  would be in comparing the largest single potential cost with the average potential cost.  On an  operator basis, this is $206.2 million versus $25.7 million, or a relationship of 8 to 1.  Please see Exhibit  7.1b.  The second context would be a comparison of the largest single potential loss with the current  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 10  available capital in the Fund, or $206.2 million to $25.9 million (as of January 2017), again a ratio of 8  to 1.  Even the average potential cost of $25.7 million nearly exceeds the Fund’s current capital of  $25.9 million after reduction for the Valley Mining losses.    Pinnacle has calculated a range of cost estimates in order to account for the variation around our  estimate.  As previously mentioned, the range is based on adjusting the selected forfeiture rate of  0.50%.  The table below displays the results.       Liability     Land Reclamation  Water Treatment  Administrative Expense  Net Present Value Expenditures  Low Estimate   Current Estimate   High Estimate   (0.33% forfeiture rate)  (0.50% forfeiture rate)  (0.67% forfeiture rate)          $17,117,483  $22,815,272  $28,513,061          701,843          701,843          701,843       1,590,000       1,590,000       1,590,000             Total  $19,409,326  $25,107,115  $30,804,904    Our range of estimates only affects the land reclamation expenditures.  The water treatment and  administrative expenses do not vary by scenario.      The establishment of the forfeiture rate is an exercise involving several assumptions and financial  judgments.  The benefit is a reasonable range of outcomes to consider when making financial  decisions. While we believe the above range is reasonable, it should not be interpreted to incorporate  all possible outcomes.  (To consider all possible outcomes would result in a range from no more  forfeitures at the low end, to 100% forfeitures at the high end.)              Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 11  Ohio Reclamation Forfeiture Fund Background  The current Fund was significantly revised in 2007 by the State Legislature to provide reclamation  coverage to eligible coal mine operators permitted by the State of Ohio in addition to the required  private performance security for each site.  This coverage is designed to step in to provide for funding  the reclamation costs of coal mining sites in the event of financial default of the permit holder.  The  mechanisms prior to House Bill 443 in 2007 had not accumulated a significant amount of capital or  revenue for its operations but the Bill did assign the responsibility for the on‐going cost associated with  the prior operator defaults not yet fully reclaimed to the Fund.  Fortunately, there have been no new  forfeitures requiring Fund financial support from year‐end 2006 through year‐end 2013.  (There were 6  forfeitures from Valley Mining in 2014.)  As of the end of January 2011, there were no permits/sites on  the list to be reclaimed under the direction of the Fund through the efforts and oversight of the ODNR‐ DMRM.  All reclamation work on permits forfeited prior to 2006 was substantially completed by year‐ end 2010.    The coal mine permit holders must maintain performance security (bonding) coverage in the amount  of $2,500 per acre of land based upon the acreage designated to be affected in the given year as  allowed on the permit.  The performance security can be obtained from the private insurance market  or financed by some other means such as letters of credit, certificates of deposit, cash or trust  agreements.      The Fund provides additional forfeiture coverage for reclamation efforts on underground mines,  surface mines and facility permits.  Facility permits might include operations such as preparation  plants, coarse refuse and slurry areas.  The eligible mine operators who select to be reliant on the Fund  for costs above the performance security pay a severance tax (i.e., tonnage fee) to the Fund which  varies from $0.12 to $0.16 per ton of coal extracted based upon the Fund’s balance.  The required  amount of private performance security is based upon the affected acreage on each permit issued by  the ODNR‐DMRM.  Many operators have submitted permit applications with a significant amount of  land not currently affected by mining.  The extra acreage has been included within the permit and  performance security up front to eliminate the need for the operator to reapply or post additional  performance security each time mining operations commence on another parcel of land.  Also, some  eligible operations, by choice or requirement, are fully covered by private performance security and  not part of the “pool” operated by the Fund.    The total potential reclamation cost estimate is based upon the ODNR‐DMRM engineer’s assessment  of the approved mining and reclamation plan on each permit including any on‐site processing facilities  covered by the Fund.  This cost estimate is commonly referred to as the PSE.  Each PSE uses unit costs  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 12  derived from the historical reclamation costs on Abandoned Mine Land projects, cost data from R.S.  Means and yearly direct inquiries for quotes.  These unit costs are applied to the approved mining and  reclamation plans to assess the total potential cost in the event of forfeiture.  Prior to our 2009  analysis, this PSE information had not been routinely established at the beginning of each permit  operation nor reviewed annually to assess the potential cost to the Fund.  It should be noted that the  forfeiture coverage is now updated periodically by the ODNR‐DMRM during the active mining  operation period of the mine and also during the reclamation process until the permit is released by  the ODNR‐DMRM.      Recently, the Advisory Board became concerned that PSEs were too conservative and did not portray  an accurate representation of the total liability of permits in the Fund.  In 2016, a workgroup was  established to develop procedures to calculate accurate cost estimates based on field conditions.  This  group consisted of individuals from Permitting, Inspection, AML, and Industry.  As a result, a more  advanced PSE procedure was implemented to provide a more precise estimate of Ohio’s cost of the  disturbed land in the event of a permit forfeiture.    The amount of the required performance security on a permit is adjusted during the reclamation  process based upon the acreage affected.  The amount of the private performance security required on  any given affected acre is decreased by 50 percent upon satisfactory completion of the procedure to  backfill and re‐grade the land (phase 1 of reclamation).  Another 35 percent decrease in required  performance security is made when the land is re‐planted and re‐growth or re‐vegetation has been  satisfactorily completed in accordance with the requirements set forth in the Ohio Revised Code and  Ohio Administrative Code (law and rule) (phase 2 of reclamation).  The final 15 percent of the required  performance security amount is typically released in about seven years following the date of planting,  if no additional action was necessary by the operator to achieve satisfactory reclamation.  It should be  noted that the private performance security is not related to the estimated reclamation cost but rather  a fixed amount of coverage ($2,500) per acre affected.  As noted previously, at any site, the operator  may elect not to rely upon the financial support of the Fund and choose to provide complete private  performance security in the full amount of the estimated reclamation cost (using the same estimation  methodology and unit cost values as the permits which are eligible and choose to rely upon the Fund).      In the case of default by the operator, the private bonding company may elect to reclaim all or a  portion of the site based upon the amount of performance security remaining as surety bond.  The  remainder of the site reclamation effort would be turned over to the Fund possibly with the  performance security payment of up to $2,500 per acre depending upon the amount previously  released.  Each coal mine operator may have multiple active sites (permits) with affected acres at  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 13  various phases at any time.  This situation with multiple permits from a single operator results in  additional concentration of risk.    As of February 27th, 2017, there were 100 active permits for coal mining operations in Ohio that were  part of the Reclamation Forfeiture Fund “Pool”.  There were also 68 permits covered by the Fund with  no future mining activity planned that had “Final Maps” accepted by the ODNR‐DMRM.  See Exhibit  7.6a.  Final Maps reflect the cumulative affected area on mining operations and are used to determine  an accurate reclamation cost estimate on each permit following completion of mining.    From the data provided for this analysis, we had ODNR‐DMRM engineer’s performance security  estimates on all 168 Fund‐covered permits from 25 different operators.  Of the 168 permits with PSEs,  the current PSEs for 133 permits are greater than the possible funding from bonding, letters of credits,  deposits or other instruments (private performance security).  Please see Exhibit 7.2.  The operator  counts have been adjusted to reflect the fact that some permit holders are part of one umbrella  company structure.  This issue is noted due to the impact that organizational structure has upon the  concentration of risk.  If a multiple permit holding operator should run into such financial difficulty that  it defaults, we have assumed that all permits under that umbrella corporation are impacted and  default as well.      Changes in the Data since Previous Report  We have compared the Performance Security Estimates for the 157 permits which had Performance  Security Estimates in the data included in the previous report as well as Performance Security  Estimates in the current data provided by the engineers from the Ohio Department of Natural  Resources.  Of these permits, the PSEs on all permits changed.  For 102 permits, the PSEs in this year's  data were lower than the PSEs included in the previous data by a total of $236.3 million of potential  reclamation cost.  For the remaining 55 permits, the performance security estimates increased by a  total of $216.8 million since the data for the last review was collected.  The overall net change is a  decrease in the Performance Security Estimate or the anticipated cost of reclamation of $19.5 million,  an improvement brought on as part of the ODNR‐DMRM’s effort in refining their PSE estimates.  Please  see the bottom of Exhibit 7.6a.    As should be expected, a grand majority of the permits in the database are from surface mining  operations.  Of the 168 permits included with PSEs, only 15 permits are related to underground mining  operations and another 20 permits are related to facility permits.  Please see Exhibits 7.3a, 7.4a, and  7.5a.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 14  Of the 100 active permits, we have PSE data for 72 surface mining operations, 10 active permits for  underground mining operations and 18 operating facilities permits.  Please see Exhibits 7.3a through  7.6a.  We note that the preceding information reflects only those permits covered by the Fund and not  those that have elected or are required to operate under full private performance security.      Historical Forfeitures   As background information, the ODNR‐DMRM provided the historical forfeiture order information  available from the US Department of the Interior’s Office of Surface Mining (OSM) covering the past 24  years by the year in which the order was made.  Since 1993, there have been a total of 104 bond  forfeiture orders to 33 permit holders.  This results in an average of 3 permits per permit holder.  The  actual number of forfeiture orders per permit holder has ranged from 1 to 21 permits.       From years 2000 through 2013, there had been only 19 forfeiture orders.  Seven of these forfeiture  orders in year 2005 were terminated because the company was able to reclaim and continue operation  on the affected sites.  These forfeiture orders did not result in any dollars being requested from the  Fund to assist with the reclamation process.  Even more impressive, there have been no forfeiture  orders from years 2006 through 2013.  Unfortunately, in October of 2014, permit holder Valley Mining  incurred 6 forfeitures.  However, even considering this, the lack of recent forfeitures otherwise has  allowed the Fund to cover the reclamation costs of previously forfeited locations including those  forfeited prior to House Bill 443.      More importantly, the Fund has begun accumulating capital to cover potential future forfeitures of  currently covered permits.  In the early 2000s before House Bill 443, this capital accumulation process  had been further slowed by the insolvency of a performance security provider (bond insurer) for two of  the permit holders, one of which was an operator with a significant number of permits.  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 15  Number of Forfeited Permits in Ohio from 1993 ‐ 2016 30 27  25 20 Permits 17  17  15 10 8  6  6  5 4  4  4  4  2  3  1  1  0  0  0  0  0  0  0  0  0  0  0 Calendar Year Source, Ohio Department of Natural Resources, Division of Mineral Resources Management      We noted in the previous analysis that similar to states that experience hurricanes, the lack of  forfeitures in the recent past prior to year 2014 does not provide support for an assumption that there  will be no forfeiture events in the future.  In 2014 this assertion was proven true when the Fund  experienced 6 forfeitures in October of that year.    The average annual number of forfeiture orders over the twenty four year available period has been  about 4.3.  We note that from 2000 to 2013, the annual permit forfeiture order frequency had declined  to 1.4 permits per year.  And most notably, from 2006 to 2013 there were no forfeitures.  However,  the good fortune ended in year 2014 when 6 permits were forfeited.  We also note that although there  were official forfeiture orders made on eight permits during calendar year 2005, the Fund was only  called upon to provide reclamation capital on one of these sites – a very positive development for the  Fund’s financial situation.  We were also provided with forfeiture information as compiled by the  ODNR‐DMRM which showed forfeiture activity during 1989 to 1992 at roughly the same levels as the  1993 to 1995 period.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 16    If we measure the annual number of forfeitures at the Permit Holder level rather than the permit level,  the long term permit holder forfeiture frequency has been less than two operators per year.      The number of inspectable units (permitted mining operations) in Ohio over the 25 year period is  displayed in the chart below.  Over the period of time 1992 through 2016, there have been anywhere  from 836 to 209 inspectable units in Ohio.  These figures are provided by the Office of Surface Mining  from their publicly available records.     Inspectable Units In Ohio 900 836 800 799 775 722 Inspectable Units 700 600 500 400 683 579 568 563 456 389 363 357 356 338 329 321 308 300 290 266 252 246 229 224 220 209 200 Calendar Year   Source: Office of Surface Mining reports    The average forfeiture rate per number of permits issued is 1.06%.  This translates to an annual  forfeiture rate of 0.06% based on an average lifetime of a permit of 21 years and adjusting for the fact  Pinnacle Actuarial Resources, Inc.    Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 17  that forfeitures rarely occur in the first two years of a permit’s active life.  Please see Exhibit 5.2.  Note  that the calculation of forfeiture frequency considers the seven 2005 permits discussed above that  were eventually terminated.  Since our goal is to estimate future frequency rates, it is prudent to  realize that future remediation efforts leading to terminated forfeiture orders may not be as  successful.      Comparing Ohio’s historic 0.06% forfeiture rate to the Kentucky and West Virginia forfeiture rates of  0.99% and 1.08%, respectively, Pinnacle has selected a projected Ohio annual forfeiture rate of 0.50%.   This selection is based on a weighting of 60% to Ohio’s forfeiture rate of 0.06%, and a 20% weighting  each to Kentucky’s forfeiture rate of 0.99% and West Virginia’s forfeiture rate of 1.08%.    The selection of the forfeiture rate of 0.50% reflects the inclusion of a mine status forfeiture rate  adjustment factor (Exhibit 5.3).  While we do not have historical data to determine the forfeiture rate  adjustment factors, our selections are intuitively logical.  We have also adjusted the final selected  forfeiture rate to account for the impact created by the adjustment factors, rendering the overall  impact revenue neutral.       Analysis Overview and General Comments   For the current permits covered by the Fund, we have utilized the site specific current estimates of the  total potential cost to reclaim all of the subject mining operations (Performance Security Estimate or  PSE) from the engineers with the Ohio Department of Natural Resources– Division of Mineral  Resources Management (ODNR‐DMRM).  We have combined the PSEs with estimated probability of  forfeiture over the lifetime of the permit to develop an estimate of the total expected (or long term  average) costs for the Fund.    The engineering estimation effort is now being undertaken by the ODNR‐DMRM on a regular basis.  At  the same time, the new task force has developed a more accurate PSE procedure.  This increased  frequency of PSE updates greatly facilitates the monitoring of potential cost at the sites and the future  analyses of the Fund’s potential liability.  These more accurate cost estimates generally produce results  that are not as conservative as those provided to Pinnacle in prior years.  Their impact has been  brought directly into our estimation process.    Since the PSEs include all portions of the permit within a single figure, they are adjusted during our  analysis to reflect the reported site operating status with respect to the various stages of mining and  reclamation.  A single permit may have various acres in process of achieving phase 1 release (all activity  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 18  including active mining operations prior to completion of all land replacement), in the process of  achieving phase 2 release (replanting and reforestation activity) and in the process of achieving phase  3 and final permit release (the waiting period prior to permit release).    In development of our estimation, we reflect that if a permit is forfeited, the underlying performance  security provided through the private insurer/bonding community, letter of credit or other security  provided would reduce the potential liability of the Reclamation Forfeiture Fund.  Thus, the total  potential cost to the Fund equals the total potential cost for all reclamation (PSE) less the underlying  performance security (bond, etc.).  This Fund potential cost figure should be viewed as the maximum  possible cost or the worst case scenario, with one exception.  In full disclosure of that one exception,  we do note that should a provider of the performance security also default, the Fund would be  obligated for the reclamation cost assumed to be covered by that provider.      Potential Fund Liability     Our analysis begins with estimates of total land reclamation cost (PSEs) for the 168 Fund‐covered  permits.  In total, the engineer estimated reclamation cost is $584.9 million.  This value is reduced by  $45.1 million of available and required performance security.  These adjustments to the initial PSEs  result in a total Potential Fund Liability of $539.9 million for land reclamation.  Again, these total  potential cost figures should be considered a worst case scenario ‐ if each and every operator would  forfeit all their permits and no providers of performance security default.    Expected Fund Cost     The combination of the potential cost (adjusted PSEs) and probability that the Fund will be called upon  (forfeiture rates) determines the Expected Cost to the Fund.  This Expected Cost being a combination of  the possible cost and the long run probability of default or forfeiture over the life of the permit could  be considered the long run average cost of future forfeitures to the Fund.  If the Fund was collecting a  single up‐front “premium” from the operators to provide this financial security in a manner similar to  insurance and bonding companies, this Expected Cost (along with any operating expenses) would be  the basis for the “premium” required from each site and operator.    We also note that while these are long term average projections, the actual results in any one year or  series of years will vary, sometimes significantly, from the long run average.  This is the nature of a low  frequency/high severity risk such as this.  For a similar example, we cite the cost of hurricane losses in a  southern state.  In some years, there will be no losses due to hurricane while in other years there will  be significant losses.  Most years are either well below or well above the long term average.  The key is  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 19  to generate sufficient capital in the less than average years to be available to cover the costs in the  years where the costs far exceed the long term averages.    Forfeiture rates    For our 2011 analysis, we obtained publically available financial information about some of the firms  holding Ohio coal mining permits through sources such as Standard & Poor’s and Dun and Bradstreet.   This potential default information was used to estimate the probability of an operator encountering  financial difficulties such that the Fund would be called upon to assume the cost of the reclamation  projects for each site of the firm.      Later we developed two additional estimates by using the probability of forfeiture estimates by permit  type and permit issuance year from the West Virginia Special Reclamation Fund analysis.      For both this analysis and the previous analysis, we developed a forfeiture rate based on historic Ohio  experience.  We blended that with projected forfeiture rates in West Virginia and Kentucky (using a  60/20/20 weighting).  We determined that this measure was superior to the financial ratings as it  should be directly related to the Reclamation Forfeiture Fund expected cost.  The recent history of no  forfeitures was fortunate, but it would not have been appropriate to assume the future long term  forfeiture rate would also be zero, as proven in October 2014 when the Fund experienced 6 forfeitures.   Hence, we use the long term historic average and include the surrounding state information to add  stability and credibility to our method.    This is a major change from our 2015 analysis.  In that prior analysis we started with a weighting of  Ohio, Kentucky and West Virginia of 75%, 12.5%, and 12.5% respectively.  However, because of the  worsening financial condition of the industry it was determined that we use a forfeiture rate of 1.0%  for the first five years of our projections, and 0.37% thereafter.  The financial outlook for the coal  industry now appears to be stabilizing, hence the lowering of the forfeiture rate and the establishment  of a range of forfeiture rates.  Consideration is still being given to the forfeiture experience of  neighboring states, particularly in light of the fact that events occurring for those states can also have  an impact on Ohio.    We maintain the enhancements incorporated in our prior analyses, which are:     An adjustment factor to the forfeiture rates to reflect mine status (active, final map,  pending phase 1 release, pending phase 2 release, pending phase 3 release)   Expanded release rates determined from historic data  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund       Page 20  An estimated liability for long‐term water treatment or long‐term alternative water supply  (Water)    Based on a number of estimates and assumptions, described later in this report, along with the PSE  information from the permits in the Fund, we have developed an estimated land reclamation expected  cost of $22.8 million, reflecting inflationary trends and discounting to present value, both explained  later in this report.  See Exhibit 2.2.  This compares to our estimate in the 2015 analysis of $30.4  million.    Water    Effective September 30, 2011 House Bill 163 amended the Ohio Revised Code to account for long‐term  water treatment and long‐term alternative water supplies.  In the prior statute, long term water  treatment was excluded from coverage by the Fund.  House Bill 163 allowed the fund to cover long‐ term water treatment for those permittees that are reliant on the Fund.  It included a provision to  allow eligible operators to fund the long term water treatment trust or alternative financial security  (AFS) over a 5‐year period and the Fund would be responsible to cover the unfunded portion until such  time as the AFS was fully‐funded (not to exceed 5 years).  As discussed later in this report, we have  estimated a liability of $0.7 million to account for long‐term water exposure on current permits.  See  Exhibit 2.3.    Shock Loss    Another financial measure of the soundness of the Fund would be its ability to absorb a shock loss  without threatening the viability of the Fund.  A shock loss for purposes of this study could be  considered to be the largest operator, carrying the largest liability, forfeiting all its permits.  In this  case, an additional $206.2 million in estimated liability would come against the Fund.    In conversations between the RFFAB and coal producers it has been postulated that four of the largest  operators would be less likely to be involved in a failure.  However, there was some concern expressed  about the financial difficulties facing large (and small) operators.  For purposes of this study we  considered the impact of a shock loss that was equal to the average liability for all operators in Ohio  who are reliant on the Fund.  See Exhibit 1 – Alternative.  That amounted to an additional $25.7 million  of estimated liabilities for an “average” shock loss.  For comparison purposes, this is approximately  $10.0 million lower than the estimate of the cost for the fifth largest carrier defaulting.  See Exhibit  7.1b.     Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 21  While shock losses are highly unlikely to occur because of the financial strength and attractive value of  the assets of the larger operating companies, it is prudent to be aware that remote possibilities do  exist.      Actuarial Analysis  As described briefly above, the objective of our analysis is to measure the Expected Cost to the Fund of  the current operating mines and all facilities currently in various phases of reclamation.    Data    The ODNR‐DMRM has provided the following information by permit in an Excel spreadsheet format:    1. The Performance Security Estimate, which is the ODNR‐DMRM engineer’s assessment of the  cost to reclaim the site based upon the approved mining and reclamation plan (described more  fully later in this report) for all 168 mining permits covered by the Fund.    2. The performance security on‐hand in total for each site along with the amounts separated into  the three phases of the reclamation process (also described more fully in a later portion of the  report).  3. The distribution of acres on the permitted site between the three phases of operation.  4. The Operator name by permit.  5. The provider of the performance security by permit.    Performance Security Estimate Groupings    The 168 PSEs are provided by the ODNR‐DMRM engineers in the following two categories:    A. 68 Permits that have an approved Final Map and coal extraction is completed  B. 100 Permits still extracting coal and thus do not have an approved Final Map     Performance Security (Bond) from Insurers    We next compare the estimated total cost of site reclamation developed in the prior step against the  amount of private performance security on hand as provided from the ODNR‐DMRM data base  (Central Tracking System ‐ CTS) files.  The private performance security, available should forfeiture  occur, may be provided through any of the following means:    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund           Page 22  Bond from an insurer licensed to do business in Ohio  Letter of credit  Certificate of Deposit  Cash  Trust agreements    The amount that the estimated total site cost exceeds the performance security on hand for the site is  the potential reclamation cost to the Fund.  There are a number of sites where the performance  security on hand is greater than the Performance Security Estimate.  Of the 168 permits included in the  analysis, 35 permits, or nearly 21 percent, fall into this category and contribute zero dollars to our  estimated potential and estimated expected Fund costs.  In these cases, the Fund would have no  reclamation liability in the case of operator default.  But we understand that the Fund still could have  some potential liability, if the provider of the performance security should become insolvent prior to  fulfilling its obligation.  This situation occurred on a number of forfeited sites in Ohio in the early 2000s.   We also note that the excess of individual permit performance security over the Performance Security  Estimate has not been used as an offset to total Fund liabilities, as these monies would not be available  to cover other forfeitures.      Estimated Potential Reclamation Fund Cost by Permit Holder    Exhibits 7.1a, 7.1b, and 7.1c provide the estimate of the potential reclamation cost by permit holder.   Four permit holders (operators) only have permits with zero net liability to the Fund.  In essence, these  operators are privately secured at “full cost”.  Therefore, 21 of the 25 current permit holders  (operators) pose potential liability to the Fund (assuming their performance security providers do not  fail).  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund    Page 23  Permit Holders by Net Adjusted PSE 6 Number of Parent Companies   5  5 4 4  4  4  4  3 2  2 1  1 Over $25M $9M to 25M $5M to 9M $2.5M to 5M $1M to 2.5M $100K to 1M $0 to 100K $0 0 1  Net Adjusted PSE       The average potential cost of a permit holder forfeiture of the operators and sites is over $25.7 million  per operator ($539.9 million divided by 21 operators with exposure to the Fund).  As can be seen in  Exhibit 7.1b, the five largest operators exceed the average.  We do note that the estimated potential  Fund cost for each of the other 16 operators is well below the average of $25.7 million.  In fact, the  average potential Fund cost of these 16 operators is roughly $3 million.  We can conclude that the  greatest concentration of risk to the Fund comes from a small number of mine operators.    Comparing the potential cost as obtained from the engineers at the ODNR‐DMRM and adjusted for the  available performance security with the number of permits with potential cost to the Fund, we develop  the average potential cost (PSE per permit) of a forfeited permit of approximately $4.1 million ($539.9  million divided by the 133 permits with potential liability to the Fund).  Please see Exhibit 4.3.      As can be seen, the estimated expected Fund cost (Net Reclamation Cost) at the permit holder level for  those permits in the study is significantly less than the estimated potential Fund cost (Net Adjusted  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 24  PSE) from the permit holder forfeiture.  Please see the charts below and Exhibits 7.1a and 7.1b for  comparisons.  The difference in these figures can be thought of as being similar to the difference  between the insured value of a home (potential cost) and the annual premium to insure the home  against a multitude of potential losses over the many years of occupancy (expected cost).    Permit Holders by Net Reclamation Cost 7 6  6  5 4  4  4 3 2  2 1  1  Over $5M 1  $2M to 5M Number of Parent Companies 6 1 0 $1M to 2M $500K to 1M $100K to 500K $10K to 100K $0 to 10K $0 Net Reclamation Cost     Based upon the information in the ODNR‐DMRM data base (CTS) for each site within each of the three  phases, we have allocated the total estimated reclamation cost to the three reclamation phases.  This  step is necessary to reflect the differences in the estimated time until full release of the permit and the  associated performance security based upon the assigned phase.  These time estimates were  developed based upon data from a report by the Office of Surface Mining Reclamation and  Enforcement that is titled “A Report on the Success of Achieving Reclamation Standards on Surface  Coal Mining Operations in Ohio”.  Please see Exhibit 3.2.  As with any estimates, some sites may  operate within significantly longer or shorter time periods – especially the active permits.  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 25        For active permits (those without Final Maps), we have assumed that the future life cycle  will take 21 years to completely proceed through the various phases of mining operation  from coal extraction to land replacement, removal of collection ponds, replanting and  reforestation and the maintenance period required to assure that the land is stable and  fulfills the requirements of the approved reclamation plan and final release of the permits.  At the point of permit release, the exposure to the Fund declines to zero and the private  performance security is also fully released.  For permits with Final Maps and CTS data pending phase 1 release, we assume that phase 1  release will be reached in 3 years.  The additional time to release follows the phase 2 and  phase 3 timeframes below.  For permits with Final Maps and CTS data pending phase 2 release, we assume that phase 2  release will be reached in 6 years.  The additional time to release follows the phase 3  timeframe below.  For permits with Final Maps and CTS data pending phase 3 release, we assume that full  release will be reached in 8 years.      The $539.9 million in potential cost from the permits in the study are spread across the Active and  Final Map Permits within the three phases of reclamation as follows:     Active Pending Phase 1      $352.6 million   Active Pending Phase 2       $55.8 million   Active Pending Phase 3      $23.8 million   Final Map Pending Phase 1    $94.3 million   Final Map Pending Phase 2    $11.3 million   Final Map Pending Phase 3    $2.1 million    Please see Exhibit 4.2.  These figures have significance as the permits now fully contained in phases 1, 2  and 3 of reclamation are no longer contributing revenue to the Fund but will continue to expose the  Fund to potential cost.  Please note that all potential costs are accumulated in the first category with  any current activity.  Thus, a permit with a final map pending phase 1 may also have some acres in  pending phases 2 and 3 of the reclamation process, but all potential costs from the phase 2 or 3 acres  would be included in the pending phase 1 category shown above.        Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 26  Estimated Operator Financial Strength – Potential for Future Default    Since the Fund will only be called upon to financially support a reclamation effort if the permit holder  should no longer have the financial resources to complete the effort, we need to consider the  probability of forfeiture or financial default of the permit holder/operator.  To reflect this potential  financial incapacity of the permit holder in our analysis, we have developed average forfeiture  probabilities based on Ohio forfeiture data and the forfeiture rates in Kentucky and West Virginia.   Please see Exhibit 5.2.    Projection into the Future    The time horizon for potential forfeiture varies based upon the reclamation phase determined by the  ODNR‐DMRM.  For the active permits, we used the longest period available – 21 years for the period of  time from current until the reclamation is completed and the permit is released.  For the sections of  the permits with Final Maps currently working to achieve phase 1 release, we used a shorter period of  17 years to reflect that coal extraction has ceased and reclamation is underway.  For the sections of  permits currently in process of achieving phase 2 release, we used a 14 year time horizon and for the  sections of permits currently within the maintenance period prior to phase 3 and total permit release,  we have used 8 years as the appropriate time horizon.  Please note that the underlying exposure (cost  of reclamation) to the Fund declines when a section moves from one phase to the next in the same  fashion as the release of the private performance security declines.      Impact of Future Inflation and Present Value of Estimate    As in our previous report, we include an explicit consideration of future inflation on reclamation costs  (materials, fuel and manpower).  We also explicitly consider that the costs of future potential liabilities  could be discounted to present value based upon expected investment returns.  That is ‐ “how much  money is needed to be set aside today to cover the costs years into the future?”      In this analysis, we make a separate reclamation cost inflation adjustment that varies by year.  The  following table displays the inflation rates utilized.  These rates were provided by the RFFAB and were  based on their internal analysis of costs and expected costs.         Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 27  Reclamation Cost Inflation Rates  Year  Rate  2017  0.00%  2018  0.00%  2019  3.00%  2020  3.00%  2021  3.50%  2022  3.50%  2023 & Subs  4.00%    We also use the investment rates to discount the future costs to present value.  The rates are based  upon United States Treasury Note return rates as of February 21st, 2017.  The Treasury Notes are sold  for 1, 2, 3, 5, 7, 10, 20 and 30 year investment periods.  The final selections reflect the recent returns  experienced by the Fund.  After discussing likely investment returns with the RFFAB, we determined to  lengthen the time period it will take the Fund to move to the more favorable return rates projected by  the Treasury.  We have interpolated the years in between those available.  When investment returns  are less than the assumed reclamation cost rates at any one point in time, the Fund liabilities are  adversely impacted by cost inflation.  Please see Exhibit 8 for a display of the rate of investment  returns used in our analysis.    Development of the Estimates of Expected Cost     We develop estimates of the expected cost for each permit by combining the potential cost to the  Fund information with the probabilities of forfeiture by permit age over the entire exposure period  based upon the current distribution by phase.  These forfeiture rates are adjusted to reflect the phase  of the mine.  The probability of forfeiture declines as the reclamation process transitions from active  mining to reclamation and on to final release.  Please see Exhibit 5.3.  These expected long run average  cost estimates by permit are then summed by parent company and then for the Fund in total.  In this  case, $22.8 million is the estimated long run average expected cost for land reclamation.  Exhibit 2.2  summarizes the estimated costs over the next 24 years.    Estimated Expected Cost by Larger Permit Holders    There are a number of sites that would be potentially impacted by a single large company becoming  financially troubled.  We have also developed estimates by permit holder as well as individual permit.   Again, we are reflecting the assumption that if a permit holder should forfeit one permit, then all  permits for that entity would simultaneously be forfeited.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 28    Thus, in the case of the forfeiture risk borne by the Fund, there is significant correlation between the  default probabilities of various permits.  On the other hand, we note that no adjustment is made for  any spread of risk between the various permit holders as the concentration of risk is much more  significant.  One might also look at it from the other perspective, i.e., if the larger permit holders  continue to remain solid financially, the potential reclamation costs to the Fund might be much more  manageable.     In Exhibit 7.1b, we provide the estimated nominal expected costs for the top five permit holders in  terms of total expected cost to the Fund before application of reclamation cost inflation or present  value calculations.    Impact of Land Reclamation Cost Inflation and Adjustment to Present Value    We adjust the 2017 nominal estimates to reflect the expected future reclamation cost inflation using  the annual rates displayed in a previous table.  These figures are then returned to a 2017 present value  basis through the use of selected investment rates as previously displayed.  Please see Exhibit 2.2 for  the results.  The following chart shows a summary of the impact of these adjustments to the estimates.    Estimated  EXPECTED  Land Reclamation Fund Cost  *After Cost Inflation and Present Value Adjustment*  Gross of Bond Net of Bond    Nominal Estimate  $23,120,248  $21,878,115  Impact of Reclamation Cost Inflation 4,181,482 3,890,224  Present Value Adjustment  (3,169,102) (2,953,067)  Resulting PV Estimate  24,132,628  22,815,272    Cost of Forfeited Sites Currently in the Reclamation Forfeiture Fund    An additional step is required when reviewing the financial condition of the Fund.  We need to account  for the sites included in the inventory of forfeited permits that are currently the responsibility of the  Fund.  As of December 31st, 2010, all reclamation projects of previously forfeited permits had been  substantially completed.  However, the cost of the recent Valley Mining forfeitures has an impact on  the analysis too.     Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 29  The RFFAB has estimated the cost of the Valley Mining forfeitures will be paid out at a rate of $2.2  million, $2.5 million, and $1.1 million over the next three years (design and construction costs  combined).      Potential Cost to the Fund from Bond Company Default    Since the Fund would be responsible for the full cost of reclamation of forfeited sites in the case of an  insolvency of a performance security provider, we have attempted to roughly estimate the potential  long term cost of this exposure to the Fund.  As this has already happened in the past with a number of  sites reclaimed by the Fund, this possibility of concurrent permit forfeiture and insurer insolvency is  clearly a valid concern.  In order for the Fund to be obligated to provide reclamation coverage, there  would need to be forfeiture by the permit holder and an insolvency of the bonding company for that  permit holder.  Bond amounts and account numbers are verified by the bonding company and by the  ODNR‐DMRM every five years at renewal.    Typically, the performance security provided by the bonding company carries an annual premium for  coverage that is irrevocable ‐ even for non‐payment of premium.  The Fund’s exposure to insurer  insolvency is typically contained within a period of roughly 12 months rather than across the full life of  the permit.  The Fund management can require the replacement of a performance security provider in  the event of an insurer’s insolvency.  The Ohio Revised Code allows up to 12 months for the operator  to replace the coverage provided by an insolvent surety.     Other alternative financial arrangements do not carry a significant default risk.  The following  summarizes some of the underlying structure of those programs:     Irrevocable Letters of Credit (LOC) must be issued for a term of 12 months or more and  intent to non‐renew requires 60‐day notice to the ODNR‐DMRM.  Verification of validity  prior to the expiration date of the LOC and value of the LOC is conducted annually by the  ODNR‐DMRM.     Certificates of Deposit are automatically renewable and held at the Treasurer of the State’s  office.  The amount of required security is verified annually at maturity.  The Treasurer’s  office reports to the ODNR‐DMRM on any issues monthly.   Cash is held by the Treasurer of State in a separate fund.    If we assume the probability of forfeiture by a permit operator in any one year is the same as selected  for our analysis (0.50% in Exhibit 5.2) and the probability of the insolvency of a performance security  provider is equal to the three year average default rate in 2015 for US financial institutions and  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 30  insurance providers (0.76 percent) based on a recent Standard & Poor’s study, the combined  probability of default of both the permit holder and the provider of performance security is 0.50  percent times 0.76 percent, or .0038 percent.  When applied to the estimated performance security of  the sites included in the Study as provided in the CTS files ($584.9 million), we develop an annual  expected cost of approximately $22,700.  This expected cost does not appear to be material to the  total Fund expected cost.      But it should be noted that, as has actually been previously witnessed, in the event of the situation  where both the permit holder AND the performance security provider are unable to meet their  obligations with respect to the completion of the reclamation, the actual cost of a provider of  performance security to the Fund can be significant and material.    Reclamation Forfeiture Fund Operating Expenses    Reclamation Forfeiture Fund operating expenses include various oversight services provided by ODNR‐ DMRM personnel, travel cost reimbursements of Advisory Board members, external consulting costs,  etc.  The ODNR‐DMRM booked operating expenses of $335,133 for Fund 5310/Reclamation Forfeiture  for Fiscal Year 2016, and has booked $108,448 to the Fund through the first four months of Fiscal Year  2017.      The PSEs that we used to develop our future cost of reclamation estimates already include a 15% mark  up for administrative expenses.  For our estimates, we have assumed annual expenses of $5,000 for  overhead costs not included in the PSEs, a biennial actuarial study at $60,000 per study, spread over  two years, and long‐term water treatment administrative expense of $10,000.  (It should be noted that  even though long‐term water treatment trusts include operating expenses, our determination of the  water treatment costs described below are not based on ODNR‐DMRM cost estimates.  We therefore  add this additional expense in.)  Our estimate therefore assumes the need for a periodic update to this  type of analysis, annual water treatment administrative expense, and the need for the Advisory Board  to meet periodically to discuss critical issues related to the financial operation of the Fund.         Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 31  Long‐Term Water Treatment and Alternative Water Supply  Currently there are three permits determined by ODNR‐DMRM to require long‐term water treatment.   The ODNR‐DMRM is monitoring another two permitted sites for potential long‐term water treatment.   The list of monitored sites is continually being updated as new information becomes available.  See  Exhibits 9.2a and 9.2b for the current listing of sites designated for water treatment or monitoring.    There is limited data on how these potential long‐term water treatment sites might develop.  In order  to determine an estimated liability on current permits, we considered the limited data available in Ohio  along with the somewhat broader data base available from our analysis of West Virginia water  reclamation liabilities.      In our first approach we consider the average costs per permitted acre separately for water treatment  and capital cost (including cost of set up, annual maintenance and abandonment).  We developed  averages for the Ohio Consol permit and another set of averages based on West Virginia data.  The  data for the one Ohio permit does not contain sufficient information to make use of our intended  exposure measure of permitted acres.  (Consol is showing the footprint of acres rather than the  permitted number of acres, which may be different than our intended measure.)  Since we only have  this one data point for Ohio, we selected the West Virginia cost indications to use in our estimates for  Ohio.  It should be noted that the West Virginia indications are prior to that state having to meet  higher National Pollutant Discharge Elimination System (NPDES) Permit Program standards  (implemented in 2011), since Ohio is not currently subject to those standards.  That is, we used 2011  West Virginia indications, reduced by our estimate of the 2011 NPDES standards on that state’s water  capital and water treatment costs.    We also developed an estimate of permitted acres that will be in future need of long‐term water  treatment.  That estimate is the sum of current permitted acres designated for long‐term water  treatment and a portion of monitored permitted acres.  Our initial estimate of the portion of  monitored permitted acres that will become treated permitted acres has been set at 5%.  There is  limited data to estimate how many of the monitored sites will become treatment sites.  The 5%  estimate was predicated on judgment per our discussions with the ODNR‐DMRM.      The ODNR‐DMRM selected a 75 year time horizon to estimate future costs.  Treatment could be  required for an even longer time period, but for practical reasons the ODNR‐DMRM established 75  years as their best management decision to account for these types of claims as they surface.      Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 32  The final piece of the first estimate is to determine a forfeiture rate.  There is only a liability to the Fund  if the permit is forfeited.  We have already selected a 0.50% annual forfeiture rate for all permits in  Ohio.  That annual forfeiture rate was developed from Ohio, Kentucky and West Virginia lifetime  forfeiture rates.  We have also selected a lifetime forfeiture rate of 0.50% for permits involving water.   Again, there is no data to develop statistical estimates.  In discussions with the Board, we conclude that  the same rate applied to land forfeitures is appropriate for water forfeitures.    Our first method of estimating the ultimate liability for long‐term water treatment on current permits  is then simply the product of the number of permitted acres, the average cost per permitted acre, the  number of years for payment, and the probability a forfeiture will occur.  This method yielded a long‐ term water cost of $183,050.    Our second estimate utilizes the estimated water treatment cost for the full cost permit #201501.  We  developed a permit count ratio of permits with water concerns (treatment and monitoring) to total  number of permits in the Fund.  The actual ratio approaches 4%.  We select a projected ratio of 5%.   Applying the 5% ratio to the cost for permit #201501 ($2.85 million) produces our second estimate for  long‐term water treatment liabilities of $142,580.    Based upon these two estimates, we selected a final estimate of $0.5 million.  Our selection of $0.5  million is substantially lower than our selection in the previous analysis of $2.25 million.  We feel this is  appropriate given the minimal amount of activity in setting up water treatment trusts since our last  analysis, the monitoring of potential water sites, and the outlook for the need of future trust funds.    We make a final adjustment to the estimate to account for underlying security, primarily in the form of  standby trust funds.  While these funds are to be set up to cover 100% of the cost of capital and  treatment, the operator can spread the funding of standby trusts over five years.  In the meantime, the  Reclamation Forfeiture Fund provides the remainder of the coverage.  The one trust that has already  been established is fully funded and presents no liability to the Fund since the trust has a built in  mechanism to adjust for shortages over time.  Of course, not all permits needing standby trust funds  will necessarily have established a trust fund before a forfeiture occurs.  In fact, the discovery of the  need for water treatment could escalate the probability of forfeiture for permits owned by operators  already in economic distress.  We selected a 10% credit adjustment factor to apply to our water liability  estimate.  This 10% adjustment is based on judgment, considering the limited number of trusts that  have previously been established.  We may need to increase the credit with time if more of these  trusts actually become reality.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 33  Applying the 10% mitigating water trust adjustment factor estimate to the selected $500,000  estimated expected costs results in a net $450,000 estimate for long‐term water treatment and  alternative water supply liabilities.  See Exhibit 9.1.  As the underlying data for our calculations is very  limited and the assumptions made to determine the estimated costs are open to a large range of  variation, it is important to note here that final results could in fact deviate substantially from these  estimates.  The ODNR‐DMRM will want to monitor this aspect of the Fund’s liability closely and update  these estimates as often as practical.    Please note that the above figures for long term water treatment are stated on a basis before inflation  and present value are taken into account over the 75 year payout period.  After consideration of  inflation and present value, the estimated expected cost of $450,000 becomes $701,843.  See Exhibit  2.3.        Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 34  Financial Capacity of the Fund  The capital available to operate the Fund is generated from revenues from the severance tax on the  covered permit holders based upon their coal production.  As explained in other sections of the report,  this revenue is not directly related to the liability assumed / forfeiture protection provided by the Fund  to the operators nor does it reflect the different financial capacity of each permit holder to fulfill his  obligations to complete the land reclamation process.  As opposed to an up‐front premium payment  required by the providers of the underlying private performance security (often to provide security  over a single year time horizon) as is provided on “full cost” permits, Ohio’s alternative bonding system  is comprised of a per acre bond plus a severance tax charged to operators to build capital on an as‐you‐ go basis.  The collections from today need to cover the exposure that exists currently from both active  mining sites and sites in the process of reclamation as well as potentially provide some additional  capital accumulation to cover the current sites in the future.    The dynamic nature of the process whereby portions of the permitted sites move from active mining to  phase 1 reclamation to phase 2 reclamation to phase 3 reclamation over time adds a complicating  feature to any analysis or comparison of future revenue with either future expected costs.  Any  increase in mining operations will result in both an increase in revenue and an increase in potential  future cost to the Fund.  Similarly, declines in mining operations will result in decreased revenue and  decreased exposure to the Fund.  Since the Fund retains responsibility for forfeited reclamation  projects in the years following the cessation of mining operations, the financial exposure to the Fund  remains for a number of years after the revenue to the Fund has ceased.    Future Coal Production Projection    Based upon historical coal production figures developed by the Ohio Department of Natural Resources,  Division of Geological Survey and provided for our use by the Ohio Department of Natural Resources,  we have the historical coal production from surface mining operations and underground mining  operations.  In the prior review, we used this data to attempt to project coal production into the future  and thus the severance tax revenues.      The following chart displays the historical coal production in Ohio.    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 35  Ohio Total Coal Production   1977 to 2015 50.0 45.0 40.0 35.0 Millions of Tons 30.0 25.0 20.0 15.0 10.0 5.0 0.0 1977 1980 1983 1986 1989 Surface 1992 1995 1998 2001 Underground 2004 2007 2010 2013 Total     In our work on another project, we became aware of the “Consensus Coal Production Forecast Report  for West Virginia 2014”.  This report was prepared for the West Virginia Department of Environmental  Protection by Christine Rish, Jennifer Shand, and Alicia K. Copley.  While this projection is specifically  tailored to coal mining in West Virginia, it utilizes economic assumptions with respect to supply and  demand related specifically to Northern Appalachia coal.  We have developed a projected future  annual change in Ohio coal production based upon the changes forecast in Northern Appalachian coal  in the Energy Information Administration Annual Energy Outlook 2014 and a study performed by  Energy Ventures.  We also relied upon the recommendations from the ODNR‐DMRM.  Pinnacle Actuarial Resources, Inc.    Ohio Department of Natural Resources  Reclamation Forfeiture Fund          Year  2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025   2026   2027   2028   2029   2030   2031   2032   2033   2034   2035   2036   2037   2038   2039   2040   2041   2042   2043   2044   2045   2046   2047   2048   2049   2050     COAL PRODUCTION INDEX  NORTHERN APPALACHIIA COAL PRODUCTION  Energy Information Admin.  Energy Ventures Analysis  Tons     Short Tons Per     (in millions)  Index to 2015  Miner Hour  Index to 2015  117.6   1.0000   3.41   1.0000   118.2   1.0057   3.38   0.9912   124.1   1.0559   3.36   0.9853   87.1   0.7410   3.33   0.9765   92.5   0.7865   3.31   0.9707   107.5   0.9144   3.28   0.9619   102.5   0.8717   3.24   0.9501   101.3   0.8620   3.20   0.9384   96.6   0.8221   3.16   0.9267   93.1   0.7921   3.12   0.9150   90.7   0.7717   3.08   0.9032   88.8   0.7552   3.04   0.8915   86.1   0.7323   3.00   0.8798   83.4   0.7091   2.97   0.8710   80.4   0.6836   2.93   0.8592   78.3   0.6659   2.89   0.8475   80.6   0.6858   2.86   0.8387   82.4   0.7006   2.83   0.8299   84.9   0.7223   2.81   0.8240   83.9   0.7138   2.78   0.8152   82.6   0.7026   2.75   0.8065   81.1   0.6897   2.72   0.7977   79.8   0.6788   2.69   0.7889   78.6   0.6690   2.67   0.7830   81.9   0.6966   2.64   0.7742   83.1   0.7065   2.61   0.7654   81.1   0.6900     80.3   0.6832     78.6   0.6683     76.9   0.6542     75.1   0.6388     77.5   0.6596     79.1   0.6730     76.2   0.6485     75.4   0.6415     73.4   0.6244         Pinnacle Actuarial Resources, Inc.  Page 36  Pinnacle Selected     Index to 2015  1.0000   1.0043   1.0488   0.7645   0.8050   0.9192   0.8796   0.8697   0.8326   0.8043   0.7848   0.7688   0.7471   0.7253   0.7012   0.6841   0.7011   0.7135   0.7325   0.7240   0.7130   0.7005   0.6898   0.6804   0.7044   0.7124   0.6967   0.6898   0.6756   0.6621   0.6475   0.6654   0.6767   0.6540   0.6469   0.6307   Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 37    We have used the average index to develop a projection of future Ohio coal production.  In 2015, there  were 16.9 million tons of coal mined in the state of Ohio, of which we attribute 15.2 million tons to  operations that participate in the Fund.  Based upon the methodology described above, the following  table provides the projected future coal production in Ohio for operations under the Fund.  It should  be noted that the tonnage listed in the table below is a formula projection based on the assumption in  the above table.  The projections below are on a calendar year basis.  Differences are possible if coal  production is summarized on a fiscal year basis. Actual results may vary significantly from the  projections listed below.    Ohio RFF Coal Production  Projections (in million tons)  Year  2016  2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  2031  2032  2033  2034  2035  2036  2037  2038  2039  2040  Average  Index  1.0043  1.0488  0.7645  0.8050  0.9192  0.8796  0.8697  0.8326  0.8043  0.7848  0.7688  0.7471  0.7253  0.7012  0.6841  0.7011  0.7135  0.7325  0.7240  0.7130  0.7005  0.6898  0.6804  0.7044  0.7124  Projected  Tons  15.3  15.9  11.6  12.2  14.0  13.4  13.2  12.7  12.2  11.9  11.7  11.4  11.0  10.7  10.4  10.7  10.8  11.1  11.0  10.8  10.6  10.5  10.3  10.7  10.8    Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 38  As in our prior analysis, we feel that this projection is more predictive of the future than the use of an  exponential trend of past Ohio coal production.      We caveat these estimates by stating that we assume the demand for coal from Ohio’s mines will  follow those projected in West Virginia for Northern Appalachia / Steam Coal.  These assumptions are  less certain the further out in the time horizon one goes.  Another important assumption is that the  supply of coal is more or less unlimited and thus the revenue to the Fund is not constrained or limited  over the time horizon.    The per ton based severance tax rate is predicated upon the Fund balance from the prior year‐end  according to the following chart:    Fund Balance  Rate per Ton of Coal Less than $5 Million  $0.16  Between $5 and $10 Million $0.14  In excess of $10 Million  $0.12    The levels of estimated production along with the severance tax rates would generate between $2.1  and $3.9 million in annual operating capital for the Fund.  We understand that currently about 90  percent of the current coal extraction is from Fund covered permits and have adjusted our revenue  projections to account for this fact.    Based upon the various projections of future coal production provided, we have developed the  following table that displays the estimated revenue from the severance tax that would be generated by  these production levels with the added assumption that 90% of the coal production is from operators  participating in the Fund.  We provide the estimates at the three tax rates currently included in the  statute.        Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 39  OHIO RECLAMATION FORFEITURE FUND ANALYSIS  Potential Reclamation Fund Revenue Projection  Tons (in millions)  $0.12   $0.14   $0.16   10.0  1,200,000  1,400,000  1,600,000  10.5  1,260,000  1,470,000  1,680,000  11.0  1,320,000  1,540,000  1,760,000  11.5  1,380,000  1,610,000  1,840,000  12.0  1,440,000  1,680,000  1,920,000  12.5  1,500,000  1,750,000  2,000,000  13.0  1,560,000  1,820,000  2,080,000  13.5  1,620,000  1,890,000  2,160,000  14.0  1,680,000  1,960,000  2,240,000  14.5  1,740,000  2,030,000  2,320,000  15.0  1,800,000  2,100,000  2,400,000  15.5  1,860,000  2,170,000  2,480,000  16.0  1,920,000  2,240,000  2,560,000  16.5  1,980,000  2,310,000  2,640,000  17.0  2,040,000  2,380,000  2,720,000  17.5  2,100,000  2,450,000  2,800,000  18.0  2,160,000  2,520,000  2,880,000  18.5  2,220,000  2,590,000  2,960,000  19.0  2,280,000  2,660,000  3,040,000  19.5  2,340,000  2,730,000  3,120,000  20.0  2,400,000  2,800,000  3,200,000      Current Fund Balance    The Fund is in the process of collecting the revenue to build up sufficient capital to provide for future  potential reclamation projects.  The balance in the Fund as of May 2013 was approximately $16.3  million.  This capital increased $8.1 million from the December 2010 balance of $8.2 million.      We note that since June 2010, current reclamation work had been substantially completed on forfeited  sites.  Thus, a grand majority of the severance tax has been added to the Fund.  The Fund balance at  the end of December 2014 had risen to $21.4 million.  The balance continues to increase with an  amount of $25.9 million as of November 2016.        Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 40  Investment Rate of Return    In addition to the revenue received from the severance tax, the capital funds will be invested by the  State Treasurer in conservative instruments.  We note that the Fund’s capital is invested along with all  of the other State investments and the returns are allocated back to the Reclamation Forfeiture Fund’s  account.  This investment income opportunity should be included in the projection of possible Fund  financial levels.      Based upon the current investment situation, we have assumed that the current returns are slightly  less than those seen more historically.  The investment rates are based upon recent US Treasury Note  return rates.  The Treasury Notes are sold for 1, 2, 3, 5, 7, 10, 20 and 30 year investment periods.  The  final selections reflect the recent returns experienced by the Fund.  After discussing likely investment  returns with the RFFAB, we determined to lengthen the time period it will take the Fund to move to  the more favorable return rates projected by the Treasury.  We have interpolated the years between  the years available.  Please see Exhibit 8 for the resulting rates and discount factors used in our  analysis.    Financial Picture – Current Permit Portfolio    One way to view the financial situation and outlook of a dynamic system is to review such an analysis  on a current portfolio run‐off basis.  While we understand that at times the system has operated on an  approach where the revenues of present sites have funded the reclamation of previously forfeited  sites, our assignment included the task of measuring the current solvency of the Fund.  In most  analyses of this type, it is not appropriate to only reflect future income without a reflection of the  additional potential liabilities.  The current permit portfolio approach attempts to match the current  capital and expected revenue from the current sites with the potential and expected costs or future  liabilities from those same sites.  This view eliminates the burden of the past being placed upon the  future operations.    In this view, we review the financial picture of the system without the complication of adding any new  entrants with respect to permits beyond those currently in the Fund as time goes forward.  This view  allows us to compare the current Fund Balance and estimated future revenue from only the permits  currently in the Fund with the estimated expected costs for the same permits over a time horizon from  current until all of the permits are anticipated to have completed phase 3 of the reclamation process.      The addition of new permits would add both revenue and potential cost to the system – estimating the  impact of that dynamic would rely upon the information in the current analysis – thus not providing  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 41  additional information.  Again, as with any estimation of the future, there are many assumptions made  and actual results may vary from the estimated expected results.  In the case of the Fund, as is shown,  these projected financial results can vary significantly and the differences can be very material.    In our estimation of the expected costs, we have assumed that the active mining operations continue  fairly uniformly over a 7 year period of time.  This is followed by a 5 year period pending phase 2  release and then a 7 year observation period pending phase 3 release.  Any acreage pending phase 1  release with no associated mining is assumed to reach phase 1 release in 3 additional years.  Because  the probability of forfeiture varies based upon the number of years that we are projecting into the  future, the expected cost to the Fund from a site will vary ‐ even between years in the same phase of  reclamation.    Exhibit 1 summarizes the revenues and costs associated with current permits that are expected to flow  through the Fund through 2094.  The tonnage fee revenue is based on the assumption of 2015 coal  production of 15.2 million tons from the currently issued permits covered by the Fund, changing  annually according to the Ohio RFF Coal Production table displayed above, and the associated revenue  for the first six years.  In the seventh and final year of assumed mining, we assume that coal extraction  will be half of the indexed amount or 6.3 million tons from permits currently in‐force.    We have credited the Fund with investment income on the prior year surplus – this assumes the  current revenue is not invested until after the annual costs are paid.  Also, investment income is  constrained to not less than zero.  The reclamation costs are the expected reclamation costs from  Exhibit 2.1.  Please note that we have assumed ongoing operating expenses to be $10,000 in the next  few years to cover general overhead not included in the land reclamation cost estimates, and another  $10,000 for the next 75 years for water treatment expenses not already included in the water  treatment reclamation costs.    As can be seen in Exhibit 1, the recent Fund balance of $25.9 million could increase to nearly $32.6  million in the next 75 to 78 years.  This figure is on a present value basis, which is a relatively important  consideration given the long time horizon associated with water treatment liabilities.      Alternative Approach    One other way of approaching the issue of capital and solvency would be to determine how many  additional years with no permit holder forfeitures would be needed to generate sufficient capital to  fund the reclamation of various permit holders.  For purpose of explanation, we have developed these  estimates at four levels based upon expected permit cost:  Pinnacle Actuarial Resources, Inc.  Ohio Department of Natural Resources  Reclamation Forfeiture Fund      Page 42        the median permit holder,   the average permit holder value,   the 5th largest, and   the largest permit holder.      With this approach, we have utilized the total annual coal production and assumed on‐going operating  expenses as described above and no on‐going reclamation projects.  Please see Exhibit 1 – Alternative  for the details in the cash flow analysis.      Number of Years with No Forfeitures  Needed to Accumulate Capital to Cover  the Forfeiture of a Permit Holder      Permit Holder Size  Median  Average  5th Largest  Largest            Net Adjusted PSE  1,881,563  25,709,885  35,716,288  206,188,502    Years from 2016  0  2  9  over 150    These estimates are before inclusion of otherwise expected land reclamation and water treatment  liability.  Making this adjustment would add several more years to the last three estimates in the table  above.    Pinnacle Actuarial Resources, Inc.  OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Table of Contents Exhibit Description Exhibit 1 Exhibit 1 - Alternative Exhibit 1 - Shock Loss Exhibit 2.1 Exhibit 2.2 Exhibit 2.3 Exhibit 3.1 Exhibit 3.2 Exhibit 4.1 Exhibit 4.2 Exhibit 4.3 Exhibit 5.1 Exhibit 5.2 Exhibit 5.3 Exhibit 6 Exhibit 7.1a Exhibit 7.1b Exhibit 7.1c Exhibit 7.2 Exhibit 7.3a Exhibit 7.3b Exhibit 7.4a Exhibit 7.4b Exhibit 7.5a Exhibit 7.5b Exhibit 7.6a Exhibit 7.6b Exhibit 8 Exhibit 9.1 Exhibit 9.2a Exhibit 9.2b Cash Flow Cash Flow - Number of Years to Accumulate Capital to Cover a Forfeiture Cash Flow - Shock Loss Scenario with 5 Year Spread Total Expenditures Land Reclamation Expenditures Water Reclamation Expenditures Remaining Performance Security Requirement Reclamation Lifecycles Performance Security Estimate (PSE) Net Adjusted PSE by Mine Status Average PSE Forfeiture Rates Forfeiture Rate Calculation Forfeiture Rate Adjustment Factor for Mine Status Net Reclamation Cost by Mine Status Permit Information by Parent Company Top Five Parent Companies Parent Company Counts by PSE Range and Net Reclamation Cost Range Permits Counts with a Performance Security Estimate Greater Than Bond on Hand Permits Counts by Mine Status and Year of Issuance - Surface Implied Bonded Acres by Mine Status and Year of Issuance - Surface Permits Counts by Mine Status and Year of Issuance - Underground Implied Bonded Acres by Mine Status and Year of Issuance - Underground Permits Counts by Mine Status and Year of Issuance - Facility Operations Implied Bonded Acres by Mine Status and Year of Issuance - Facility Operations Permits Counts by Mine Status and Year of Issuance - Total Implied Bonded Acres by Mine Status and Year of Issuance - Total Projected Investment Rates Water Reclamation Cost Ohio Permits with Water Treatment Ohio Permits Being Monitored For Possible Water Treatment Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 Cash Flow (all figures discounted to present value) Interest Income Land Reclamation Water Reclamation (2) (3) (4) Tonnage Fee (1) Page 1 Operating Expense (5) Fund Balance (6) 2016 2017 2018 2019 2020 1,905,000 1,372,000 1,423,000 1,598,000 222,057 317,772 374,276 434,324 2,216,401 2,412,946 1,092,559 1,931,999 0 0 0 5,977 35,000 35,000 35,000 45,000 25,912,186 25,787,842 25,029,669 25,699,386 25,748,734 2021 2022 2023 2024 2025 1,500,000 1,453,000 680,000 0 0 478,131 506,146 521,152 500,571 473,246 1,957,013 1,991,771 1,927,708 1,959,742 1,990,946 6,054 6,138 6,228 6,332 6,433 45,000 45,000 45,000 45,000 45,000 25,718,798 25,635,035 24,857,251 23,346,748 21,777,615 2026 2027 2028 2029 2030 0 0 0 0 0 441,877 417,280 404,405 397,034 388,971 1,435,877 750,179 538,713 483,526 490,267 6,531 6,629 6,726 6,822 6,917 45,000 45,000 45,000 45,000 45,000 20,732,084 20,347,557 20,161,523 20,023,210 19,869,997 2031 2032 2033 2034 2035 0 0 0 0 0 382,031 373,321 365,672 362,462 362,352 496,909 503,493 180,463 69,485 70,330 7,011 7,103 7,195 7,285 7,374 45,000 45,000 45,000 45,000 45,000 19,703,109 19,520,834 19,653,848 19,894,540 20,134,188 2036 2037 2038 2039 2040 0 0 0 0 0 360,690 358,793 355,651 353,536 350,015 71,165 59,931 60,613 61,285 61,952 7,461 7,548 7,633 7,718 7,802 45,000 45,000 45,000 45,000 45,000 20,371,251 20,617,565 20,859,969 21,099,502 21,334,764 2041 2042 2043 2044 2045 0 0 0 0 0 347,493 346,317 343,782 342,178 339,257 0 0 0 0 0 7,885 7,966 8,046 8,125 8,203 10,000 10,000 10,000 10,000 10,000 21,664,372 21,992,723 22,318,458 22,642,511 22,963,565 2046 2047 2048 2049 2050 0 0 0 0 0 337,244 335,458 329,994 324,484 318,940 0 0 0 0 0 8,280 8,448 8,527 8,606 8,686 10,000 10,000 10,000 10,000 10,000 23,282,530 23,599,539 23,911,006 24,216,884 24,517,137 2051 2052 2053 2054 2055 0 0 0 0 0 313,368 307,777 302,175 296,569 290,966 0 0 0 0 0 8,767 8,849 8,931 9,015 9,099 10,000 10,000 10,000 10,000 10,000 24,811,738 25,100,665 25,383,908 25,661,462 25,933,330 2056 2057 2058 2059 2060 0 0 0 0 0 285,373 279,797 274,242 268,715 263,220 0 0 0 0 0 9,183 9,269 9,355 9,443 9,530 10,000 10,000 10,000 10,000 10,000 26,199,520 26,460,047 26,714,934 26,964,206 27,207,896 2061 2062 2063 2064 2065 0 0 0 0 0 257,763 252,348 246,979 241,659 236,393 0 0 0 0 0 9,619 9,709 9,799 9,891 9,983 10,000 10,000 10,000 10,000 10,000 27,446,040 27,678,679 27,905,858 28,127,627 28,344,038 2066 2067 2068 2069 2070 0 0 0 0 0 231,184 226,035 220,947 215,925 210,970 0 0 0 0 0 10,076 10,170 10,264 10,360 10,457 10,000 10,000 10,000 10,000 10,000 28,555,146 28,761,011 28,961,694 29,157,259 29,347,772 Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 Cash Flow (all figures discounted to present value) Interest Income Land Reclamation Water Reclamation (2) (3) (4) Tonnage Fee (1) Page 2 Operating Expense (5) Fund Balance (6) 2071 2072 2073 2074 2075 0 0 0 0 0 206,083 201,267 196,524 191,854 187,259 0 0 0 0 0 10,554 10,652 10,752 10,852 10,953 10,000 10,000 10,000 10,000 10,000 29,533,301 29,713,916 29,889,689 30,060,691 30,226,997 2076 2077 2078 2079 2080 0 0 0 0 0 182,740 178,297 173,931 169,644 165,434 0 0 0 0 0 11,055 11,158 11,262 11,367 11,473 10,000 10,000 10,000 10,000 10,000 30,388,682 30,545,821 30,698,491 30,846,768 30,990,729 2081 2082 2083 2084 2085 0 0 0 0 0 161,302 157,249 153,274 149,378 145,559 0 0 0 0 0 11,580 11,687 11,796 11,906 12,017 10,000 10,000 10,000 10,000 10,000 31,130,452 31,266,014 31,397,492 31,524,963 31,648,505 2086 2087 2088 2089 2090 0 0 0 0 0 141,818 138,155 134,568 131,058 127,623 0 0 0 0 0 12,129 12,242 12,356 12,471 12,587 10,000 10,000 10,000 10,000 10,000 31,768,195 31,884,107 31,996,319 32,104,906 32,209,941 2091 2092 2093 2094 0 0 0 0 124,263 120,977 117,764 114,624 0 0 0 0 12,705 12,823 12,943 13,063 10,000 10,000 10,000 10,000 32,311,498 32,409,652 32,504,473 32,596,034 Total 9,931,000 21,859,963 22,815,272 701,843 1,590,000 Tonnage Fee Fund Balance Rate < $5M $5M - $10M > $10M 0.16 0.14 0.12 Footnotes: (1) (2) (3) (4) (5) (6) All columns shown at present value, based on Exhibit 8, Investment Rates Based on coal production from the Ohio Department of Natural Resources, Division of Geological Survey. Future production based on the report "Annual Energy Outlook 2017 with projections to 2050" by the Energy Information Administration The per ton fee is predicated upon the prior year Fund Balance in column (6) according to the chart at the bottom of the second page, titled Tonnage Fee. Active mining continues for seven years, with the seventh year coal production being half the prior year. See Exhibit 3.1. [Prior year Col (6) x Exhibit 8 Col (1)] + [Col (1) / 2 x Exhibit 8 Col (1)]. Years 2046 and subsequent based on 3.040% discount factor Exhibit 2.1 Col (2). Exhibit 2.1 Col (4). Based on discussion with client. Inflation and discount rates assumed to offset. Majority of expense for land reclamation, based on 15% load in PSEs. Others include: Overhead $5,000 Actuarial/2 yrs $60,000 Water Treatment $10,000 Year 2016 client provided data. Subsequent years = prior year col (6) + Col (1) + Col (2) - Col (3) - Col (4) - Col (5) Page 1 Calendar Year Tonnage Fee (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 - Alternative Cash Flow - Number of Years to Accumulate Capital to Cover a Forfeiture (all figures discounted to present value) Interest Income Land Reclamation Water Reclamation (2) (3) (4) Operating Expense (5) Fund Balance (6) 2016 2017 2018 2019 2020 1,905,000 1,372,000 1,423,000 1,598,000 222,057 317,772 374,276 434,324 2,216,401 2,412,946 1,092,559 0 0 0 0 0 35,000 35,000 35,000 45,000 25,912,186 25,787,842 25,029,669 25,699,386 27,686,711 2021 2022 2023 2024 2025 1,500,000 1,453,000 1,360,000 1,285,000 1,224,000 513,099 581,479 648,541 689,727 732,763 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 29,654,809 31,644,288 33,607,829 35,537,556 37,449,319 2026 2027 2028 2029 2030 1,171,000 1,110,000 1,052,000 992,000 943,000 771,743 803,120 829,600 857,572 880,539 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 39,347,061 41,215,181 43,051,782 44,856,354 46,634,893 2031 2032 2033 2034 2035 942,000 934,000 934,000 899,000 861,000 905,684 926,611 950,110 968,991 989,834 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 48,437,577 50,253,188 52,092,299 53,915,290 55,721,124 2036 2037 2038 2039 2040 823,000 789,000 756,000 761,000 748,000 1,005,577 1,019,762 1,028,895 1,040,421 1,047,397 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 57,504,701 59,268,462 61,008,358 62,764,778 64,515,175 2041 2042 2043 2044 2045 711,000 684,000 651,000 619,000 588,000 1,056,590 1,064,875 1,068,220 1,073,680 1,074,258 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 66,272,765 68,011,640 69,720,860 71,403,539 73,055,797 2046 2047 2048 2049 2050 586,000 585,000 549,000 527,000 498,000 1,077,205 1,080,632 1,071,649 1,061,740 1,051,016 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 74,709,003 76,364,634 77,975,283 79,554,023 81,093,039 2051 2052 2053 2054 2055 478,000 459,000 441,000 423,000 406,000 1,039,551 1,027,464 1,014,817 1,001,663 988,055 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 82,600,591 84,077,054 85,522,871 86,937,534 88,321,589 2056 2057 2058 2059 2060 390,000 374,000 359,000 344,000 331,000 974,047 959,684 945,012 930,072 914,908 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 89,675,636 90,999,320 92,293,332 93,557,404 94,793,312 2061 2062 2063 2064 2065 317,000 304,000 292,000 280,000 269,000 899,558 884,052 868,428 852,717 836,949 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 95,999,870 97,177,921 98,328,349 99,451,066 100,547,015 2066 2067 2068 2069 2070 258,000 248,000 238,000 228,000 219,000 821,150 805,347 789,564 773,818 758,132 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 101,616,165 102,659,512 103,677,076 104,668,894 105,636,026 Page 2 Calendar Year Tonnage Fee (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 - Alternative Cash Flow - Number of Years to Accumulate Capital to Cover a Forfeiture (all figures discounted to present value) Interest Income Land Reclamation Water Reclamation (2) (3) (4) Operating Expense (5) Fund Balance (6) 2071 2072 2073 2074 2075 210,000 202,000 194,000 186,000 179,000 742,525 727,014 711,616 696,345 681,213 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 106,578,551 107,497,565 108,393,181 109,265,526 110,115,738 2076 2077 2078 2079 2080 171,000 164,000 158,000 151,000 145,000 666,231 651,408 636,758 622,289 608,007 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 110,942,969 111,748,376 112,533,135 113,296,424 114,039,431 2081 2082 2083 2084 2085 140,000 134,000 129,000 123,000 118,000 593,923 580,042 566,368 552,905 539,656 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 114,763,354 115,467,396 116,152,765 116,818,670 117,466,326 2086 2087 2088 2089 2090 114,000 109,000 105,000 100,000 96,000 526,628 513,822 501,241 488,885 476,754 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 118,096,954 118,709,776 119,306,016 119,884,901 120,447,655 2091 2092 2093 2094 93,000 89,000 85,000 82,000 464,854 453,183 441,739 430,523 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 120,995,509 121,527,692 122,044,431 122,546,954 2160 2161 2162 2163 5,000 5,000 5,000 5,000 66,739 64,799 62,915 61,084 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 136,653,212 136,713,011 136,770,926 136,827,011 Total 44,603,000 74,313,730 5,721,906 0 2,280,000 Tonnage Fee Fund Balance Rate < $5M $5M - $10M > $10M 0.16 0.14 0.12 Number of Years with No Forfeitures Needed to Accumulate Capital to Cover the Forfeiture of a Permit Holder Permit Holder Size Median Average 5th Largest Largest Net Adjusted PSE 1,881,563 25,709,885 35,716,288 206,188,502 Years from 2016 0 2 9 Over 150 Number of Years with No Forfeitures Needed to Accumulate Capital to Cover the Forfeiture of a Permit Holder and otherwise expected land and water reclamations costs Permit Holder Size Net Adjusted PSE Years from 2016 Median 25,398,678 1 Average 49,227,000 16 5th Largest 59,233,403 21 Largest 229,705,617 Over 150 Footnotes: (1) (2) (3) (4) (5) (6) All columns shown at present value, based on Exhibit 8, Investment Rates Based on coal production from the Ohio Department of Natural Resources, Division of Geological Survey. Future production based on the report "Annual Energy Outlook 2017 with projections to 2050" by the Energy Information Administration The per ton fee is predicated upon the prior year Fund Balance in column (6) according to the chart at the bottom of the second page, titled Tonnage Fee. [Prior year Col (6) x Exhibit 8 Col (1)] + [Col (1) / 2 x Exhibit 8 Col (1)]. Years 2046 and subsequent based on 3.040% discount factor Years 2017-2019 reflect Valley Mining Payments. Assume no losses Based on discussion with client. Inflation and discount rates assumed to offset. Year 2016 client provided data. Subsequent years = prior year col (6) + Col (1) + Col (2) - Col (3) - Col (4) - Col (5) Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 ‐ Shock Loss Cash Flow ‐ Shock Loss Scenario with a Maximum Land Reclamation Cost Per Year of $3,500,000 (all figures discounted to present value) Tonnage Fee Interest Income Land Reclamation Water Reclamation Operating Expense (1) (2) (3) (4) (5) Page 1 Fund Balance (6) 2016 2017 2018 2019 2020 1,905,000 1,372,000 1,423,000 1,598,000 222,057 317,772 374,276 434,324 2,216,401 2,412,946 1,092,559 3,500,000 0 0 0 5,977 35,000 35,000 35,000 45,000 25,912,186 25,787,842 25,029,669 25,699,386 24,180,734 2021 2022 2023 2024 2025 1,500,000 1,453,000 680,000 0 0 449,839 446,062 426,701 372,206 310,212 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 6,054 6,138 6,228 6,332 6,433 45,000 45,000 45,000 45,000 45,000 22,579,518 20,927,442 18,482,915 15,303,789 12,062,568 2026 2027 2028 2029 2030 0 0 0 0 0 244,755 176,230 106,935 38,117 0 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 6,531 6,629 6,726 6,822 6,917 45,000 45,000 45,000 45,000 45,000 8,755,791 5,380,393 1,935,601 (1,578,103) (5,130,020) 2031 2032 2033 2034 2035 0 0 0 0 0 0 0 0 0 0 3,164,534 503,493 180,463 69,485 70,330 7,011 7,103 7,195 7,285 7,374 45,000 45,000 45,000 45,000 45,000 (8,346,565) (8,902,161) (9,134,819) (9,256,589) (9,379,293) 2036 2037 2038 2039 2040 0 0 0 0 0 0 0 0 0 0 71,165 59,931 60,613 61,285 61,952 7,461 7,548 7,633 7,718 7,802 45,000 45,000 45,000 45,000 45,000 (9,502,919) (9,615,398) (9,728,645) (9,842,648) (9,957,402) 2041 2042 2043 2044 2045 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,885 7,966 8,046 8,125 8,203 10,000 10,000 10,000 10,000 10,000 (9,975,286) (9,993,252) (10,011,299) (10,029,424) (10,047,627) 2046 2047 2048 2049 2050 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,280 8,448 8,527 8,606 8,686 10,000 10,000 10,000 10,000 10,000 (10,065,907) (10,084,355) (10,102,882) (10,121,488) (10,140,175) 2051 2052 2053 2054 2055 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,767 8,849 8,931 9,015 9,099 10,000 10,000 10,000 10,000 10,000 (10,158,942) (10,177,791) (10,196,723) (10,215,737) (10,234,836) 2056 2057 2058 2059 2060 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9,183 9,269 9,355 9,443 9,530 10,000 10,000 10,000 10,000 10,000 (10,254,019) (10,273,288) (10,292,644) (10,312,086) (10,331,617) 2061 2062 2063 2064 2065 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9,619 9,709 9,799 9,891 9,983 10,000 10,000 10,000 10,000 10,000 (10,351,236) (10,370,945) (10,390,744) (10,410,635) (10,430,618) 2066 2067 2068 2069 2070 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10,076 10,170 10,264 10,360 10,457 10,000 10,000 10,000 10,000 10,000 (10,450,693) (10,470,863) (10,491,127) (10,511,488) (10,531,944) Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 1 ‐ Shock Loss Cash Flow ‐ Shock Loss Scenario with a Maximum Land Reclamation Cost Per Year of $3,500,000 (all figures discounted to present value) Tonnage Fee Interest Income Land Reclamation Water Reclamation Operating Expense (1) (2) (3) (4) (5) Page 2 Fund Balance (6) 2071 2072 2073 2074 2075 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10,554 10,652 10,752 10,852 10,953 10,000 10,000 10,000 10,000 10,000 (10,552,498) (10,573,150) (10,593,902) (10,614,754) (10,635,707) 2076 2077 2078 2079 2080 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11,055 11,158 11,262 11,367 11,473 10,000 10,000 10,000 10,000 10,000 (10,656,762) (10,677,919) (10,699,181) (10,720,548) (10,742,021) 2081 2082 2083 2084 2085 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11,580 11,687 11,796 11,906 12,017 10,000 10,000 10,000 10,000 10,000 (10,763,600) (10,785,288) (10,807,084) (10,828,990) (10,851,007) 2086 2087 2088 2089 2090 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12,129 12,242 12,356 12,471 12,587 10,000 10,000 10,000 10,000 10,000 (10,873,137) (10,895,379) (10,917,735) (10,940,206) (10,962,794) 2091 2092 2093 2094 0 0 0 0 0 0 0 0 0 0 0 0 12,705 12,823 12,943 13,063 10,000 10,000 10,000 10,000 (10,985,498) (11,008,322) (11,031,264) (11,054,327) Total 9,931,000 3,919,487 48,525,157 701,843 1,590,000 Tonnage Fee Fund Balance Rate < $5M $5M ‐ $10M > $10M 0.16 0.14 0.12 Footnotes: (1) (2) (3) (4) (5) (6) All columns shown at present value, based on Exhibit 8, Investment Rates Based on coal production from the Ohio Department of Natural Resources, Division of Geological Survey. Future production based on the report "Annual Energy Outlook 2017 with projections to 2050" by the Energy Information Administration The per ton fee is predicated upon the prior year Fund Balance in column (6) according to the chart at the bottom of the second page, titled Tonnage Fee. Active mining continues for seven years, with the seventh year coal production being half the prior year.  See Exhibit 3.1. [Prior year Col (6) x Exhibit 8 Col (1)] + [Col (1) / 2 x Exhibit 8 Col (1)].  Years 2046 and subsequent based on 3.040% discount factor Exhibit 2.1 Col (2).  *  In addition, Years 2020‐2024 include a shock loss of $25,709,885, derived in Exhibit 7.1b Col (3), spread evenly over five years. Exhibit 2.1 Col (4). Based on discussion with client.  Inflation and discount rates assumed to offset. Year 2016 client provided data.  Subsequent years = prior year col (6) + Col (1) + Col (2) ‐ Col (3) ‐ Col (4) ‐ Col (5) Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.1 Total Expenditures Water Reclamation Gross Net Operating Expense (3) (4) (5) Land Reclamation Gross (1) Net (2) Page 1 Gross Total (6) Net Total (7) 2016 2017 2018 2019 2020 2,216,401 2,412,946 1,092,559 2,083,607 2,216,401 2,412,946 1,092,559 1,931,999 0 0 0 6,641 0 0 0 5,977 35,000 35,000 35,000 45,000 2,251,401 2,447,946 1,127,559 2,135,248 2,251,401 2,447,946 1,127,559 1,982,976 2021 2022 2023 2024 2025 2,110,886 2,147,974 2,080,558 2,115,132 2,148,810 1,957,013 1,991,771 1,927,708 1,959,742 1,990,946 6,727 6,820 6,921 7,036 7,148 6,054 6,138 6,228 6,332 6,433 45,000 45,000 45,000 45,000 45,000 2,162,613 2,199,793 2,132,478 2,167,168 2,200,958 2,008,067 2,042,909 1,978,936 2,011,074 2,042,379 2026 2027 2028 2029 2030 1,540,407 809,699 576,874 518,425 525,653 1,435,877 750,179 538,713 483,526 490,267 7,257 7,365 7,473 7,580 7,685 6,531 6,629 6,726 6,822 6,917 45,000 45,000 45,000 45,000 45,000 1,592,664 862,064 629,347 571,005 578,338 1,487,408 801,808 590,439 535,348 542,184 2031 2032 2033 2034 2035 532,773 539,833 195,570 73,999 74,900 496,909 503,493 180,463 69,485 70,330 7,789 7,893 7,994 8,095 8,193 7,011 7,103 7,195 7,285 7,374 45,000 45,000 45,000 45,000 45,000 585,563 592,725 248,564 127,094 128,093 548,919 555,596 232,658 121,770 122,704 2036 2037 2038 2039 2040 75,789 63,878 64,605 65,321 66,032 71,165 59,931 60,613 61,285 61,952 8,290 8,386 8,482 8,576 8,669 7,461 7,548 7,633 7,718 7,802 45,000 45,000 45,000 45,000 45,000 129,079 117,264 118,087 118,897 119,701 123,626 112,479 113,247 114,003 114,754 2041 2042 2043 2044 2045 0 0 0 0 0 0 0 0 0 0 8,761 8,851 8,940 9,028 9,115 7,885 7,966 8,046 8,125 8,203 10,000 10,000 10,000 10,000 10,000 18,761 18,851 18,940 19,028 19,115 17,885 17,966 18,046 18,125 18,203 2046 2047 2048 2049 2050 0 0 0 0 0 0 0 0 0 0 9,200 9,387 9,474 9,562 9,652 8,280 8,448 8,527 8,606 8,686 10,000 10,000 10,000 10,000 10,000 19,200 19,387 19,474 19,562 19,652 18,280 18,448 18,527 18,606 18,686 2051 2052 2053 2054 2055 0 0 0 0 0 0 0 0 0 0 9,741 9,832 9,924 10,016 10,110 8,767 8,849 8,931 9,015 9,099 10,000 10,000 10,000 10,000 10,000 19,741 19,832 19,924 20,016 20,110 18,767 18,849 18,931 19,015 19,099 2056 2057 2058 2059 2060 0 0 0 0 0 0 0 0 0 0 10,204 10,299 10,395 10,492 10,589 9,183 9,269 9,355 9,443 9,530 10,000 10,000 10,000 10,000 10,000 20,204 20,299 20,395 20,492 20,589 19,183 19,269 19,355 19,443 19,530 2061 2062 2063 2064 2065 0 0 0 0 0 0 0 0 0 0 10,688 10,788 10,888 10,990 11,092 9,619 9,709 9,799 9,891 9,983 10,000 10,000 10,000 10,000 10,000 20,688 20,788 20,888 20,990 21,092 19,619 19,709 19,799 19,891 19,983 2066 2067 2068 2069 2070 0 0 0 0 0 0 0 0 0 0 11,195 11,300 11,405 11,511 11,618 10,076 10,170 10,264 10,360 10,457 10,000 10,000 10,000 10,000 10,000 21,195 21,300 21,405 21,511 21,618 20,076 20,170 20,264 20,360 20,457 Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.1 Total Expenditures Water Reclamation Gross Net Operating Expense (3) (4) (5) Land Reclamation Gross (1) Net (2) Page 2 Gross Total (6) Net Total (7) 2071 2072 2073 2074 2075 0 0 0 0 0 0 0 0 0 0 11,727 11,836 11,946 12,057 12,170 10,554 10,652 10,752 10,852 10,953 10,000 10,000 10,000 10,000 10,000 21,727 21,836 21,946 22,057 22,170 20,554 20,652 20,752 20,852 20,953 2076 2077 2078 2079 2080 0 0 0 0 0 0 0 0 0 0 12,283 12,398 12,513 12,630 12,747 11,055 11,158 11,262 11,367 11,473 10,000 10,000 10,000 10,000 10,000 22,283 22,398 22,513 22,630 22,747 21,055 21,158 21,262 21,367 21,473 2081 2082 2083 2084 2085 0 0 0 0 0 0 0 0 0 0 12,866 12,986 13,107 13,229 13,352 11,580 11,687 11,796 11,906 12,017 10,000 10,000 10,000 10,000 10,000 22,866 22,986 23,107 23,229 23,352 21,580 21,687 21,796 21,906 22,017 2086 2087 2088 2089 2090 0 0 0 0 0 0 0 0 0 0 13,477 13,602 13,729 13,857 13,986 12,129 12,242 12,356 12,471 12,587 10,000 10,000 10,000 10,000 10,000 23,477 23,602 23,729 23,857 23,986 22,129 22,242 22,356 22,471 22,587 2091 2092 2093 2094 0 0 0 0 0 0 0 0 14,116 14,248 14,381 14,515 12,705 12,823 12,943 13,063 10,000 10,000 10,000 10,000 24,116 24,248 24,381 24,515 22,705 22,823 22,943 23,063 Total 24,132,628 22,815,272 779,826 701,843 1,590,000 26,502,454 25,107,115 Footnotes: (1) (2) (3) (4) Exhibit 2.2 Col (3). Exhibit 2.2 Col (6). Exhibit 2.3 Col (3). Exhibit 2.3 Col (6). Inflated and discounted reclamation costs. Inflated and discounted reclamation costs. Inflated and discounted reclamation costs. Inflated and discounted reclamation costs. (5) (6) (7) Client provided data Col (1) + Col (3) + Col (5) Col (2) + Col (4) + Col (5) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2016 2017 2018 2019 2020 2,225,580 2,452,499 1,110,589 2,091,672 2,225,580 2,452,499 1,127,125 2,186,500 2,216,401 2,412,946 1,092,559 2,083,607 2,225,580 2,452,499 1,110,589 1,939,478 2,225,580 2,452,499 1,127,125 2,027,405 2,216,401 2,412,946 1,092,559 1,931,999 2021 2022 2023 2024 2025 2,091,972 2,099,727 2,004,230 2,004,230 2,004,230 2,257,878 2,345,567 2,322,841 2,415,754 2,512,385 2,110,886 2,147,974 2,080,558 2,115,132 2,148,810 1,939,478 1,947,033 1,856,988 1,856,988 1,856,988 2,093,290 2,174,995 2,152,191 2,238,279 2,327,810 1,957,013 1,991,771 1,927,708 1,959,742 1,990,946 2026 2027 2028 2029 2030 1,415,073 732,876 514,610 455,977 455,977 1,844,805 993,655 725,632 668,675 695,422 1,540,407 809,699 576,874 518,425 525,653 1,319,048 679,003 480,568 425,282 425,282 1,719,619 920,612 677,631 623,662 648,608 1,435,877 750,179 538,713 483,526 490,267 2031 2032 2033 2034 2035 455,977 455,977 163,094 60,946 60,946 723,239 752,168 279,797 108,738 113,088 532,773 539,833 195,570 73,999 74,900 425,282 425,282 150,496 57,228 57,228 674,552 701,535 258,184 102,105 106,189 496,909 503,493 180,463 69,485 70,330 2036 2037 2038 2039 2040 60,946 50,780 50,780 50,780 50,780 117,611 101,914 105,990 110,230 114,639 75,789 63,878 64,605 65,321 66,032 57,228 47,642 47,642 47,642 47,642 110,437 95,616 99,441 103,419 107,556 71,165 59,931 60,613 61,285 61,952 Total 23,120,248 27,301,730 24,132,628 21,878,115 25,768,339 22,815,272 Footnotes: (1) (2) (3) See report for details. Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (1) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (4) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Calendar Year Expenditure (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.3 Water Reclamation Expenditures Gross Inflated Discounted Expenditure (2) (3) (4) Page 1 Net Inflated (5) Discounted (6) 2016 2017 2018 2019 2020 0 0 0 6,667 0 0 0 6,969 0 0 0 6,641 0 0 0 6,000 0 0 0 6,272 0 0 0 5,977 2021 2022 2023 2024 2025 6,667 6,667 6,667 6,667 6,667 7,195 7,447 7,726 8,036 8,357 6,727 6,820 6,921 7,036 7,148 6,000 6,000 6,000 6,000 6,000 6,476 6,702 6,954 7,232 7,521 6,054 6,138 6,228 6,332 6,433 2026 2027 2028 2029 2030 6,667 6,667 6,667 6,667 6,667 8,691 9,039 9,400 9,776 10,167 7,257 7,365 7,473 7,580 7,685 6,000 6,000 6,000 6,000 6,000 7,822 8,135 8,460 8,799 9,151 6,531 6,629 6,726 6,822 6,917 2031 2032 2033 2034 2035 6,667 6,667 6,667 6,667 6,667 10,574 10,997 11,437 11,895 12,370 7,789 7,893 7,994 8,095 8,193 6,000 6,000 6,000 6,000 6,000 9,517 9,897 10,293 10,705 11,133 7,011 7,103 7,195 7,285 7,374 2036 2037 2038 2039 2040 6,667 6,667 6,667 6,667 6,667 12,865 13,380 13,915 14,472 15,050 8,290 8,386 8,482 8,576 8,669 6,000 6,000 6,000 6,000 6,000 11,579 12,042 12,523 13,024 13,545 7,461 7,548 7,633 7,718 7,802 2041 2042 2043 2044 2045 6,667 6,667 6,667 6,667 6,667 15,652 16,278 16,930 17,607 18,311 8,761 8,851 8,940 9,028 9,115 6,000 6,000 6,000 6,000 6,000 14,087 14,651 15,237 15,846 16,480 7,885 7,966 8,046 8,125 8,203 2046 2047 2048 2049 2050 6,667 6,667 6,667 6,667 6,667 19,044 19,805 20,597 21,421 22,278 9,200 9,387 9,474 9,562 9,652 6,000 6,000 6,000 6,000 6,000 17,139 17,825 18,538 19,279 20,050 8,280 8,448 8,527 8,606 8,686 2051 2052 2053 2054 2055 6,667 6,667 6,667 6,667 6,667 23,169 24,096 25,060 26,062 27,105 9,741 9,832 9,924 10,016 10,110 6,000 6,000 6,000 6,000 6,000 20,852 21,687 22,554 23,456 24,394 8,767 8,849 8,931 9,015 9,099 2056 2057 2058 2059 2060 6,667 6,667 6,667 6,667 6,667 28,189 29,317 30,489 31,709 32,977 10,204 10,299 10,395 10,492 10,589 6,000 6,000 6,000 6,000 6,000 25,370 26,385 27,440 28,538 29,680 9,183 9,269 9,355 9,443 9,530 2061 2062 2063 2064 2065 6,667 6,667 6,667 6,667 6,667 34,296 35,668 37,095 38,579 40,122 10,688 10,788 10,888 10,990 11,092 6,000 6,000 6,000 6,000 6,000 30,867 32,101 33,385 34,721 36,110 9,619 9,709 9,799 9,891 9,983 2066 2067 2068 2069 2070 6,667 6,667 6,667 6,667 6,667 41,727 43,396 45,132 46,937 48,814 11,195 11,300 11,405 11,511 11,618 6,000 6,000 6,000 6,000 6,000 37,554 39,056 40,618 42,243 43,933 10,076 10,170 10,264 10,360 10,457 Calendar Year Expenditure (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.3 Water Reclamation Expenditures Gross Inflated Discounted Expenditure (2) (3) (4) Page 2 Net Inflated (5) Discounted (6) 2071 2072 2073 2074 2075 6,667 6,667 6,667 6,667 6,667 50,767 52,798 54,910 57,106 59,390 11,727 11,836 11,946 12,057 12,170 6,000 6,000 6,000 6,000 6,000 45,690 47,518 49,419 51,395 53,451 10,554 10,652 10,752 10,852 10,953 2076 2077 2078 2079 2080 6,667 6,667 6,667 6,667 6,667 61,766 64,236 66,806 69,478 72,257 12,283 12,398 12,513 12,630 12,747 6,000 6,000 6,000 6,000 6,000 55,589 57,813 60,125 62,530 65,031 11,055 11,158 11,262 11,367 11,473 2081 2082 2083 2084 2085 6,667 6,667 6,667 6,667 6,667 75,147 78,153 81,279 84,531 87,912 12,866 12,986 13,107 13,229 13,352 6,000 6,000 6,000 6,000 6,000 67,633 70,338 73,152 76,078 79,121 11,580 11,687 11,796 11,906 12,017 2086 2087 2088 2089 2090 6,667 6,667 6,667 6,667 6,667 91,428 95,085 98,889 102,844 106,958 13,477 13,602 13,729 13,857 13,986 6,000 6,000 6,000 6,000 6,000 82,286 85,577 89,000 92,560 96,262 12,129 12,242 12,356 12,471 12,587 2091 2092 2093 2094 6,667 6,667 6,667 6,667 111,237 115,686 120,313 125,126 14,116 14,248 14,381 14,515 6,000 6,000 6,000 6,000 100,113 104,117 108,282 112,613 12,705 12,823 12,943 13,063 Total 500,000 3,081,727 779,826 450,000 2,773,554 701,843 Footnotes: (1) (2) (3) Exhibit 9.1 Row (25), spread over 75 years Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (1) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) Years 2046 and Subsequent based on 3.040% discount factor (4) (5) (6) Exhibit 9.1 Row (27), spread over 75 years Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (4) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Years 2046 and Subsequent based on 3.040% discount factor OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 3.1 Remaining Performance Security Requirement Active Final Map Years Pending Pending Pending Pending Since Phase 1 Phase 1 Phase 2 Phase 3 Issuance Release Release Release Release (1) (2) (3) (4) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Footnotes: (1) - (4) 100% 100% 100% 100% 100% 100% 100% 50% 50% 50% 50% 50% 50% 15% 15% 15% 15% 15% 15% 15% 15% 100% 100% 100% 50% 50% 50% 50% 50% 50% 15% 15% 15% 15% 15% 15% 15% 15% 50% 50% 50% 50% 50% 50% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Judgmentally selected based on historic Ohio timing of various stages of the mining and reclamation process Evaluation Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Average Selected OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 3.2 Reclamation Lifecycles Final Map to Phase 1 release Phase 1 release to Phase 2 release Permit Count Acres Avg # Yrs Permit Count Acres Avg # Yrs (1) (2) (3) (4) (5) (6) 115 73 91 73 87 67 70 70 53 64 40 44 54 36 112 66 5,470 2,615 7,671 2,444 4,840 2,778 3,357 2,580 2,216 3,221 2,030 2,475 2,285 2,083 7,090 3,462 1,115 70 56,617 3,539 Footnotes: Years 1999 through 2014 Year 2015 1.9 1.2 1.7 1.3 2.6 1.7 1.2 2.2 1.6 1.7 1.8 1.9 3.4 4.0 3.8 2.7 2.9 2.21 3.00 129 113 117 78 62 62 50 71 61 63 57 46 68 33 72 80 7,117 4,751 7,640 2,862 2,603 2,519 2,415 4,187 2,675 2,348 1,852 2,114 3,181 1,512 4,005 4,470 1,162 73 56,251 3,516 3.9 3.8 3.6 3.5 3.7 3.6 3.3 3.6 4.2 4.0 5.2 6.0 4.3 6.6 7.3 5.9 5.9 4.61 6.00 Phase 2 release to Phase 3 release Permit Count Acres Avg # Yrs (7) (8) (9) 147 179 162 110 105 108 73 78 81 69 50 70 73 61 82 93 5,961 8,688 6,844 5,277 4,800 5,121 2,519 3,452 3,125 2,558 2,358 3,037 3,081 2,687 4,037 3,989 1,541 96 67,534 4,221 From the September 2014 Office of Surface Mining Reclamation and Enforcement report "A Report on the Success of Achieving Reclamation Standards on Surface Coal Mining Operations in Ohio" Table C "Timing and Acreage Released Over a 16-Year Period From the September 2015 Office of Surface Mining Reclamation and Enforcement report "Annual Evaluation Summary Report Of the Regulatory and Abandoned Mine Land Programs" Page 19 through 22 6.5 6.5 6.9 6.8 7.2 7.2 6.0 6.8 7.8 6.7 8.5 8.0 7.0 8.9 8.9 8.7 7.8 7.42 8.00 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 4.1 Performance Security Estimate (PSE) PSE (1) Final Map PSE (2) Active PSE (3) Total PSE Spring 2017 120,359,000 464,529,000 584,888,000 Spring 2015 Spring 2013 70,508,800 537,158,580 607,667,380 170,182,000 529,266,142 699,448,142 Spring 2011 170,812,000 396,722,889 567,534,889 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 49,850,200 (72,629,580) (22,779,380) (49,823,000) (64,737,142) (114,560,142) (50,453,000) 67,806,111 17,353,111 (4) Bond Amount 44,980,415 54,665,778 71,783,943 69,293,576 (9,685,363) (26,803,528) (24,313,161) (5) Total Net PSE 539,907,585 553,001,601 627,664,199 498,241,313 (13,094,016) (87,756,614) 41,666,272 Footnotes: (1), (2), (3), (5) (4) See report for details Row (3) - Row (5) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 4.2 Net Adjusted PSE by Mine Status Phase Spring 2017 Spring 2015 Spring 2013 Spring 2011 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (1) Active - Pending Phase 1 release (2) Active - Pending Phase 2 release (3) Active - Pending Phase 3 release (4) Active - Total 352,568,360 55,821,286 23,802,450 432,192,096 339,402,844 131,073,897 21,723,796 492,200,537 420,449,906 30,432,476 28,552,017 479,434,399 271,267,028 61,646,604 16,381,793 349,295,425 13,165,516 (75,252,611) 2,078,654 (60,008,441) (67,881,546) 25,388,810 (4,749,567) (47,242,303) 81,301,332 (5,825,318) 7,420,657 82,896,671 (5) Final Map - Pending Phase 1 release (6) Final Map - Pending Phase 2 release (7) Final Map - Pending Phase 3 release (8) Final Map - Total 94,307,850 11,302,513 2,105,127 107,715,489 39,256,913 10,811,000 10,733,152 60,801,065 139,564,625 6,455,063 2,210,113 148,229,800 138,898,250 7,838,688 2,208,950 148,945,888 55,050,937 491,513 (8,628,025) 46,914,425 (45,256,776) 4,847,450 (104,986) (40,514,311) (44,590,401) 3,463,825 (103,823) (41,230,399) (9) Total Net Adjusted PSE 539,907,585 553,001,601 627,664,199 498,241,313 (13,094,016) (87,756,614) 41,666,272 Footnotes: (1) - (8) (9) See report for details Row (4) + Row (8) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 4.3 Average PSE PSE Average Spring 2017 Spring 2015 Spring 2013 Spring 2011 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (1) Total PSE Per Permit Count (2) Net Adj PSE Per Permit Count 3,481,476 3,213,736 3,232,273 2,941,498 3,108,658 2,789,619 2,384,600 2,093,451 7.16% 8.47% 10.71% 13.20% 31.51% 34.86% (3) Total PSE Per Bonded Acre (4) Net Adj PSE Per Bonded Acre 18,711 17,272 16,293 14,828 14,208 12,750 11,625 10,206 12.92% 14.15% 24.07% 26.18% 37.87% 40.91% 4,397,654 4,059,456 3,452,656 3,142,055 3,346,642 3,003,178 2,782,034 2,442,359 21.49% 22.60% 23.90% 26.02% 36.74% 39.84% (5) Total PSE Per Permit Count w/ PSE > Bond (6) Net Adj PSE Per Permit Count w/ PSE > Bond Footnotes: (1) (2) (3) (4) (5) (6) Exhibit 4.1 Row (3) / Exhibit 7.6a Col (9) Total Exhibit 4.1 Row (5) / Exhibit 7.6a Col (9) Total Exhibit 4.1 Row (3) / Exhibit 7.6b Col (9) Total Exhibit 4.1 Row (5) / Exhibit 7.6b Col (9) Total Exhibit 4.1 Row (3) / Exhibit 7.2 Col (9) Total Exhibit 4.1 Row (5) / Exhibit 7.2 Col (9) Total Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.1 Forfeiture Rates Years Since Issuance All Permit Types (1) 1 2 3 4 5 0.00% 0.00% 0.50% 0.50% 0.50% 6 7 8 9 10 0.50% 0.50% 0.50% 0.50% 0.50% 11 12 13 14 15 0.50% 0.50% 0.50% 0.50% 0.50% 16 17 18 19 20 0.50% 0.50% 0.50% 0.50% 0.50% Footnotes: (1) Exhibit 5.2 Row (9) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.2 Forfeiture Rate Calculation Calendar Year Number of Permits In Force Forfeited (1) (2) Forfeiture Rate (3) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 17 6 27 4 4 4 17 2 4 1 3 1 8 0 0 0 0 0 0 0 0 6 0 0 2.13% 0.77% 3.74% 0.59% 0.69% 0.70% 3.02% 0.44% 1.03% 0.28% 0.84% 0.28% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.68% 0.00% 0.00% Total 9,842 104 1.06% (4a) Average lifetime of permit (4b) Selected average lifetime of permits w/o forfeitures 21.00 19.00 (5) Ohio indicated forfeiture annual incremental rate 0.06% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 0.99% 1.08% (8) Weighted indicated forfeiture annual incremental rate 0.50% (9) Ohio selected forfeiture annual incremental rate 0.50% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) Historical Ohio permit data Historical Ohio permit data Col (2) / Col (1) Exhibit 3.1 Selected average lifetime based on assumption of minimal forfeitures within the first two years of issuance Col (3) / Row (4b) From Pinnacle analysis of Kentucky data applied to Ohio permit count by mine type distribution From Pinnacle analysis of West Virginia data applied to Ohio permit count by mine type distribution Weighted average of rows (5) through (7) based on… OH = 60.0%, KY = 20.0% and WV = 20.0% Selected based on rows (5) through (8) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.3 Forfeiture Rate Adjustment Factor for Mine Status Mine Status Factor (1) Active, Pending Phase 1 Release Final Map, Pending Phase 1 Release Pending Phase 2 Release Pending Phase 3 Release Footnotes: (1) 1.00 0.80 0.67 0.33 Judgmentally selected These factors are intended to reflect that the probability of forfeiture declines as the reclamation process moves from active mining to reclamation and on to final release. OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 6 Net Reclamation Cost by Mine Status Phase Spring 2017 Spring 2015 Spring 2013 Spring 2011 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (1) Active - Pending Phase 1 release (2) Active - Pending Phase 2 release (3) Active - Pending Phase 3 release (4) Active - Total 12,346,477 1,103,194 314,192 13,763,863 15,872,249 3,800,171 411,492 20,083,913 9,110,576 339,359 244,034 9,693,970 23,279,440 1,491,776 192,800 24,964,016 (3,525,772) (2,696,978) (97,300) (6,320,049) 3,235,901 763,834 70,158 4,069,894 (10,932,963) (388,582) 121,392 (11,200,152) (5) Final Map - Pending Phase 1 release (6) Final Map - Pending Phase 2 release (7) Final Map - Pending Phase 3 release (8) Final Map - Total 2,072,483 225,312 27,788 2,325,583 1,296,140 319,172 203,307 1,818,619 1,813,560 71,130 18,890 1,903,579 4,363,792 201,678 22,973 4,588,444 776,344 (93,860) (175,520) 506,964 258,924 154,183 8,898 422,004 (2,291,309) 23,634 4,814 (2,262,860) (9) Total Net Reclamation Cost 16,089,447 21,902,532 11,597,549 29,552,459 (5,813,085) 4,491,898 (13,463,013) Footnotes: (1), (2), (3), (5), (6), (7) (4) (8) (9) See report for details Row (1) + Row (2) + Row (3) Row (5) + Row (6) + Row (7) Row (4) + Row (8) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.1a Permit Information by Parent Company Parent Company Total PSE (1) Net Adjusted PSE (2) Permit Count (3) Implied Bond Acres (4) Net Reclamation Cost (5) MURRAY ENERGY WESTMORELAND COAL COMPANY CONSOL ENERGY WATERLOO COAL CO INC RHINO ENERGY, LLC KIMBLE CLAY & LIMESTONE ROSEBUD MINING COMPANY LLC ANTHONY MINING CO INC B & N COAL INC SIDWELL MATERIALS INC DTE DICKERSON LLC THOMPSON BROTHERS MINING ETTA MAE INC AMERICAN LANDFILL INC MARIETTA COAL COMPANY VALLEY MINING INC L & M MINERAL CO SCHANEY MINING STATE LINE RESOURCES INC HERITAGE COAL CO LLC F & M COAL CO AMERIKOHL MINING INC CHAMBERS DEVL OF OHIO INC GEORGETOWN MARINE INC COLLIER PORTS INC 212,796,000 150,070,000 66,932,000 59,286,000 38,963,000 13,635,000 8,832,000 7,264,000 6,776,000 5,475,000 4,905,000 2,183,000 1,973,000 1,761,000 1,276,000 964,000 894,000 305,000 295,000 159,000 82,000 39,000 10,000 10,000 3,000 206,188,502 131,764,000 64,053,250 55,642,648 35,716,288 11,133,300 6,549,275 6,374,663 5,078,875 5,002,188 3,881,500 1,934,400 1,881,563 1,645,825 1,195,250 552,022 760,250 295,000 215,788 0 34,000 9,000 0 0 0 13 63 4 10 10 13 23 3 6 3 1 4 1 1 2 1 2 1 1 1 1 1 1 1 1 3,286 14,888 2,912 2,626 1,145 1,112 2,675 589 449 135 83 112 124 22 86 366 51 13 79 384 42 41 30 4 6 7,005,872 4,259,358 1,428,987 1,217,462 811,341 438,756 178,139 132,190 128,631 114,505 131,645 44,042 37,590 54,827 43,557 15,131 35,755 5,963 4,747 0 762 187 0 0 0 Total 584,888,000 539,907,585 168 31,259 16,089,447 Spring 2015 Total Spring 2013 Total Spring 2011 Total 607,667,380 699,448,142 567,534,889 553,001,601 627,664,199 498,241,313 188 225 238 37,295 49,229 48,820 21,902,532 11,597,549 29,552,459 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (22,779,380) (114,560,142) 17,353,111 (6,037) (17,971) (17,561) (5,813,085) 4,491,898 (13,463,013) Footnotes: (1), (2), (3), (4), (5) (13,094,016) (87,756,614) 41,666,272 See report for details Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle (20) (57) (70) Parent Company OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.1b Top Five Parent Companies Net Adjusted PSE Amount % of Total Average Amount (1) (2) (3) (4) MURRAY ENERGY WESTMORELAND COAL COMPANY CONSOL ENERGY WATERLOO COAL CO INC RHINO ENERGY, LLC 206,188,502 131,764,000 64,053,250 55,642,648 35,716,288 38.19% 24.40% 11.86% 10.31% 6.62% Subtotal 493,364,688 91.38% Remaining Parent Companies 46,542,897 Total 539,907,585 Spring 2015 Total Spring 2013 Total Spring 2011 Total 553,001,601 627,664,199 498,241,313 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 Footnotes: (1) (2) (3) (4) (5) (6) Net Reclamation Cost % of Total (5) Average (6) 7,005,872 4,259,358 1,428,987 1,217,462 811,341 43.54% 26.47% 8.88% 7.57% 5.04% 98,672,938 14,723,020 91.51% 2,944,604 8.62% 2,908,931 1,366,426 8.49% 85,402 100.00% 25,709,885 16,089,447 100.00% 766,164 19,750,057 20,922,140 12,775,418 21,902,532 11,597,549 29,552,459 (13,094,016) (87,756,614) 41,666,272 23.18% 18.62% 50.31% Exhibit 7.1a Col (2) Col (1) / Total Col (1) Derived from Exhibit 7.1a Col (2) Exhibit 7.1a Col (5) Col (4) / Total Col (4) Derived from Exhibit 7.1a Col (5) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle (5,813,085) 4,491,898 (13,463,013) 782,233 386,585 757,755 -2.10% 49.54% 1.10% OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.1c Parent Company Counts by PSE Range and Net Reclamation Cost Range Net Adjusted PSE (1) Company Count (2) Net Reclamation Cost (3) Company Count (4) $0 $0 to 100K $100K to 1M $1M to 2.5M $2.5M to 5M $5M to 9M $9M to 25M Over $25M 4 2 4 4 1 4 1 5 $0 $0 to 10K $10K to 100K $100K to 500K $500K to 1M $1M to 2M $2M to 5M Over $5M 4 4 6 6 1 2 1 1 Total 25 Total 25 Footnotes: (2) (4) Exhibit 7.1a Col (2) Exhibit 7.1a Col (5) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.2 Permits Counts with a Performance Security Estimate Greater Than Bond on Hand Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 5 7 1 0 4 1 1 0 1 1 0 2 0 1 0 1 0 0 1 0 2 4 1 5 4 2 2 1 2 4 5 4 0 1 0 0 0 0 0 0 1 0 0 0 1 2 1 0 0 0 0 1 0 0 0 1 0 1 0 2 0 1 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 5 7 1 0 4 2 1 0 1 3 2 4 0 1 0 1 1 0 1 0 3 4 2 5 6 2 3 1 3 4 5 4 0 1 0 2 1 1 0 0 0 0 0 0 1 0 0 0 0 1 3 0 1 0 0 1 1 1 1 0 1 1 0 3 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 0 2 0 0 0 2 0 1 1 1 1 2 1 3 4 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 1 0 2 3 1 0 0 1 0 0 0 0 0 2 1 1 0 0 0 0 0 0 1 0 0 1 2 1 5 0 1 1 2 1 3 3 2 3 6 3 3 7 5 1 0 0 0 1 7 8 2 0 4 2 1 0 1 4 2 4 1 3 1 6 1 1 2 2 4 7 5 7 9 8 6 4 10 9 6 4 0 1 Total 63 12 3 78 21 24 10 55 133 96 107 26 9 4 6 126 122 119 9 31 13 26 28 30 50 87 85 176 209 204 (14) 3 (1) (3) 12 (10) 11 (2) (18) (20) 5 (32) (30) Spring 2015 Total Spring 2013 Total Spring 2011 Total 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 Footnotes: (1) (2) (3) (4) (33) (44) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) (48) (44) (41) (5) (6) (7) (8) (9) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) (43) (76) (71) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.3a Permits Counts by Mine Status and Year of Issuance - Surface Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 1 1 0 0 2 1 0 0 1 1 0 2 1 1 0 3 0 0 1 0 1 3 0 5 5 2 1 1 2 4 6 7 3 3 0 0 0 0 0 0 0 0 0 0 1 2 1 0 0 0 0 1 0 0 0 1 0 1 0 2 0 1 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 2 1 0 0 1 3 2 4 1 1 0 3 1 0 1 0 2 3 1 5 7 2 2 1 4 4 6 7 3 3 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 2 0 1 0 0 1 1 1 1 0 1 1 0 3 1 1 0 0 0 0 0 0 0 0 0 1 1 0 1 0 0 0 2 2 0 2 0 1 0 2 0 1 1 2 1 3 1 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 2 1 0 2 3 1 0 0 1 0 0 0 0 0 0 0 0 0 0 1 1 0 1 1 0 0 2 2 1 4 1 2 1 2 1 4 3 3 3 7 3 4 7 6 1 0 0 0 0 1 1 0 0 2 2 1 0 2 4 2 4 3 3 1 7 2 2 2 2 3 7 4 8 10 9 5 5 11 10 7 7 3 3 Total 58 12 2 72 16 33 12 61 133 Spring 2015 Total Spring 2013 Total Spring 2011 Total 76 89 25 7 4 5 105 101 103 4 30 19 34 28 30 51 94 104 156 195 207 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (18) (31) (13) 5 (2) (3) 12 (14) 14 (1) (16) (18) (33) (29) (31) 10 (33) (43) (23) (62) (74) Permits Released Since Spring 2015 Total PSE of Permits Released Since Spring 2015 Net Adjusted PSE of Permits Released Since Spring 2015 29 7,807,000 5,373,843 Permits Issued Since Spring 2015 Total PSE of Permits Issued Since Spring 2015 Net Adjusted PSE of Permits Issued Since Spring 2015 7 5,046,000 4,106,625 Permits remaining in system from Spring 2015 to Spring 2017 Total PSE change of permits remaining in system from Spring 2015 to Spring 2017 Net Adjusted PSE change of permits remaining in system from Spring 2015 to Spring 2017 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 126 (152,585,292) (144,674,241) (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year Phase 1 (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.3b Implied Bonded Acres by Mine Status and Year of Issuance - Surface Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 75 41 0 0 69 149 0 0 35 3 0 13 30 32 0 176 0 0 24 0 24 54 0 264 349 163 29 9 108 87 206 330 12 12 0 0 0 0 0 109 0 0 0 0 123 12 78 0 0 0 323 3 0 123 0 9 138 7 732 603 696 131 13 411 96 7 68 0 0 0 0 0 0 0 156 0 0 0 0 217 27 299 0 0 0 461 60 0 176 0 13 226 88 1,172 1,279 1,188 241 18 587 217 9 98 0 0 0 75 41 0 0 334 149 0 0 35 343 40 389 30 32 0 960 62 0 323 0 46 418 96 2,168 2,231 2,047 401 40 1,105 399 222 496 12 12 0 0 0 0 0 0 0 0 0 0 13 0 0 0 0 0 128 0 4 0 0 16 10 0 19 0 2 0 0 141 22 55 0 0 0 0 0 0 0 0 0 40 83 0 113 19 0 0 224 341 0 558 0 34 0 31 366 18 12 292 160 406 274 135 677 342 76 0 0 0 0 0 0 0 0 0 58 119 0 162 91 0 0 385 564 150 1,016 101 58 52 63 523 411 554 451 951 1,232 511 254 967 604 109 0 0 0 0 0 0 0 0 0 98 203 0 275 124 0 0 608 905 150 1,701 101 96 52 94 905 439 566 763 1,112 1,640 785 389 1,784 968 240 0 0 0 0 75 41 0 0 334 247 203 0 310 467 40 389 638 937 150 2,661 163 96 375 94 952 857 662 2,931 3,343 3,687 1,186 429 2,889 1,367 462 496 12 12 Total 2,295 3,680 6,530 12,505 411 4,202 9,384 13,997 26,502 Spring 2015 Total Spring 2013 Total Spring 2011 Total 2,736 3,744 6,913 5,903 12,157 10,283 21,806 19,931 18,571 213 1,723 2,108 6,762 8,124 15,465 10,444 23,950 23,585 32,251 43,881 42,157 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (441) (1,449) (3,232) (2,223) 198 (1,312) 2,095 (2,560) (5,627) (3,753) (9,301) (7,425) (6,066) 1,260 (6,081) 3,553 (9,953) (9,588) Acres Released Since Spring 2015 3,633 Acres Issued Since Spring 2015 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle (5,748) (17,379) (15,654) 220 (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.4a Permits Counts by Mine Status and Year of Issuance - Underground Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 1 0 0 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 1 0 0 2 1 0 0 3 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 0 1 0 0 2 1 Total 10 0 0 10 5 0 0 5 15 Spring 2015 Total Spring 2013 Total Spring 2011 Total 7 7 0 1 0 0 7 8 8 5 4 0 0 0 0 5 4 5 12 12 13 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 3 3 0 (1) 0 0 3 2 2 0 1 0 0 0 0 0 1 0 3 3 2 Permits Released Since Spring 2015 Total PSE of Permits Released Since Spring 2015 Net Adjusted PSE of Permits Released Since Spring 2015 1 21,000 16,750 Permits Issued Since Spring 2015 Total PSE of Permits Issued Since Spring 2015 Net Adjusted PSE of Permits Issued Since Spring 2015 3 1,541,000 1,511,000 Permits remaining in system from Spring 2015 to Spring 2017 Total PSE change of permits remaining in system from Spring 2015 to Spring 2017 Net Adjusted PSE change of permits remaining in system from Spring 2015 to Spring 2017 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 12 128,334,971 128,611,346 (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year Phase 1 (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.4b Implied Bonded Acres by Mine Status and Year of Issuance - Underground Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 0 124 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 79 28 45 0 0 0 0 0 32 0 0 8 4 0 0 51 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 39 0 0 0 0 0 0 0 0 0 0 0 0 0 73 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 56 0 0 0 0 0 0 0 0 0 0 0 0 0 247 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 79 123 45 0 0 0 0 0 32 0 0 8 4 0 0 475 8 0 0 0 0 0 0 0 0 0 0 0 0 33 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 914 204 0 0 0 0 0 0 0 0 0 0 0 0 49 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,306 291 0 0 0 0 0 0 0 0 0 0 0 0 70 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,695 502 0 0 0 0 0 0 0 0 0 0 0 0 153 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,942 502 0 0 0 0 0 0 0 0 0 0 0 0 153 0 0 0 0 0 79 123 45 0 0 0 0 0 32 0 0 8 4 Total 321 90 128 539 516 1,167 1,667 3,350 3,889 Spring 2015 Total Spring 2013 Total Spring 2011 Total 286 792 60 60 86 85 432 937 480 509 483 1,155 1,118 1,650 1,597 3,314 3,197 4,873 3,745 4,134 5,353 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 34 (471) 30 30 43 43 107 (398) 59 7 33 12 49 17 70 36 153 (1,523) 144 (245) (1,464) Acres Released Since Spring 2015 116 Acres Issued Since Spring 2015 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 12 (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.5a Permits Counts by Mine Status and Year of Issuance - Facility Operations Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 4 3 1 0 2 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 4 3 1 0 2 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 1 1 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 6 3 1 0 2 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 1 1 0 Total 16 1 1 18 2 0 0 2 20 Spring 2015 Total Spring 2013 Total Spring 2011 Total 16 14 1 1 1 1 18 16 16 2 2 0 0 0 0 2 2 2 20 18 18 0 2 0 0 0 0 0 2 2 0 0 0 0 0 0 0 0 0 0 2 2 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 Permits Released Since Spring 2015 Total PSE of Permits Released Since Spring 2015 Net Adjusted PSE of Permits Released Since Spring 2015 1 2,526,000 2,449,000 Permits Issued Since Spring 2015 Total PSE of Permits Issued Since Spring 2015 Net Adjusted PSE of Permits Issued Since Spring 2015 1 10,000 0 Permits remaining in system from Spring 2015 to Spring 2017 Total PSE change of permits remaining in system from Spring 2015 to Spring 2017 Net Adjusted PSE change of permits remaining in system from Spring 2015 to Spring 2017 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 19 4,718,973 5,190,848 (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.5b Implied Bonded Acres by Mine Status and Year of Issuance - Facility Operations Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 84 57 0 0 25 0 11 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 133 0 0 0 101 27 4 0 0 26 8 31 0 0 31 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 38 11 45 0 0 47 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 148 76 76 0 25 78 11 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 133 0 0 0 101 27 4 0 0 35 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 58 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 85 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 178 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 326 76 76 0 25 78 11 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 133 0 0 0 101 27 4 0 Total 448 97 144 690 35 58 85 178 867 Spring 2015 Total Spring 2013 Total Spring 2011 Total 416 388 123 78 184 117 724 582 678 131 131 183 183 262 318 576 632 632 1,300 1,214 1,310 (125) (125) (177) (233) (398) (454) (454) 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 32 61 (27) 19 (40) 27 (34) 107 11 (96) (96) Acres Released Since Spring 2015 68 Acres Issued Since Spring 2015 Footnotes: (1) (2) (3) (4) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle (432) (347) (443) 4 (5) (6) (7) (8) (9) Client provided data, Pending Phase 1 Release Client provided data, Pending Phase 2 Release Client provided data, Pending Phase 3 Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.6a Permits Counts by Mine Status and Year of Issuance - Total Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Phase 1 (1) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 5 7 1 0 4 1 1 0 1 1 0 2 1 1 0 3 0 0 1 0 2 4 1 6 5 2 2 1 2 5 7 8 6 4 0 0 0 0 0 0 1 0 0 0 1 2 1 0 0 0 0 1 0 0 0 1 0 1 0 2 0 1 0 2 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 5 7 1 0 4 2 1 0 1 3 2 4 1 1 0 3 1 0 1 0 3 4 2 6 7 2 3 1 4 5 7 8 6 4 0 2 3 1 0 0 0 0 0 0 1 0 0 0 0 1 3 0 1 0 0 1 1 1 1 0 1 1 0 3 1 1 0 0 0 0 0 0 0 0 0 1 1 0 1 0 0 0 2 2 0 2 0 1 0 2 0 1 1 2 1 3 1 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 2 1 0 2 3 1 0 0 1 0 0 0 0 0 2 3 1 0 0 1 1 0 1 1 0 0 2 2 1 5 1 2 1 2 1 4 3 3 3 7 3 4 7 6 1 0 0 0 1 7 10 2 0 4 3 2 0 2 4 2 4 3 3 1 8 2 2 2 2 4 8 5 9 10 9 6 5 11 11 8 8 6 4 Total 84 13 3 100 23 33 12 68 168 99 110 26 9 5 6 130 125 127 11 36 19 34 28 30 58 100 111 188 225 238 (13) 4 (2) (3) 12 (13) 14 (1) (16) (18) Spring 2015 Total Spring 2013 Total Spring 2011 Total 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (15) (26) (30) (25) (27) 10 (32) (43) (20) (57) (70) Permits Released Since Spring 2015 Total PSE of Permits Released Since Spring 2015 Net Adjusted PSE of Permits Released Since Spring 2015 31 9,845,031 7,839,593 Permits Issued Since Spring 2015 Total PSE of Permits Issued Since Spring 2015 Net Adjusted PSE of Permits Issued Since Spring 2015 11 6,597,000 5,617,625 Permits remaining in system from Spring 2015 to Spring 2017 Total PSE change of permits remaining in system from Spring 2015 to Spring 2017 Net Adjusted PSE change of permits remaining in system from Spring 2015 to Spring 2017 Footnotes: (1) (2) (3) (4) Sum of Exhibits 7.3a through 7.5a Col (1), Pending Release Sum of Exhibits 7.3a through 7.5a Col (2), Pending Release Sum of Exhibits 7.3a through 7.5a Col (3), Pending Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 157 (19,531,349) (10,872,048) (5) (6) (7) (8) (9) Sum of Exhibits 7.3a through 7.5a Col (5), Pending Release Sum of Exhibits 7.3a through 7.5a Col (6), Pending Release Sum of Exhibits 7.3a through 7.5a Col (7), Pending Release Sum of Col (5) through Col (7) Col (4) + Col (8) Issue Year Phase 1 (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 7.6b Implied Bonded Acres by Mine Status and Year of Issuance - Total Active Final Map Phase 2 Phase 3 Total Phase 1 Phase 2 Phase 3 (2) (3) (4) (5) (6) (7) Total Total (8) (9) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 159 222 0 0 94 149 11 0 35 3 0 13 30 32 0 176 0 0 24 0 32 133 28 310 349 163 162 9 108 120 307 357 24 16 0 26 58 31 0 109 31 0 0 0 123 12 78 0 0 0 323 3 0 123 0 9 138 46 732 603 696 131 13 411 96 7 68 0 0 4 38 83 45 0 156 47 0 0 0 217 27 299 0 0 0 461 60 0 176 0 13 226 144 1,172 1,279 1,188 241 18 587 217 9 98 0 0 4 223 364 76 0 359 227 11 0 35 343 40 389 30 32 0 960 62 0 323 0 54 497 219 2,213 2,231 2,047 533 40 1,105 432 323 523 24 16 0 35 475 8 0 0 0 0 0 0 13 0 0 0 0 0 161 0 4 0 0 16 10 0 19 0 2 0 0 141 22 55 0 0 0 0 58 914 204 0 0 40 83 0 113 19 0 0 224 341 0 607 0 34 0 31 366 18 12 292 160 406 274 135 677 342 76 0 0 0 0 85 1,306 291 0 0 58 119 0 162 91 0 0 385 564 150 1,086 101 58 52 63 523 411 554 451 951 1,232 511 254 967 604 109 0 0 0 0 178 2,695 502 0 0 98 203 0 275 124 0 0 608 905 150 1,854 101 96 52 94 905 439 566 763 1,112 1,640 785 389 1,784 968 240 0 0 0 4 401 3,058 579 0 359 325 214 0 310 467 40 389 638 937 150 2,813 163 96 375 94 959 936 785 2,976 3,343 3,687 1,318 429 2,889 1,400 563 523 24 16 Total 3,064 3,867 6,803 13,734 961 5,427 11,136 17,525 31,259 Spring 2015 Total Spring 2013 Total Spring 2011 Total 3,439 4,923 7,096 6,041 12,427 10,486 22,962 21,449 19,729 853 2,337 3,446 8,063 10,035 17,380 14,334 27,780 29,091 37,295 49,229 48,820 2017 vs. 2015 2017 vs. 2013 2017 vs. 2011 (375) (1,859) (3,229) (2,173) 109 (1,375) 1,982 (2,636) 3,191 (10,255) (11,566) (6,037) (17,971) (17,561) (5,624) (3,683) (9,228) (7,716) (5,995) 1,101 (6,244) Acres Released Since Spring 2015 3,817 Acres Issued Since Spring 2015 Footnotes: (1) (2) (3) (4) Sum of Exhibits 7.3b through 7.5b Col (1), Pending Release Sum of Exhibits 7.3b through 7.5b Col (2), Pending Release Sum of Exhibits 7.3b through 7.5b Col (3), Pending Release Sum of Col (1) through Col (3) Spring 2015, 2013 and 2011 Amounts from the Spring 2015, 2013 and 2011 Reports by Pinnacle 236 (5) (6) (7) (8) (9) Sum of Exhibits 7.3b through 7.5b Col (5), Pending Release Sum of Exhibits 7.3b through 7.5b Col (6), Pending Release Sum of Exhibits 7.3b through 7.5b Col (7), Pending Release Sum of Col (5) through Col (7) Col (4) + Col (8) Calendar Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Footnotes: (1) (2), (3) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 8 Projected Investment Rates Based on US Treasury Returns in Spring 2017 Investment Return (%) Yearly Discount Factor (1) (2) 0.830% 1.220% 1.500% 1.720% 1.930% 2.090% 2.240% 2.300% 2.370% 2.430% 2.470% 2.500% 2.540% 2.570% 2.610% 2.640% 2.680% 2.710% 2.750% 2.780% 2.810% 2.830% 2.860% 2.880% 2.910% 2.940% 2.960% 2.990% 3.010% 3.040% Based on US Treasury Returns in Spring 2017; Returns not in Bold are interpolated from US Treasury Rates Based on Col (1) 99.177% 98.795% 98.522% 98.309% 98.107% 97.953% 97.809% 97.752% 97.685% 97.628% 97.590% 97.561% 97.523% 97.494% 97.456% 97.428% 97.390% 97.362% 97.324% 97.295% 97.267% 97.248% 97.220% 97.201% 97.172% 97.144% 97.125% 97.097% 97.078% 97.050% Compound Discount Factor (3) -0.412% -1.613% -3.067% -4.706% -6.510% -8.424% -10.430% -12.444% -14.471% -16.500% -18.513% -20.501% -22.470% -24.412% -26.335% -28.230% -30.103% -31.947% -33.769% -35.560% -37.321% -39.046% -40.741% -42.400% -44.029% -45.627% -47.190% -48.724% -50.222% -51.691% OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 9.1 Water Reclamation Cost Surface Acres (1) Permitted acres with water treatment (2) Permitted acres with water monitoring (3) Percent of monitored permits that become water treatment (4) Projected permitted acres with water treatment Underground 0 0 5.00% 0 1,633 0 5.00% 1,633 Other Total 0 395 5.00% 20 1,633 395 1,652 (5) Water capital Ohio permit #433 avg cost per affected acre (6) Water treatment Ohio permit #433 avg cost per affected acre (7) Water capital West Virginia avg cost per permitted acre (8) Water treatment West Virginia avg cost per permitted acre Selected Average Cost (9) Water capital selected avg cost per permitted acre (10) Water treatment selected avg cost per permitted acre Number of Exposure Years (11) Number of years for water capital reclamation (12) Number of years for water treatment reclamation Forfeiture Rate (13) Selected water forfeiture rate Estimate 1 Gross Reclamation Cost (14) Water capital reclamation cost (15) Water treatment reclamation cost (16) Estimate 1 - Total gross water reclamation cost Estimate 2 Gross Reclamation Cost (17) Estimated water treatment cost for Ohio permit #201501 (18) Number of Ohio permits in the fund with water treatment and monitoring (19) Number of Ohio full cost permits with water treatment (20) Total number of Ohio permits in the fund (Active + Final Map) (21) Ratio of water issue permits to total permits (22) Selected ratio of water issue permits to total permits (23) Estimate 2 - Total gross water reclamation cost 2,851,602 5 1 168 3.57% 5.00% 142,580 Estimate 3 Gross Reclamation Cost (24a) Pinnacle's 2013 Ohio analysis selected gross water reclamation cost (24b) Pinnacle's 2015 Ohio analysis selected gross water reclamation cost (25) Selected gross water reclamation cost 2,500,000 2,250,000 500,000 Net Reclamation Cost (26) Water Trust Fund mitigation adjustment percentage (27) Total estimated net water reclamation cost Average Cost Footnotes: (1), (2) (3) (4) (5), (6) (7), (8) (9) (10) (11), (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) 11.94 6.91 13.36 318.36 54.91 241.40 42.68 180.88 11.94 6.91 54.91 241.40 42.68 180.88 75 75 75 75 75 75 0.50% 0 0 0 0.50% 33,615 147,779 181,394 Provided by Client Judgmental Selection (The two permits being monitored have a minimal probability of developing into long term water treatment) Row (1) + Row (2) x Row (3) From 2015 Pinnacle Report Internal Analysis of West Virginia Data, treatment costs adjusted for pre 2011 NPDES standards Row (7) Row (8) Based on Client estimates. Judgmental Selection. Equals the selected land reclamation forfeiture rate in Exhibit 5.2 Row (9) Row (4) x Row (9) x Row (11) x Row (13) Row (4) x Row (10) x Row (12) x Row (13) Row (14) + Row (15) Client provided data Exhibit 9.2a and Exhibit 9.2b Client provided data Exhibit 7.6a Col (9) [Row (18) + Row (19)] / Row(20) Judgmental Selection based on Row (21) Row (21) x Row (22) Selection from the Prior Ohio analysis (2013 Pinnacle Report and 2015 Pinnacle Report) Selection based on Row (16), Row (23), and Row (24) Judgmental Selection, considering forfeitures before Trust is set up or while Trust is partially funded by the RFF. Row (25) x [1.00 - Row (26)] 0.50% 316 1,340 1,656 33,931 149,119 183,050 10% 450,000 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 9.2a Water Reclamation Cost Ohio Permits with Water Treatment Surface Permit # 354 Issue Yr. 1984 Underground Permit # 355 Issue Yr. 1984 Underground Permit # 463 Issue Yr. 1985 Underground Data provided by Client Water Capital Cost per Year Water Treatment Cost per Year Permitted Acres Affected Acres Implied Bonded Acres Total PSE Net Adjusted PSE Water Capital Cost per Year Water Treatment Cost per Year Permitted Acres Affected Acres Implied Bonded Acres Total PSE Net Adjusted PSE Water Capital Cost per Year Water Treatment Cost per Year Permitted Acres Affected Acres Implied Bonded Acres Total PSE Net Adjusted PSE Underground Other N/A N/A 997 1,796 64,740,000 62,754,625 N/A N/A 316 514 398,000 0 N/A N/A 319 502 1,480,000 1,097,125 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 9.2b Water Reclamation Cost Ohio Permits Being Monitored For Possible Water Treatment Surface Underground Permit # 215 Issue Yr. 1983 Facility Operations Permit # 223 Issue Yr. 1983 Facility Operations Data provided by client. Permitted Acres Affected Acres Implied Bonded Acres Total PSE Net Adjusted PSE Permitted Acres Affected Acres Implied Bonded Acres Total PSE Net Adjusted PSE Other 344 99 314,000 201,500 52 79 295,000 215,788 Appendix A - Low Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2016 2017 2018 2019 2020 2,225,580 2,452,499 1,110,589 1,394,448 2,225,580 2,452,499 1,127,125 1,457,666 2,216,401 2,412,946 1,092,559 1,389,071 2,225,580 2,452,499 1,110,589 1,292,985 2,225,580 2,452,499 1,127,125 1,351,604 2,216,401 2,412,946 1,092,559 1,288,000 2021 2022 2023 2024 2025 1,394,648 1,399,818 1,336,154 1,336,154 1,336,154 1,505,252 1,563,711 1,548,561 1,610,503 1,674,923 1,407,257 1,431,982 1,387,038 1,410,088 1,432,540 1,292,985 1,298,022 1,237,992 1,237,992 1,237,992 1,395,527 1,449,996 1,434,794 1,492,186 1,551,873 1,304,675 1,327,847 1,285,138 1,306,495 1,327,297 2026 2027 2028 2029 2030 943,382 488,584 343,073 303,985 303,985 1,229,870 662,436 483,755 445,783 463,614 1,026,938 539,799 384,583 345,617 350,435 879,365 452,668 320,378 283,521 283,521 1,146,413 613,741 451,754 415,774 432,405 957,251 500,119 359,142 322,351 326,845 2031 2032 2033 2034 2035 303,985 303,985 108,729 40,631 40,631 482,159 501,445 186,531 72,492 75,392 355,182 359,888 130,380 49,333 49,933 283,521 283,521 100,331 38,152 38,152 449,702 467,690 172,123 68,070 70,793 331,272 335,662 120,309 46,323 46,887 2036 2037 2038 2039 2040 40,631 33,853 33,853 33,853 33,853 78,408 67,942 70,660 73,486 76,426 50,526 42,585 43,070 43,547 44,021 38,152 31,762 31,762 31,762 31,762 73,624 63,744 66,294 68,946 71,704 47,443 39,954 40,409 40,857 41,301 Total 17,343,055 20,136,221 17,995,721 16,514,966 19,113,960 17,117,483 Footnotes: (1) (2) (3) See report for details. Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (1) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (4) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Appendix A - Low Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.1 Forfeiture Rates Years Since Issuance All Permit Types (1) 1 2 3 4 5 0.00% 0.00% 0.33% 0.33% 0.33% 6 7 8 9 10 0.33% 0.33% 0.33% 0.33% 0.33% 11 12 13 14 15 0.33% 0.33% 0.33% 0.33% 0.33% 16 17 18 19 20 0.33% 0.33% 0.33% 0.33% 0.33% Footnotes: (1) Exhibit 5.2 Row (9) Appendix A - Low Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.2 Forfeiture Rate Calculation Calendar Year Number of Permits In Force Forfeited (1) (2) Forfeiture Rate (3) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 17 6 27 4 4 4 17 2 4 1 3 1 8 0 0 0 0 0 0 0 0 6 0 0 2.13% 0.77% 3.74% 0.59% 0.69% 0.70% 3.02% 0.44% 1.03% 0.28% 0.84% 0.28% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.68% 0.00% 0.00% Total 9,842 104 1.06% (4a) Average lifetime of permit (4b) Selected average lifetime of permits w/o forfeitures 21.00 19.00 (5) Ohio indicated forfeiture annual incremental rate 0.06% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 0.99% 1.08% (8) Weighted indicated forfeiture annual incremental rate 0.34% (9) Ohio selected forfeiture annual incremental rate 0.33% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) Historical Ohio permit data Historical Ohio permit data Col (2) / Col (1) Exhibit 3.1 Selected average lifetime based on assumption of minimal forfeitures within the first two years of issuance Col (3) / Row (4b) From Pinnacle analysis of Kentucky data applied to Ohio permit count by mine type distribution From Pinnacle analysis of West Virginia data applied to Ohio permit count by mine type distribution Weighted average of rows (5) through (7) based on… OH = 75.0%, KY = 12.5% and WV = 12.5% Selected based on rows (5) through (8) Appendix B - High Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2016 2017 2018 2019 2020 2,225,580 2,452,499 1,110,589 2,788,896 2,225,580 2,452,499 1,127,125 2,915,333 2,216,401 2,412,946 1,092,559 2,778,142 2,225,580 2,452,499 1,110,589 2,585,970 2,225,580 2,452,499 1,127,125 2,703,207 2,216,401 2,412,946 1,092,559 2,575,999 2021 2022 2023 2024 2025 2,789,296 2,799,636 2,672,307 2,672,307 2,672,307 3,010,504 3,127,422 3,097,121 3,221,006 3,349,846 2,814,515 2,863,965 2,774,077 2,820,176 2,865,081 2,585,970 2,596,043 2,475,984 2,475,984 2,475,984 2,791,053 2,899,993 2,869,588 2,984,372 3,103,747 2,609,351 2,655,694 2,570,277 2,612,989 2,654,595 2026 2027 2028 2029 2030 1,886,763 977,167 686,147 607,969 607,969 2,459,740 1,324,873 967,510 891,566 927,229 2,053,875 1,079,598 769,165 691,233 700,870 1,758,730 905,337 640,757 567,043 567,043 2,292,826 1,227,483 903,508 831,549 864,811 1,914,502 1,000,238 718,284 644,701 653,690 2031 2032 2033 2034 2035 607,969 607,969 217,459 81,261 81,261 964,318 1,002,891 373,063 144,984 150,784 710,364 719,777 260,760 98,666 99,866 567,043 567,043 200,661 76,304 76,304 899,403 935,379 344,246 136,140 141,585 662,545 671,324 240,617 92,647 93,774 2036 2037 2038 2039 2040 81,261 67,707 67,707 67,707 67,707 156,815 135,885 141,320 146,973 152,852 101,052 85,171 86,140 87,095 88,043 76,304 63,523 63,523 63,523 63,523 147,249 127,489 132,588 137,892 143,407 94,887 79,908 80,817 81,713 82,603 Total 28,897,441 34,467,239 30,269,536 27,241,264 32,422,717 28,513,061 Footnotes: (1) (2) (3) See report for details. Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (1) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2017-2019 reflect current reclamation projects Payments for future forfeitures delayed by three years to reflect period between forfeiture order and reclamation activity. Col (4) x annual inflation of… 0.0% for years 2017-18 3.0% for years 2019-20 3.5% for years 2021-22 4.0% for years 2023 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Appendix B - High Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.1 Forfeiture Rates Years Since Issuance All Permit Types (1) 1 2 3 4 5 0.00% 0.00% 0.67% 0.67% 0.67% 6 7 8 9 10 0.67% 0.67% 0.67% 0.67% 0.67% 11 12 13 14 15 0.67% 0.67% 0.67% 0.67% 0.67% 16 17 18 19 20 0.67% 0.67% 0.67% 0.67% 0.67% Footnotes: (1) Exhibit 5.2 Row (9) Appendix B - High Forfeiture Rate Estimate OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2017 Exhibit 5.2 Forfeiture Rate Calculation Calendar Year Number of Permits In Force Forfeited (1) (2) Forfeiture Rate (3) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 17 6 27 4 4 4 17 2 4 1 3 1 8 0 0 0 0 0 0 0 0 6 0 0 2.13% 0.77% 3.74% 0.59% 0.69% 0.70% 3.02% 0.44% 1.03% 0.28% 0.84% 0.28% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.68% 0.00% 0.00% Total 9,842 104 1.06% (4a) Average lifetime of permit (4b) Selected average lifetime of permits w/o forfeitures 21.00 19.00 (5) Ohio indicated forfeiture annual incremental rate 0.06% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 0.99% 1.08% (8) Weighted indicated forfeiture annual incremental rate 0.67% (9) Ohio selected forfeiture annual incremental rate 0.67% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) Historical Ohio permit data Historical Ohio permit data Col (2) / Col (1) Exhibit 3.1 Selected average lifetime based on assumption of minimal forfeitures within the first two years of issuance Col (3) / Row (4b) From Pinnacle analysis of Kentucky data applied to Ohio permit count by mine type distribution From Pinnacle analysis of West Virginia data applied to Ohio permit count by mine type distribution Weighted average of rows (5) through (7) based on… OH = 45.0%, KY = 27.5% and WV = 27.5% Selected based on rows (5) through (8)