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 26, 2019 1 Glenlake Parkway, Suite 1285 Atlanta, GA 30328 770.587.0351 pinnacleactuaries.com Commitment Beyond Numbers One Glenlake Parkway, Suite 1285 Atlanta, GA 30328 770.587.0351 pinnacleactuaries.com Arthur R. Randolph, II, FCAS, MAAA, CPCU, ARM, ARe Principal & Consulting Actuary arandolph@pinnacleactuaries.com June 26, 2019 Mr. Michael Sliva Chair – Ohio Reclamation Forfeiture Fund Advisory Board 2045 Morse Road, Building H-3 Columbus, Ohio 43229-6693 RE: Actuarial Analysis of the Ohio Reclamation Forfeiture Fund – June 2019 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 (ODNR-DMRM), and Pinnacle Actuarial Resources, Inc. This final report replaces and supersedes the draft report issued on June 10, 2019. We have not made any modifications to the expenditure and fund balance indications subsequent to the aforementioned draft report. 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. The undersigned author of this report is a member in good standing of the Casualty Actuarial Society and the American Academy of Actuaries, and meets the qualification standards to render the actuarial opinion contained herein. Commitment Beyond Numbers Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund May 20, 2019 Page 2 It has been a pleasure working with you on this study. Please feel free to contact me should you have any questions. Best regards, Arthur R. Randolph, II, FCAS, MAAA, CPCU, ARM, ARe Principal & Consulting Actuary Direct Dial: 678.894.7258 cc: Lanny E. Erdos – ODNR-DMRM Benny K. McCament – ODNR-DMRM John E. Wade, ACAS, MAAA – Pinnacle Subcontractor Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund TABLE OF CONTENTS PURPOSE .....................................................................................................................................................................1 QUALIFICATION TO PROVIDE ACTUARIAL REPORT.....................................................................................................2 DISTRIBUTION AND USE .............................................................................................................................................3 RELIANCES AND LIMITATIONS ....................................................................................................................................4 EXECUTIVE SUMMARY ................................................................................................................................................6 SUMMARY OF FINDINGS ......................................................................................................................................... 10 FUND-SPECIFIC RISK FACTORS ................................................................................................................................. 12 OHIO RECLAMATION FORFEITURE FUND BACKGROUND ........................................................................................ 14 CHANGES IN THE DATA SINCE PREVIOUS REPORT .................................................................................................. 17 HISTORICAL FORFEITURES ....................................................................................................................................... 18 ANALYSIS OVERVIEW AND GENERAL COMMENTS .................................................................................................. 22 Potential Fund Liability ..........................................................................................................22 Expected Fund Cost ...............................................................................................................23 Forfeiture Rates.....................................................................................................................23 Water ...................................................................................................................................24 Shock Loss .............................................................................................................................24 ACTUARIAL ANALYSIS .............................................................................................................................................. 26 Data .....................................................................................................................................26 Performance Security Estimate Groupings ..............................................................................26 Performance Security (Bond) from Insurers ............................................................................26 Estimated Potential Reclamation Fund Cost by Permit Holder .................................................27 Estimated Operator Financial Strength – Potential for Future Default .....................................30 Projection into the Future ......................................................................................................30 Impact of Future Inflation and Present Value of Estimate .......................................................30 Development of the Estimates of Expected Cost .....................................................................31 Estimated Expected Cost by Larger Permit Holders .................................................................31 Impact of Land Reclamation Cost Inflation and Adjustment to Present Value ..........................32 Cost of Forfeited Sites Currently in the Reclamation Forfeiture Fund .......................................32 Potential Cost to the Fund from Bond Company Default .........................................................32 Reclamation Forfeiture Fund Operating Expenses...................................................................33 LONG-TERM WATER TREATMENT AND ALTERNATIVE WATER SUPPLY .................................................................. 35 FINANCIAL CAPACITY OF THE FUND ........................................................................................................................ 37 Future Coal Production Projection ..........................................................................................37 Current Fund Balance ............................................................................................................42 Investment Rate of Return .....................................................................................................42 Financial Picture – Current Permit Portfolio ............................................................................42 Alternative Approach ............................................................................................................43 ALTERNATIVE SCENARIOS ........................................................................................................................................ 45 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. Page 1 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund QUALIFICATION TO PROVIDE ACTUARIAL REPORT This report is provided to the Advisory Board by Arthur R. Randolph II, FCAS, MAAA, CPCU, ARM, ARe. Mr. Randolph is a member in good standing of the American Academy of Actuaries and meets its qualification standards to prepare this report. Page 2 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 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. Page 3 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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; we have also relied upon publically available industry data. 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 have reviewed this data for consistency and believe it to be reasonable and accurate; we have also assumed that we have been provided with all information relevant to our analysis. The accuracy of our results is dependent upon the accuracy and completeness of this underlying data. Therefore, any material discrepancies discovered in this data by the Fund should be reported to us and this report amended accordingly, if warranted. 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). An independent evaluation of the quality of the security provided by each operator is outside the scope of our engagement. We have assumed that all of the underlying security protection will be valid and collectible. Contingent liability may exist for security recoveries (e.g., bond forfeiture amounts) that may prove to be uncollectible. Should such liabilities materialize, they would be in addition to the net liability estimates (i.e., net reclamation costs) contained herein. 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 Page 4 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. When reviewing our findings, it is important to note certain implications of a risk pool. The entire retained risk remains with the pool, which likely exposes this entity to greater potential fluctuations in financial experience than does a first-dollar insurance program. The Fund should have sufficient financial capacity to reserve for and withstand those fluctuations. Actual losses in excess of projected losses will have to be paid by the Fund. It is not possible to estimate such fluctuations with complete accuracy; however, the effects of such fluctuations can be reduced by the funding of a provision for contingencies (a margin for the risk of adverse deviation from the expected loss levels). We have not calculated such risk margins or estimated confidence levels in the scope of our review; however, we have modeled various shock loss scenarios to simulate the impact of a catastrophic event. An important factor bearing on a risk pool’s financial capacity is the existence of an excess insurance program. Excess insurance is generally considered an integral part of programs with the potential for catastrophic losses. Mine reclamation claims are characterized by this potential. We understand that the Fund does not currently have excess insurance protection. Please note that for the purposes of this report, the Performance Security Estimate (PSE) and Central Tracking System (CTS) data was provided as of May 9, 2019. Further reliances and limitations are contained in the subsequent text, and in the exhibits accompanying the text. Page 5 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 ($22.2 million) exceed the current Fund outstanding liabilities and obligations for forfeited reclamation projects ($2.94 million). For longer-term solvency, the measurement compares the current available Fund assets with the Fund’s long term expected exposure or liability ($21.6 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. Another indicator of financial soundness is the Fund’s ability to withstand a shock loss. It would take 9 more years of non-forfeitures before the Fund could cover an average loss and 27 more years to cover the forfeited permits of the failure of the fifth largest permit holder. The 2017 analysis resulted in projected Fund balances that would cover the failure of an average loss in two years or the failure of the fifth largest permit holder in nine years. Several factors have caused the increased time periods for the 2019 analysis compared to the 2017 analysis. First, the fund balance is lower than in the 2017 analysis due to the State of Ohio withdrawing $5 million from the Fund in the 2017 biennium budget bill. The cost of reclamation associated with the Valley Mining forfeiture sites has also impacted the fund balance. In addition, the average potential liability has increased due to an increasing overall potential liability and a decrease in the number of permits. 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 149 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 twelve 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 prior studies, through the efforts of the engineers with the ODNR-DMRM, we have developed an estimate of the total potential cost to reclaim all the subject mining operations covered by the Fund. 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 Page 6 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 22 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 (Westmoreland Coal Company) currently has 51 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 over $14 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 $50 million, with the largest potentially exceeding $200 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. The forfeiture rate selection is based upon historical Ohio forfeiture information and forfeiture rates developed by using Kentucky and West Virginia information. While the frequency increased in the other states, there are no new incidents in Ohio since our 2017 analysis. Therefore, we determined that maintaining the 0.50% selected frequency for Ohio used in our prior analysis was still reasonable. This equates to giving Ohio’s data 67% weight in the selection, and the other states combined received 33% weight. (In our prior analysis these figures were 60%/40%, respectively.) The selection also considered the current economic and operational state of the Ohio coal mining industry as gleaned by discussions with the RFFAB. Page 7 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 some of our earliest 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 67% weight to Ohio’s long term average forfeiture rate. We continue to develop a range of land reclamation cost estimates, as was started with our 2017 analysis. 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 an 80% weight to Ohio and a 10% 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 55% Ohio weighting and a 22.5% 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 $19.4 million in Exhibit 2.2. This estimate compares to our range estimates of $13.9 million on the low end and $24.8 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 $0.65 million in Exhibit 2.3. 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 $5.57 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 $17.3 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 $21.6 million balance ($19.4 million for land plus $0.65 million for water plus $1.59 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. Page 8 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 $30.3 million in additional liability to the Fund. See the derivation in Exhibit 7.1b and the cash flows in Exhibit 1 - Shock Loss. For practical considerations, the cash flow exhibit incorporates a $3.50 million cap on land reclamation costs per year. This spreads the shock loss out over a fifteen 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 $51.9 million ($19.4 million for land plus $0.65 million for water plus $1.59 million for operating expense plus $30.3 million). It is informative to note in Exhibit 1 – Shock Loss that even a shock loss as described above with reclamation costs beginning in 2022 would move the Fund to a negative balance in 2030. 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 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, Inc. 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. Page 9 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 Net Present Value Expenditures Land Reclamation Water Treatment Administrative Expense $19,366,472 645,823 1,590,000 Total $21,602,295 The above calculations are found in Exhibit 2.1. This compares to our 2017 total estimate of $25.1 million, and our 2015 total estimate of $36.3 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 $202.2 million. An additional $30.3 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 $202.2 million versus $30.3 million, or a relationship of 6.7 to 1. Please see Exhibit 7.1b. The second context would be a comparison of the largest single potential loss with the current available capital in the Fund, or $202.2 million to $22.2 million (as of January 2019), a ratio of 9.1 to 1. Even the average potential cost of $30.3 million exceeds the Fund’s current capital of $22.2 million. Page 10 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 Net Present Value Expenditures Low Estimate Current Estimate High Estimate 0.33% Forfeiture Rate 0.50% Forfeiture Rate 0.67% Forfeiture Rate Land Reclamation Water Treatment Administrative Expense $13,892,288 645,823 1,590,000 $19,366,472 645,823 1,590,000 $24,840,657 645,823 1,590,000 Total $16,128,111 $21,602,295 $27,076,479 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.) Page 11 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund FUND-SPECIFIC RISK FACTORS Actuarial estimates and property and casualty loss and expense reserves are inherently uncertain because they are dependent on future contingent events. Also, these reserve estimates are generally derived from analysis of historical data, and future events or conditions may differ from the past. The actual amount necessary to settle the unpaid claims may therefore be significantly different from those contained herein. The following provides major risk factors and/or particular conditions underlying the risks and uncertainties that Pinnacle considers relevant to the Fund’s estimates of loss and expenses:  The Fund’s balance (i.e., net assets or surplus) and potential vulnerable financial condition of the coal operators. Our analysis of the Fund’s losses and expenses implicitly assumes the Fund is viable. If it is not viable (e.g., due to developments such as regulatory actions, legislative actions, inability to meet claim payments, etc.), liabilities may be affected in ways that cannot be quantified at this time.  The Fund’s potential expenditures under a shock loss scenario are large in relation to fund balance. As a result, reasonably expected fluctuations of actual versus expected results may be material to the fund balance.  The Fund’s historical forfeitures. While we have reflected these forfeitures in our analysis, the risk exists for forfeitures to occur in the future.  The Fund does not currently have excess insurance to address catastrophic (i.e., shock) losses.  The Fund reflects discounting of losses and expenses (i.e., expenditures reflect anticipated future interest income). The discounting creates uncertainty in addition to the usual uncertainty in projecting ultimate loss and expense amounts. Discounted estimates are also influenced by variations in the timing of actual loss and expense payments versus the rate of payment assumed in discounting estimates to present value, and variations in the actual investment yield on the assets underlying the liabilities versus the assumed investment yield used in discounting. The discount is 74% of the projected fund balance by calendar year 2096.  The Fund insures coal mine reclamation liability coverage with net reclamation costs that that are large in relation to the fund balance. Maximum exposure to a single risk is $7.24 million (see Exhibit 7.1a). Consequently, it is possible that a single forfeiture could occur that would represent a high percentage of the fund balance.  Demonstration of contemporaneous reclamation. Failure of coal mining operators to undertake contemporaneous reclamation has proven to increase reclamation costs, especially during forfeitures. Page 12 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund To the extent operators are not subject to this requirement, the indicated losses and expenses contained herein may be understated.  The Fund writes a concentration of risk related to a small group of entities. This concentration increases the uncertainty in the estimated expenditures and projected fund balance as a consequence of unforeseen changes in Ohio’s legal and economic environment.  The Fund only writes a small volume of business. Loss projections based on small volumes of data tend to be volatile. Due to the Fund-specific risk factors indicated above, we believe that there are significant risks and uncertainties that could result in material adverse deviation in the losses and expenses. The absence of other risks and uncertainties from this listing at this time does not imply that factors will not be identified in the future as having been a significant influence on the Fund’s losses and expenses. The potential exists that a combination of the above factors and other conditions might arise, thus increasing the Fund’s risk of material adverse deviation. Page 13 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 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- Page 14 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 eight 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 various phases at any time. This situation with multiple permits from a single operator results in additional concentration of risk. As of February 4, 2019, there were 94 active permits for coal mining operations in Ohio that were part of the Reclamation Forfeiture Fund “Pool”. There were also 55 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 149 Fund-covered permits from 22 different operators. Of the 149 permits with PSEs, the current PSEs for 110 Page 15 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. Page 16 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund CHANGES IN THE DATA SINCE PREVIOUS REPORT We have compared the Performance Security Estimates for the 144 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 15 permits did not change. For 72 permits, the PSEs in this year's data were lower than the PSEs included in the previous data by a total of $111.6 million of potential reclamation cost. For the remaining 57 permits, the performance security estimates increased by a total of $114.4 million since the data for the last review was collected. The overall net change is an increase in the Performance Security Estimate or the anticipated cost of reclamation of $2.79 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 149 permits included with PSEs, only 16 permits are related to underground mining operations and another 19 permits are related to facility permits. Please see Exhibits 7.3a, 7.4a, and 7.5a. Of the 94 active permits, we have PSE data for 66 surface mining operations, 11 active permits for underground mining operations and 17 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. Page 17 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 26 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 approximate average of 3 forfeitures per permit holder. The actual number of forfeiture orders per permit holder has ranged from 1 to 21 permits. From years 2001 through 2014, there were only 18 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 were no forfeiture orders from years 2006 through 2014. 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. Page 18 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund Number of Forfeited Permits in Ohio from 1993 - 2018 35 30 29 25 Permits 20 17 16 15 10 8 6 6 5 5 4 3 2 2 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Evaluation Year Ending 6/30/XXXX 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 evaluation year ending June 30, 2015 does not provide support for an assumption that there will be no forfeiture events in the future. As reflected in the graph above, this assertion was proven true when the Fund experienced 6 forfeitures in October 2014. The average annual number of forfeiture orders over the twenty six year available period has been 4.0 per year. We note that from 2001 to 2014, the annual permit forfeiture order frequency had declined to 1.3 permits per year. And most notably, from 2006 to 2014 there were no forfeitures. However, the good fortune ended in year 2015 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. Page 19 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 27 year period is displayed in the chart below. Over the period of time 1992 through 2018, there have been anywhere from 836 to 181 inspectable units in Ohio. These figures are provided by the Office of Surface Mining from their publicly available records. Inspectable Units In Ohio 860 836 799 775 760 722 683 Inspectable Units 660 579 568 563 560 460 456 389 360 363 357 356 338 329 321 308 290 266 260 252 246 229 224 220 209 194 181 160 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 2017 2018 Evaluation Year Ending 6/30/XXXX Source: Office of Surface Mining reports The average forfeiture rate per number of permits issued is 1.02%. This translates to an annual forfeiture rate of 0.05% based on an average lifetime of a permit of 21 years and adjusting for the fact 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 includes 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. Page 20 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund Comparing Ohio’s historic 0.05% forfeiture rate to the Kentucky and West Virginia forfeiture rates of 1.43% and 1.02%, respectively, Pinnacle has selected a projected Ohio annual forfeiture rate of 0.50%. While the frequency increased in the other states, there are no new incidents in Ohio since our 2017 analysis. Therefore, we determined that maintaining the 0.50% selected frequency for Ohio used in our prior analysis was still reasonable. This equates to giving Ohio’s data 67% weight in the selection, and the other states combined received 33% weight. (In our prior analysis these figures were 60%/40%, respectively.) The selection also considered the current economic and operational state of the Ohio coal mining industry as gleaned by discussions with the RFFAB. 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. Page 21 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 (ODNRDMRM). 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 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 149 Fund-covered permits. In total, the engineer estimated reclamation cost is $587.2 million. This value is reduced by $42.4 million of available and required performance security. These adjustments to the initial PSEs result in a total Potential Fund Liability of $544.8 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. Page 22 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. On an active permit basis, we reviewed the various acres in terms of amount of acres, type of mining operation, phase of operation (i.e., mine status), and underlying security coverage. The net adjusted PSE amounts reflect the total PSE less the underlying security. We develop the net expected cost of reclamation for every permit based on the net adjusted PSE and projection parameters (e.g., release rates, forfeiture rates, mine status adjustment factors) that reflect the average dynamics of all mining operations. Our methodology follows a “cost times frequency” approach. This approach is commonly referred to as a frequency and severity analysis, where the frequency is the probability of forfeiture and the severity is the cost of reclamation. Under this approach we determine an expected average cost and an expected average frequency of a permit forfeiture occurrence. We apply these parameters to the expected exposure to derive an estimated cost. 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 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 a West Virginia Special Reclamation Fund analysis. Page 23 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund For our most recent analyses, we developed a forfeiture rate based on historic Ohio experience. We blended that with projected forfeiture rates in West Virginia and Kentucky. 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. 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 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 $19.4 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 2017 analysis of $22.8 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 $0.65 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 $202.2 million in estimated liability would become the responsibility of the Fund. Page 24 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund In prior 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 $30.3 million of estimated liabilities for an “average” shock loss. For comparison purposes, this is approximately $23.3 million lower than the estimate of the cost for the fifth largest carrier defaulting. See Exhibit 7.1b. 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. Page 25 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 149 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 149 PSEs are provided by the ODNR-DMRM engineers in the following two categories: A. 55 Permits that have an approved Final Map and coal extraction is completed B. 94 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:      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 149 permits included in the analysis, 39 permits, or 26%, 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 Page 26 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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, 18 of the 22 current permit holders (operators) pose potential liability to the Fund (assuming their performance security providers do not fail). Permit Holders by Net Adjusted PSE Number of Parent Companies 6 5 5 4 5 4 3 3 2 2 1 1 0 Over $25M $9M to 25M $5M to 9M $2.5M to 5M $1M to 2.5M $100K to 1M $0 to 100K $0 0 2 Net Adjusted PSE The average potential cost of a permit holder forfeiture of the operators and sites is over $30.3 million per operator ($544.8 million divided by 18 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 Page 27 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund other 13 operators is well below the average of $30.3 million. In fact, the average potential Fund cost of these 13 operators is $3.98 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 $4.95 million ($544.8 million divided by the 110 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 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 8 7 Number of Parent Companies 7 6 5 4 4 4 3 3 2 2 1 1 $2M to 5M Over $5M 1 0 0 Page 28 Pinnacle Actuarial Resources, Inc. $1M to 2M $500K to 1M $100K to 500K $10K to 100K $0 to 10K $0 Net Reclamation Cost Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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,” as well as internal calculations from the DNR for the most recent years presented. Please see Exhibit 3.2. As with any estimates, some sites may operate within significantly longer or shorter time periods – especially the active permits:     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 $544.8 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 Active Pending Phase 2 Active Pending Phase 3 Final Map Pending Phase 1 Final Map Pending Phase 2 Final Map Pending Phase 3 $318.2 million $57.9 million $46.7 million $115.9 million $5.81 million $0.24 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. Page 29 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 ODNRDMRM. 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 reports, 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. Reclamation Cost Inflation Rates Year Rate 2019 0.00% 2020 0.00% 2021 3.00% 2022 3.00% 2023 3.50% 2024 3.50% 2025 & Subs 4.00% Page 30 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 6, 2019. 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, $19.4 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. 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. Page 31 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund Impact of Land Reclamation Cost Inflation and Adjustment to Present Value We adjust the 2019 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 2019 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 $20,481,945 $19,324,728 Impact of Reclamation Cost Inflation 4,236,642 3,966,073 Present Value Adjustment (4,190,418) (3,924,329 Resulting PV Estimate $20,528,169 $19,366,472 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 31, 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. The RFFAB has estimated the cost of the Valley Mining forfeitures will be paid out at a rate of $2.22 million and $0.72 million over the next two 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 Page 32 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 nonrenew 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 ODNRDMRM 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 2017 for US financial institutions and insurance providers (1.51 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 1.51 percent, or 0.00755 percent. When applied to the estimated performance security of the sites included in the study as provided in the CTS files ($544.8 million), we develop an annual expected cost of $41,100. 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 ODNRDMRM booked operating expenses of $5,693 for Fund 5310/Reclamation Forfeiture for Fiscal Year 2018, and has booked $74,961 to the Fund through June 21, 2019 for Fiscal Year 2019. 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 Page 33 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. Page 34 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 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 ODNRDMRM. 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. 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 Page 35 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund for payment, and the probability a forfeiture will occur. This method yielded a long-term water cost of $160,747. 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 is approximately 4%. We select a projected ratio of 5%. Applying the 5% ratio to the cost for permit #201501 ($1.84 million) produces our second estimate for long-term water treatment liabilities of $92,142. Based upon these two estimates, we selected a final estimate of $500,000. Our selection of $500,000 is the same as we selected in our 2017 analysis and substantially lower than our selection in our 2015 analysis of $2.25 million. We feel the $500,000 selection is still appropriate given the minimal amount of activity in setting up water treatment trusts, 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. 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 $645,823. See Exhibit 2.3. Page 36 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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. Page 37 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund The following chart displays the historical coal production in Ohio. Ohio Total Coal Production - 1977 to 2017 50.0 45.0 40.0 Millions of Tons 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 1977 1980 1983 1986 1989 1992 Surface 1995 1998 2001 2004 Underground 2007 2010 2013 2016 Total In our work on another project, we became aware of the “Consensus Coal Production Forecast Report for West Virginia 2017”. This report was prepared for the West Virginia Department of Environmental Protection by Christine Rish, Alicia K. Copley, and Jacqueline Agesa. 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 2019 and a study performed by Energy Ventures. We also relied upon the recommendations from the ODNR-DMRM. Page 38 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 2047 2048 2049 2050 Page 39 COAL PRODUCTION INDEX NORTHERN APPALACHIIA COAL PRODUCTION Energy Information Admin. Energy Ventures Analysis Tons Short Tons Per (in millions) Index to 2017 Miner Hour Index to 2017 112.73 1.0000 4.32 1.0000 129.1 1.1453 4.13 0.9560 114.0 1.0109 3.94 0.9120 100.7 0.8931 3.75 0.8681 84.4 0.7491 3.66 0.8472 88.8 0.7878 3.58 0.8287 91.4 0.8106 3.49 0.8079 89.7 0.7956 3.41 0.7894 90.6 0.8041 3.32 0.7685 89.7 0.7953 3.24 0.7500 88.6 0.7859 3.16 0.7315 88.7 0.7864 3.07 0.7106 90.0 0.7987 2.99 0.6921 87.8 0.7785 2.91 0.6736 89.2 0.7909 2.85 0.6597 86.3 0.7659 2.78 0.6435 87.1 0.7725 2.72 0.6296 85.2 0.7555 2.66 0.6157 86.2 0.7650 2.60 0.6019 87.2 0.7733 2.53 0.5856 88.3 0.7834 2.47 0.5718 89.5 0.7941 2.41 0.5579 89.3 0.7924 2.34 0.5417 90.1 0.7995 2.28 0.5278 91.1 0.8082 2.24 0.5185 90.8 0.8057 2.20 0.5093 91.8 0.8141 2.16 0.5000 91.7 0.8132 2.12 0.4907 91.2 0.8086 2.08 0.4815 90.4 0.8021 2.04 0.4722 89.8 0.7965 2.00 0.4630 89.2 0.7914 1.96 0.4537 87.4 0.7752 1.92 0.4444 86.8 0.7703 1.88 0.4352 Pinnacle Actuarial Resources, Inc. Pinnacle Selected Index to 2017 1.0000 1.1264 1.0011 0.8906 0.7589 0.7919 0.8103 0.7950 0.8005 0.7908 0.7805 0.7789 0.7881 0.7680 0.7778 0.7537 0.7582 0.7415 0.7486 0.7545 0.7622 0.7705 0.7673 0.7724 0.7793 0.7761 0.7826 0.7810 0.7759 0.7691 0.7632 0.7576 0.7422 0.7368 Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund We have used the average index to develop a projection of future Ohio coal production. In 2017, there were 10.3 million tons of coal mined in the state of Ohio, of which we attribute 9.2 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. Year 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 Ohio RFF Coal Production Projections (in million tons) Avg. Index Tons 1.1264 10.4 1.0011 9.2 0.8906 8.2 0.7589 7.0 0.7919 7.3 0.8103 7.5 0.7950 7.3 0.8005 7.4 0.7908 7.3 0.7805 7.2 0.7789 7.2 0.7881 7.3 0.7680 7.1 0.7778 7.2 0.7537 6.9 0.7582 7.0 0.7415 6.8 0.7486 6.9 0.7545 6.9 0.7622 7.0 0.7705 7.1 0.7673 7.1 0.7724 7.1 0.7793 7.2 0.7761 7.1 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. Page 40 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 $0.72 million and $1.68 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. OHIO RECLAMATION FORFEITURE FUND ANALYSIS Potential Reclamation Fund Revenue Projection Tons (in millions) $0.12 $0.14 $0.16 6.0 $720,000 $840,000 $960,000 6.5 780,000 910,000 1,040,000 7.0 840,000 980,000 1,120,000 7.5 900,000 1,050,000 1,200,000 8.0 960,000 1,120,000 1,280,000 8.5 1,020,000 1,190,000 1,360,000 9.0 1,080,000 1,260,000 1,440,000 9.5 1,140,000 1,330,000 1,520,000 10.0 1,200,000 1,400,000 1,600,000 10.5 1,260,000 1,470,000 1,680,000 Page 41 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 increased to an amount of $25.9 million as of November 2016, and has dropped slightly to $22.2 million as of December 31, 2018. It is this latter figure that is used to begin our cash flow analysis in Exhibit 1. 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. 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. Page 42 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund 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 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 6 year period pending phase 2 release and then an 8 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 2096. The tonnage fee revenue is based on the assumption of 2019 coal production of 9.2 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 3.7 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 $5,000 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, our projections show that the recent Fund balance of $22.2 million could continue decreasing over the next several years before gradually climbing back up to $23.5 million in the next 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:  the median permit holder, Page 43 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund    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 2,198,194 30,265,848 53,518,913 202,211,502 Years from 2018 0 9 27 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. Page 44 Pinnacle Actuarial Resources, Inc. Ohio Department of Natural Resources Analysis of the Reclamation Forfeiture Fund ALTERNATIVE SCENARIOS As noted in the Executive Summary section, we have endeavored to demonstrate the sensitivity of one of the key variables (i.e., forfeiture rate) on the indicated net total expenditures (Exhibit 2.1). At the Advisory Board’s request, we have also measured the impact on the projected fund balance by calendar 2096 (Exhibit 1), if the Ohio legislature were to provide the Fund with various levels of additional capital contributions. The following tables present net total expenditures and fund balances for different combinations of forfeiture rates and capital contributions. Net Total Expenditures: OHIO RECLAMATION FORFEITURE FUND Net Total Expenditures (Exhibit 2.1) Based on Forfeiture Rate & Additional Capital Contribution Forfeiture Rate $0 Additional Capital Contributions $5M* $10M** 0.33% $16,128,111 $16,128,111 $16,128,111 0.50% 21,602,295 21,602,295 21,602,295 0.67% 27,076,479 27,076,479 27,076,479 Notes: * Reflects contribution on 7/1/2019 ** Reflects contributions of $5M each on 7/1/2019 and 7/1/2021 Fund Balance: OHIO RECLAMATION FORFEITURE FUND Fund Balance at Calendar Year 2096 (Exhibit 1) Based on Forfeiture Rate & Additional Capital Contribution Forfeiture Rate $0 Additional Capital Contributions $5M* $10M** 0.33% $34,674,556 $46,674,431 $58,121,045 0.50% 23,530,172 35,530,047 46,976,661 0.67% 12,385,788 24,385,663 35,832,277 Notes: * Reflects contribution on 7/1/2019 ** Reflects contributions of $5M each on 7/1/2019 and 7/1/2021 The reader should observe that additional capital contributions do not have a direct impact on the aggregate level of expenditures. Page 45 Pinnacle Actuarial Resources, Inc. OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 a Maximum Land Reclamation Cost Per Year of $3,500,000 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 2019 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) 2018 2019 2020 2021 2022 1,091,000 947,000 787,000 801,000 575,603 536,614 534,554 551,163 2,221,592 722,328 0 1,862,693 0 0 0 5,750 35,000 35,000 35,000 45,000 22,224,988 21,635,000 22,361,286 23,647,839 23,086,559 2023 2024 2025 2026 2027 800,000 765,000 375,500 0 0 525,158 508,565 483,777 452,275 414,355 1,876,317 1,923,786 1,831,716 1,856,167 1,880,395 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 22,484,609 21,783,542 20,760,192 19,305,310 17,788,201 2028 2029 2030 2031 2032 0 0 0 0 0 377,346 347,145 331,235 318,563 308,443 1,428,351 743,852 530,046 461,134 466,653 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 16,686,050 16,238,121 15,988,011 15,794,065 15,584,403 2033 2034 2035 2036 2037 0 0 0 0 0 298,226 287,927 277,566 272,045 268,970 472,146 477,611 159,443 70,580 71,362 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 15,358,955 15,117,668 15,184,113 15,333,825 15,479,604 2038 2039 2040 2041 2042 0 0 0 0 0 265,771 262,456 258,402 255,129 250,925 72,139 58,612 59,233 59,849 60,465 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 15,621,333 15,773,200 15,920,319 16,063,476 16,201,738 2043 2044 2045 2046 2047 0 0 0 0 0 247,481 244,581 242,386 239,302 236,907 0 0 0 0 0 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 16,431,949 16,659,188 16,884,160 17,105,975 17,325,325 2048 2049 2050 2051 2052 0 0 0 0 0 233,660 230,141 226,078 222,004 217,924 0 0 0 0 0 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 17,541,356 17,753,779 17,962,066 18,166,206 18,366,192 2053 2054 2055 2056 2057 0 0 0 0 0 213,843 209,768 205,701 201,648 197,613 0 0 0 0 0 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 18,562,022 18,753,702 18,941,238 19,124,645 19,303,939 2058 2059 2060 2061 2062 0 0 0 0 0 193,600 189,611 185,652 181,724 177,832 0 0 0 0 0 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 19,479,141 19,650,276 19,817,372 19,980,460 20,139,573 2063 2064 2065 2066 2067 0 0 0 0 0 173,976 170,161 166,388 162,659 158,976 0 0 0 0 0 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 20,294,749 20,446,027 20,593,448 20,737,056 20,876,896 2068 2069 2070 2071 2072 0 0 0 0 0 155,341 151,756 148,221 144,739 141,309 0 0 0 0 0 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 21,013,016 21,145,463 21,274,287 21,399,541 21,521,276 Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 137,934 134,613 131,348 128,138 124,985 0 0 0 0 0 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 21,639,545 21,754,403 21,865,903 21,974,101 22,079,053 2078 2079 2080 2081 2082 0 0 0 0 0 121,889 118,850 115,867 112,942 110,074 0 0 0 0 0 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 22,180,814 22,279,440 22,374,988 22,467,513 22,557,072 2083 2084 2085 2086 2087 0 0 0 0 0 107,263 104,508 101,810 99,168 96,582 0 0 0 0 0 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 22,643,720 22,727,514 22,808,510 22,886,761 22,962,323 2088 2089 2090 2091 2092 0 0 0 0 0 94,051 91,575 89,153 86,785 84,471 0 0 0 0 0 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 23,035,251 23,105,598 23,173,418 23,238,763 23,301,686 2093 2094 2095 2096 0 0 0 0 82,208 79,998 77,839 75,730 0 0 0 0 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 23,362,237 23,420,469 23,476,431 23,530,172 Total 5,566,500 17,340,979 19,366,472 645,823 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 2019 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)] x (1 + Exhibit 8 Col (3). Years 2048 and subsequent based on 3.030% 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 2018 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 2019 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) 2018 2019 2020 2021 2022 1,091,000 947,000 787,000 801,000 575,603 536,614 534,554 551,163 2,221,592 722,328 0 0 0 0 0 0 35,000 35,000 35,000 45,000 22,224,988 21,635,000 22,361,286 23,647,839 24,955,002 2023 2024 2025 2026 2027 800,000 765,000 751,000 723,000 695,000 566,937 592,907 615,758 637,735 656,236 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 26,276,939 27,589,845 28,911,603 30,227,338 31,533,575 2028 2029 2030 2031 2032 676,000 665,000 631,000 622,000 587,000 676,101 690,152 703,064 712,340 723,019 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 32,840,675 34,150,828 35,439,892 36,729,232 37,994,251 2033 2034 2035 2036 2037 574,000 546,000 536,000 526,000 516,000 732,556 741,029 748,476 752,496 758,274 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 39,255,807 40,497,836 41,737,312 42,970,808 44,200,081 2038 2039 2040 2041 2042 507,000 491,000 480,000 471,000 455,000 763,229 767,321 767,981 770,454 769,569 0 0 0 0 0 0 0 0 0 0 45,000 45,000 45,000 45,000 45,000 45,425,310 46,638,631 47,841,613 49,038,067 50,217,636 2043 2044 2045 2046 2047 446,000 432,000 417,000 401,000 386,000 770,478 768,637 768,561 765,220 763,649 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 51,424,114 52,614,750 53,790,312 54,946,532 56,086,180 2048 2049 2050 2051 2052 372,000 355,000 342,000 329,000 317,000 758,920 752,882 744,638 735,966 726,905 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 57,207,100 58,304,983 59,381,621 60,436,587 61,470,492 2053 2054 2055 2056 2057 305,000 294,000 283,000 273,000 263,000 717,496 707,775 697,778 687,539 677,090 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 62,482,989 63,474,764 64,445,542 65,396,082 66,326,171 2058 2059 2060 2061 2062 253,000 244,000 235,000 226,000 218,000 666,455 655,664 644,745 633,718 622,608 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 67,235,626 68,125,290 68,995,035 69,844,752 70,675,360 2063 2064 2065 2066 2067 210,000 202,000 195,000 188,000 181,000 611,438 600,226 588,993 577,757 566,533 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 71,486,798 72,279,025 73,053,018 73,808,775 74,546,308 2068 2069 2070 2071 2072 174,000 168,000 162,000 156,000 150,000 555,334 544,175 533,073 522,036 511,075 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 75,265,642 75,967,817 76,652,890 77,320,926 77,972,001 Page 2 Calendar Year Tonnage Fee (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 145,000 139,000 134,000 129,000 125,000 500,202 489,424 478,749 468,187 457,747 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 78,607,202 79,225,626 79,828,376 80,415,563 80,988,310 2078 2079 2080 2081 2082 120,000 116,000 112,000 108,000 104,000 447,433 437,251 427,207 417,304 407,547 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 81,545,744 82,088,994 82,618,201 83,133,505 83,635,052 2083 2084 2085 2086 2087 100,000 96,000 93,000 89,000 86,000 397,936 388,476 379,170 370,020 361,027 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 84,122,988 84,597,465 85,059,635 85,508,655 85,945,682 2088 2089 2090 2091 2092 83,000 80,000 77,000 74,000 72,000 352,193 343,520 335,007 326,655 318,465 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 86,370,875 86,784,395 87,186,402 87,577,057 87,957,522 2093 2094 2095 2096 69,000 66,000 64,000 62,000 310,436 302,566 294,857 287,307 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 88,326,958 88,685,524 89,034,381 89,373,688 2162 2163 2164 2165 5,000 5,000 5,000 5,000 44,440 43,150 41,897 40,680 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 98,832,914 98,871,064 98,907,962 98,943,642 Total 27,676,000 54,266,574 2,943,920 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 2,198,194 30,265,848 53,518,913 202,211,502 Years from 2018 0 9 27 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 Adj. PSE + Rec. Costs Years from 2018 Median 22,210,489 1 Average 50,278,144 25 5th Largest 73,531,208 48 Largest 222,223,797 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 2019 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)] x (1 + Exhibit 8 Col (3). Years 2048 and subsequent based on 3.030% discount factor Years 2019-2021 reflect permit number D-1015 payments. Assume no losses Based on discussion with client. Inflation and discount rates assumed to offset. Year 2018 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 2019 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) 2018 2019 2020 2021 2022 1,091,000 947,000 787,000 801,000 575,603 536,614 534,554 551,163 2,221,592 722,328 0 3,500,000 0 0 0 5,750 35,000 35,000 35,000 45,000 22,224,988 21,635,000 22,361,286 23,647,839 21,449,252 2023 2024 2025 2026 2027 800,000 765,000 375,500 0 0 488,548 435,226 374,848 305,780 231,602 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 19,187,008 16,836,389 14,035,825 10,790,615 7,471,148 2028 2029 2030 2031 2032 0 0 0 0 0 158,488 84,851 12,486 0 0 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 4,078,490 612,119 (2,926,693) (6,478,068) (10,029,520) 2033 2034 2035 2036 2037 0 0 0 0 0 0 0 0 0 0 3,500,000 3,500,000 736,159 70,580 71,362 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 (13,581,047) (17,132,650) (17,920,488) (18,042,821) (18,166,012) 2038 2039 2040 2041 2042 0 0 0 0 0 0 0 0 0 0 72,139 58,612 59,233 59,849 60,465 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 (18,290,054) (18,400,643) (18,511,926) (18,623,899) (18,736,561) 2043 2044 2045 2046 2047 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 (18,753,830) (18,771,173) (18,788,587) (18,806,073) (18,823,631) 2048 2049 2050 2051 2052 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 (18,841,260) (18,858,978) (18,876,769) (18,894,633) (18,912,571) 2053 2054 2055 2056 2057 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 (18,930,584) (18,948,672) (18,966,837) (18,985,078) (19,003,397) 2058 2059 2060 2061 2062 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 (19,021,794) (19,040,271) (19,058,827) (19,077,463) (19,096,181) 2063 2064 2065 2066 2067 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 (19,114,982) (19,133,864) (19,152,831) (19,171,882) (19,191,018) 2068 2069 2070 2071 2072 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 (19,210,240) (19,229,550) (19,248,946) (19,268,431) (19,288,006) Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 (19,307,670) (19,327,426) (19,347,273) (19,367,214) (19,387,247) 2078 2079 2080 2081 2082 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 (19,407,375) (19,427,599) (19,447,919) (19,468,336) (19,488,851) 2083 2084 2085 2086 2087 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 (19,509,465) (19,530,179) (19,550,994) (19,571,910) (19,592,930) 2088 2089 2090 2091 2092 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 (19,614,053) (19,635,281) (19,656,614) (19,678,055) (19,699,603) 2093 2094 2095 2096 0 0 0 0 0 0 0 0 0 0 0 0 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 (19,721,259) (19,743,026) (19,764,903) (19,786,892) Total 5,566,500 4,289,764 49,632,321 645,823 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 2019 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)] x (1 + Exhibit 8 Col (3). Years 2048 and subsequent based on 3.030% discount factor Exhibit 2.1 Col (2). * A shock loss of $30,265,848, derived in Exhibit 7.1b Col (3), with a maximum land reclamation cost of $3,500,000 per year. Exhibit 2.1 Col (4). Based on discussion with client. Inflation and discount rates assumed to offset. Year 2018 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 2019 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) 2018 2019 2020 2021 2022 2,221,592 722,328 0 1,999,004 2,221,592 722,328 0 1,862,693 0 0 0 6,389 0 0 0 5,750 35,000 35,000 35,000 45,000 2,256,592 757,328 35,000 2,050,393 2,256,592 757,328 35,000 1,913,443 2023 2024 2025 2026 2027 2,013,789 2,064,713 1,966,047 1,992,292 2,018,297 1,876,317 1,923,786 1,831,716 1,856,167 1,880,395 6,436 6,495 6,569 6,656 6,743 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 2,065,225 2,116,208 2,017,616 2,043,948 2,070,040 1,927,109 1,974,632 1,882,627 1,907,158 1,931,464 2028 2029 2030 2031 2032 1,518,953 796,774 564,836 490,926 496,801 1,428,351 743,852 530,046 461,134 466,653 6,828 6,914 6,998 7,084 7,168 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 1,570,781 848,688 616,834 543,009 548,970 1,479,497 795,075 581,344 512,509 518,104 2033 2034 2035 2036 2037 502,650 508,468 172,768 74,711 75,539 472,146 477,611 159,443 70,580 71,362 7,253 7,337 7,420 7,504 7,587 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 554,902 560,804 225,188 127,215 128,126 523,674 529,214 211,121 122,334 123,191 2038 2039 2040 2041 2042 76,362 61,851 62,506 63,156 63,807 72,139 58,612 59,233 59,849 60,465 7,670 7,752 7,834 7,915 7,997 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 129,031 114,603 115,340 116,071 116,803 124,042 110,589 111,283 111,973 112,662 2043 2044 2045 2046 2047 0 0 0 0 0 0 0 0 0 0 8,077 8,158 8,238 8,318 8,397 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 18,077 18,158 18,238 18,318 18,397 17,270 17,342 17,414 17,486 17,558 2048 2049 2050 2051 2052 0 0 0 0 0 0 0 0 0 0 8,476 8,576 8,656 8,738 8,820 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 18,476 18,576 18,656 18,738 18,820 17,629 17,718 17,791 17,864 17,938 2053 2054 2055 2056 2057 0 0 0 0 0 0 0 0 0 0 8,903 8,987 9,072 9,157 9,243 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 18,903 18,987 19,072 19,157 19,243 18,013 18,088 18,165 18,241 18,319 2058 2059 2060 2061 2062 0 0 0 0 0 0 0 0 0 0 9,330 9,418 9,507 9,596 9,687 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 19,330 19,418 19,507 19,596 19,687 18,397 18,476 18,556 18,637 18,718 2063 2064 2065 2066 2067 0 0 0 0 0 0 0 0 0 0 9,778 9,870 9,963 10,057 10,151 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 19,778 19,870 19,963 20,057 20,151 18,800 18,883 18,967 19,051 19,136 2068 2069 2070 2071 2072 0 0 0 0 0 0 0 0 0 0 10,247 10,343 10,441 10,539 10,638 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 20,247 20,343 20,441 20,539 20,638 19,222 19,309 19,397 19,485 19,574 Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 0 0 0 0 0 10,738 10,840 10,942 11,045 11,149 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 20,738 20,840 20,942 21,045 21,149 19,665 19,756 19,847 19,940 20,034 2078 2079 2080 2081 2082 0 0 0 0 0 0 0 0 0 0 11,254 11,359 11,466 11,574 11,683 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 21,254 21,359 21,466 21,574 21,683 20,128 20,224 20,320 20,417 20,515 2083 2084 2085 2086 2087 0 0 0 0 0 0 0 0 0 0 11,793 11,904 12,016 12,130 12,244 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 21,793 21,904 22,016 22,130 22,244 20,614 20,714 20,815 20,917 21,019 2088 2089 2090 2091 2092 0 0 0 0 0 0 0 0 0 0 12,359 12,475 12,593 12,711 12,831 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 22,359 22,475 22,593 22,711 22,831 21,123 21,228 21,334 21,440 21,548 2093 2094 2095 2096 0 0 0 0 0 0 0 0 12,952 13,074 13,197 13,321 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 22,952 23,074 23,197 23,321 21,657 21,766 21,877 21,989 Total 20,528,169 19,366,472 717,581 645,823 1,590,000 22,835,750 21,602,295 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 2019 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2018 2019 2020 2021 2022 2,249,849 749,950 0 2,085,947 2,249,849 749,950 0 2,180,515 2,221,592 722,328 0 1,999,004 2,249,849 749,950 0 1,943,707 2,249,849 749,950 0 2,031,826 2,221,592 722,328 0 1,862,693 2023 2024 2025 2026 2027 2,086,117 2,119,237 1,995,409 1,995,409 1,995,409 2,251,559 2,367,361 2,312,617 2,405,122 2,501,327 2,013,789 2,064,713 1,966,047 1,992,292 2,018,297 1,943,707 1,974,589 1,859,072 1,859,072 1,859,072 2,097,854 2,205,778 2,154,607 2,240,791 2,330,422 1,876,317 1,923,786 1,831,716 1,856,167 1,880,395 2028 2029 2030 2031 2032 1,482,956 768,318 538,064 462,037 462,037 1,933,304 1,041,708 758,704 677,561 704,663 1,518,953 796,774 564,836 490,926 496,801 1,394,502 717,286 504,923 433,998 433,998 1,817,988 972,518 711,973 636,443 661,901 1,428,351 743,852 530,046 461,134 466,653 2033 2034 2035 2036 2037 462,037 462,037 155,226 66,377 66,377 732,850 762,164 266,298 118,428 123,165 502,650 508,468 172,768 74,711 75,539 433,998 433,998 143,253 62,706 62,706 688,377 715,912 245,759 111,879 116,354 472,146 477,611 159,443 70,580 71,362 2038 2039 2040 2041 2042 2043 2044 66,377 53,195 53,195 53,195 53,195 0 0 128,091 106,760 111,030 115,472 120,090 0 0 76,362 61,851 62,506 63,156 63,807 0 0 62,706 50,409 50,409 50,409 50,409 0 0 121,009 101,169 105,216 109,425 113,802 0 0 72,139 58,612 59,233 59,849 60,465 0 0 Total 20,481,945 24,718,587 20,528,169 19,324,728 23,290,801 19,366,472 Footnotes: (1) (2) (3) See report for details. Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Calendar Year Expenditure (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 2.3 Water Reclamation Expenditures Gross Inflated Discounted Expenditure (2) (3) (4) Page 1 Net Inflated (5) Discounted (6) 2018 2019 2020 2021 2022 0 0 0 6,667 0 0 0 6,969 0 0 0 6,389 0 0 0 6,000 0 0 0 6,272 0 0 0 5,750 2023 2024 2025 2026 2027 6,667 6,667 6,667 6,667 6,667 7,195 7,447 7,726 8,036 8,357 6,436 6,495 6,569 6,656 6,743 6,000 6,000 6,000 6,000 6,000 6,476 6,702 6,954 7,232 7,521 5,792 5,846 5,912 5,991 6,069 2028 2029 2030 2031 2032 6,667 6,667 6,667 6,667 6,667 8,691 9,039 9,400 9,776 10,167 6,828 6,914 6,998 7,084 7,168 6,000 6,000 6,000 6,000 6,000 7,822 8,135 8,460 8,799 9,151 6,146 6,222 6,299 6,375 6,451 2033 2034 2035 2036 2037 6,667 6,667 6,667 6,667 6,667 10,574 10,997 11,437 11,895 12,370 7,253 7,337 7,420 7,504 7,587 6,000 6,000 6,000 6,000 6,000 9,517 9,897 10,293 10,705 11,133 6,527 6,603 6,678 6,753 6,828 2038 2039 2040 2041 2042 6,667 6,667 6,667 6,667 6,667 12,865 13,380 13,915 14,472 15,050 7,670 7,752 7,834 7,915 7,997 6,000 6,000 6,000 6,000 6,000 11,579 12,042 12,523 13,024 13,545 6,903 6,976 7,050 7,124 7,197 2043 2044 2045 2046 2047 6,667 6,667 6,667 6,667 6,667 15,652 16,278 16,930 17,607 18,311 8,077 8,158 8,238 8,318 8,397 6,000 6,000 6,000 6,000 6,000 14,087 14,651 15,237 15,846 16,480 7,270 7,342 7,414 7,486 7,558 2048 2049 2050 2051 2052 6,667 6,667 6,667 6,667 6,667 19,044 19,805 20,597 21,421 22,278 8,476 8,576 8,656 8,738 8,820 6,000 6,000 6,000 6,000 6,000 17,139 17,825 18,538 19,279 20,050 7,629 7,718 7,791 7,864 7,938 2053 2054 2055 2056 2057 6,667 6,667 6,667 6,667 6,667 23,169 24,096 25,060 26,062 27,105 8,903 8,987 9,072 9,157 9,243 6,000 6,000 6,000 6,000 6,000 20,852 21,687 22,554 23,456 24,394 8,013 8,088 8,165 8,241 8,319 2058 2059 2060 2061 2062 6,667 6,667 6,667 6,667 6,667 28,189 29,317 30,489 31,709 32,977 9,330 9,418 9,507 9,596 9,687 6,000 6,000 6,000 6,000 6,000 25,370 26,385 27,440 28,538 29,680 8,397 8,476 8,556 8,637 8,718 2063 2064 2065 2066 2067 6,667 6,667 6,667 6,667 6,667 34,296 35,668 37,095 38,579 40,122 9,778 9,870 9,963 10,057 10,151 6,000 6,000 6,000 6,000 6,000 30,867 32,101 33,385 34,721 36,110 8,800 8,883 8,967 9,051 9,136 2068 2069 2070 2071 2072 6,667 6,667 6,667 6,667 6,667 41,727 43,396 45,132 46,937 48,814 10,247 10,343 10,441 10,539 10,638 6,000 6,000 6,000 6,000 6,000 37,554 39,056 40,618 42,243 43,933 9,222 9,309 9,397 9,485 9,574 Calendar Year Expenditure (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 2.3 Water Reclamation Expenditures Gross Inflated Discounted Expenditure (2) (3) (4) Page 2 Net Inflated (5) Discounted (6) 2073 2074 2075 2076 2077 6,667 6,667 6,667 6,667 6,667 50,767 52,798 54,910 57,106 59,390 10,738 10,840 10,942 11,045 11,149 6,000 6,000 6,000 6,000 6,000 45,690 47,518 49,419 51,395 53,451 9,665 9,756 9,847 9,940 10,034 2078 2079 2080 2081 2082 6,667 6,667 6,667 6,667 6,667 61,766 64,236 66,806 69,478 72,257 11,254 11,359 11,466 11,574 11,683 6,000 6,000 6,000 6,000 6,000 55,589 57,813 60,125 62,530 65,031 10,128 10,224 10,320 10,417 10,515 2083 2084 2085 2086 2087 6,667 6,667 6,667 6,667 6,667 75,147 78,153 81,279 84,531 87,912 11,793 11,904 12,016 12,130 12,244 6,000 6,000 6,000 6,000 6,000 67,633 70,338 73,152 76,078 79,121 10,614 10,714 10,815 10,917 11,019 2088 2089 2090 2091 2092 6,667 6,667 6,667 6,667 6,667 91,428 95,085 98,889 102,844 106,958 12,359 12,475 12,593 12,711 12,831 6,000 6,000 6,000 6,000 6,000 82,286 85,577 89,000 92,560 96,262 11,123 11,228 11,334 11,440 11,548 2093 2094 2095 2096 6,667 6,667 6,667 6,667 111,237 115,686 120,313 125,126 12,952 13,074 13,197 13,321 6,000 6,000 6,000 6,000 100,113 104,117 108,282 112,613 11,657 11,766 11,877 11,989 Total 500,000 3,081,727 717,581 450,000 2,773,554 645,823 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) Years 2048 and Subsequent based on 3.030% 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) Years 2048 and Subsequent based on 3.030% discount factor OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 Ending 6/30/XXXX 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 Averages All Years Ex High/Low Last 10 Years Last 5 Years Selected 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 1.9 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 2.5 1.9 6.2 2.27 3.11 3.24 3.00 Footnotes: Years 1999 through 2014 Year 2015 Years 2016 through 2018 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 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 4.9 5.7 11.7 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 4.76 6.35 6.82 6.00 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 Data provided by the Ohio DNR Division of Mineral Resources Management. 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 6.4 6.6 10.0 7.40 8.08 7.90 8.00 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 4.1 Performance Security Estimate (PSE) PSE Spring 2019 Spring 2017 Spring 2015 Spring 2013 Spring 2011 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (1) Final Map PSE (2) Active PSE (3) Total PSE 136,452,000 450,777,000 587,229,000 120,359,000 464,529,000 584,888,000 70,508,800 537,158,580 607,667,380 170,182,000 529,266,142 699,448,142 170,812,000 396,722,889 567,534,889 16,093,000 (13,752,000) 2,341,000 65,943,200 (86,381,580) (20,438,380) (33,730,000) (78,489,142) (112,219,142) (34,360,000) 54,054,111 19,694,111 (4) Bond Amount 42,443,728 44,980,415 54,665,778 71,783,943 69,293,576 (2,536,688) (12,222,051) (29,340,215) (26,849,849) (5) Total Net PSE 544,785,272 539,907,585 553,001,601 627,664,199 498,241,313 4,877,688 (8,216,329) (82,878,926) 46,543,960 Footnotes: (1), (2), (3), (5) (4) See report for details Row (3) - Row (5) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 4.2 Net Adjusted PSE by Mine Status Phase Spring 2019 Spring 2017 Spring 2015 Spring 2013 Spring 2011 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (1) Active - Pending Phase 1 release (2) Active - Pending Phase 2 release (3) Active - Pending Phase 3 release (4) Active - Total 318,196,825 57,885,536 46,738,450 422,820,811 352,568,360 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 (34,371,535) 2,064,250 22,936,000 (9,371,285) (21,206,019) (73,188,361) 25,014,654 (69,379,726) (102,253,081) 27,453,060 18,186,433 (56,613,588) 46,929,797 (3,761,068) 30,356,657 73,525,386 (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 115,915,647 5,807,925 240,890 121,964,461 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 21,607,797 (5,494,588) (1,864,238) 14,248,972 76,658,734 (5,003,075) (10,492,263) 61,163,397 (23,648,978) (647,138) (1,969,223) (26,265,339) (22,982,603) (2,030,763) (1,968,061) (26,981,426) (9) Total Net Adjusted PSE 544,785,272 539,907,585 553,001,601 627,664,199 498,241,313 4,877,688 (8,216,329) (82,878,926) 46,543,960 Footnotes: (1) - (8) (9) See report for details Row (4) + Row (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 4.3 Average PSE PSE Average Spring 2019 Spring 2017 Spring 2015 Spring 2013 Spring 2011 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (1) Total PSE Per Permit Count (2) Net Adj PSE Per Permit Count 3,941,134 3,656,277 3,481,476 3,213,736 3,232,273 2,941,498 3,108,658 2,789,619 2,384,600 2,093,451 11.66% 12.10% 17.99% 19.55% 21.12% 23.70% 39.49% 42.74% (3) Total PSE Per Bonded Acre (4) Net Adj PSE Per Bonded Acre 21,385 19,839 18,711 17,272 16,293 14,828 14,208 12,750 11,625 10,206 12.50% 12.94% 23.81% 25.26% 33.56% 35.73% 45.64% 48.56% 5,338,445 4,952,593 4,397,654 4,059,456 3,452,656 3,142,055 3,346,642 3,003,178 2,782,034 2,442,359 17.62% 18.03% 35.32% 36.56% 37.31% 39.36% 47.89% 50.69% (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 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 21 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Footnotes: (1) Exhibit 5.2 Row (10) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 5.2 Forfeiture Rate Calculation Evaluation Year Ending 6/30/XXXX 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 2017 2018 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 194 181 6 16 1 29 4 5 2 17 2 3 3 2 8 0 0 0 0 0 0 0 0 0 6 0 0 0 0.75% 2.06% 0.14% 4.25% 0.69% 0.88% 0.36% 3.73% 0.51% 0.83% 0.84% 0.56% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.73% 0.00% 0.00% 0.00% Total 10,217 104 1.02% (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 0.05% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 1.43% 1.02% (8) Weighted factor 0.86 (9) Weighted indicated forfeiture annual incremental rate 0.61% (10) Ohio selected forfeiture annual incremental rate 0.50% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) (10) Office of Surface Mining Reclamation and Enforcement annual evaluation reports of all mine sites in Ohio Client 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 Exhibit 5.3 Col (4) [Weighted average of rows (5) through (7)] / row (8) based on… OH = 60.0%, KY = 20.0% and WV = 20.0% Selected based on rows (5), (6), (7), and (9) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 5.3 Forfeiture Rate Adjustment Factor for Mine Status Mine Status Factor (1) Net Adjusted PSE (2) Weighted Net Adj PSE (3) Active, Pending Phase 1 Release Final Map, Pending Phase 1 Release Pending Phase 2 Release Pending Phase 3 Release 1.00 0.80 0.67 0.33 318,196,825 115,915,647 63,693,461 46,979,340 318,196,825 92,732,518 42,674,619 15,503,182 Total 0.33 544,785,272 469,107,143 Footnotes: (1) (2) (3) (4) 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. Exhibit 4.2 Col (1) x Col (2) Col (3) / Col (2) Weighted Factor (4) 0.86 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 6 Net Reclamation Cost by Mine Status Phase Spring 2019 Spring 2017 Spring 2015 Spring 2013 Spring 2011 2019 vs. 2017 2019 vs. 2015 (1) Active - Pending Phase 1 release (2) Active - Pending Phase 2 release (3) Active - Pending Phase 3 release (4) Active - Total 11,893,451 1,135,608 616,948 13,646,006 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 (453,027) 32,415 302,755 (117,857) (3,978,799) (2,664,563) 205,455 (6,437,906) (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 2,557,631 118,113 3,180 2,678,924 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 4,588,444 485,148 (107,200) (24,608) 353,340 1,261,491 (201,059) (200,128) 860,304 (9) Total Net Reclamation Cost 16,324,930 16,089,447 21,902,532 11,597,549 29,552,459 235,483 (5,577,602) 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 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 2019 vs. 2013 2,782,874 796,249 372,913 3,952,036 744,071 46,983 (15,710) 775,345 4,727,381 2019 vs. 2011 (11,385,989) (356,168) 424,148 (11,318,009) (1,806,161) (83,566) (19,794) (1,909,520) (13,227,530) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 7.1a Permit Information by Parent Company Parent Company Total PSE (1) Bond Amount (2) Net Adjusted PSE (3) Permit Count (4) Implied Bond Acres (5) Net Reclamation Cost (6) MURRAY ENERGY WESTMORELAND COAL COMPANY CONSOL ENERGY WATERLOO COAL CO INC RHINO ENERGY, LLC DTE DICKERSON LLC KIMBLE CLAY & LIMESTONE ROSEBUD MINING COMPANY LLC B & N COAL INC SIDWELL MATERIALS INC ANTHONY MINING CO INC AMERICAN LANDFILL INC THOMPSON BROTHERS MINING ETTA MAE INC MARIETTA COAL COMPANY L & M MINERAL CO VALLEY MINING INC STATE LINE RESOURCES INC F & M COAL CO GEORGETOWN MARINE INC CHAMBERS DEVL OF OHIO INC COLLIER PORTS INC 208,819,000 118,595,000 79,093,000 62,594,000 56,750,000 15,060,000 12,674,000 11,006,000 6,165,000 3,897,000 2,582,000 2,385,000 2,323,000 2,218,000 1,104,000 854,000 792,000 274,000 14,000 10,000 10,000 10,000 6,607,498 16,514,025 2,958,750 3,492,352 3,231,088 1,023,500 2,447,700 2,180,600 1,722,250 441,563 639,000 115,175 229,100 91,438 80,750 133,750 411,978 79,213 14,000 10,000 10,000 10,000 202,211,502 102,080,975 76,134,250 59,101,648 53,518,913 14,036,500 10,226,300 8,825,400 4,442,750 3,455,438 1,943,000 2,269,825 2,093,900 2,126,563 1,023,250 720,250 380,022 194,788 0 0 0 0 13 51 4 8 11 1 13 24 5 2 2 1 3 1 2 2 1 1 1 1 1 1 3,286 12,616 2,912 2,148 1,001 83 1,112 2,679 361 122 226 22 104 124 86 51 366 79 42 4 30 6 7,242,985 3,470,483 1,698,983 1,269,311 1,036,179 476,062 376,959 248,709 119,976 98,419 41,006 75,614 45,930 42,485 35,598 33,873 8,072 4,285 0 0 0 0 Total 587,229,000 42,443,728 544,785,272 149 27,460 16,324,930 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 584,888,000 607,667,380 699,448,142 567,534,889 44,980,415 54,665,778 71,783,943 69,293,576 539,907,585 553,001,601 627,664,199 498,241,313 168 188 225 238 31,259 37,295 49,229 48,820 16,089,447 21,902,532 11,597,549 29,552,459 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 2,341,000 (20,438,380) (112,219,142) 19,694,111 (2,536,688) (12,222,051) (29,340,215) (26,849,849) (3,798) (9,835) (21,769) (21,360) 235,483 (5,577,602) 4,727,381 (13,227,530) Footnotes: (1), (2), (3), (4), (5), (6) 4,877,688 (8,216,329) (82,878,926) 46,543,960 See report for details; reflects permits in the Reclamation Forfeiture Fund Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle (19) (39) (76) (89) Parent Company OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 202,211,502 102,080,975 76,134,250 59,101,648 53,518,913 37.12% 18.74% 13.98% 10.85% 9.82% Subtotal 493,047,288 90.50% Remaining Parent Companies 51,737,985 Total 544,785,272 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 539,907,585 553,001,601 627,664,199 498,241,313 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 Footnotes: (1) (2) (3) (4) (5) (6) Net Reclamation Cost % of Total (5) Average (6) 7,242,985 3,470,483 1,698,983 1,269,311 1,036,179 44.37% 21.26% 10.41% 7.78% 6.35% 98,609,458 14,717,942 90.16% 2,943,588 9.50% 3,979,845 1,606,988 9.84% 123,614 100.00% 30,265,848 16,324,930 100.00% 906,941 25,709,885 20,481,541 20,922,140 13,840,036 16,089,447 21,902,532 11,597,549 29,552,459 4,877,688 (8,216,329) (82,878,926) 46,543,960 15.05% 32.33% 30.87% 54.27% 235,483 (5,577,602) 4,727,381 (13,227,530) Exhibit 7.1a Col (3) Col (1) / Total Col (1) Derived from Exhibit 7.1a Col (3) Exhibit 7.1a Col (6) Col (4) / Total Col (4) Derived from Exhibit 7.1a Col (6) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 766,164 811,205 386,585 820,902 15.52% 10.56% 57.37% 9.49% OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 0 3 5 2 1 2 5 $0 $0 to 10K $10K to 100K $100K to 500K $500K to 1M $1M to 2M $2M to 5M Over $5M 4 2 7 4 0 3 1 1 Total 22 Total 22 Footnotes: (2) (4) Exhibit 7.1a Col (3) Exhibit 7.1a Col (6) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 0 5 7 1 0 3 1 2 0 1 1 0 2 0 1 0 1 0 0 1 0 1 4 1 4 3 1 2 1 0 2 3 5 1 0 0 3 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 0 0 1 0 0 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 0 0 1 5 7 1 0 3 2 2 0 1 3 2 4 0 1 0 1 1 0 1 0 2 4 2 4 5 1 2 1 1 2 3 5 1 0 0 3 0 2 1 1 0 1 0 0 0 0 1 0 0 0 0 0 3 0 1 0 0 1 0 0 2 1 1 0 0 2 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 0 0 0 0 0 0 0 0 1 1 0 2 2 1 4 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 1 1 0 0 0 1 0 0 0 0 0 0 0 2 1 1 0 1 0 0 0 0 1 0 0 1 2 0 3 0 1 0 0 1 0 1 3 2 4 2 1 6 4 2 0 0 0 0 0 1 7 8 2 0 4 2 2 0 1 4 2 4 1 3 0 4 1 1 1 0 3 4 3 7 7 5 4 2 7 6 5 5 1 0 0 3 Total 57 11 3 71 20 16 3 39 110 63 96 107 12 26 9 3 4 6 78 126 122 119 21 9 31 24 13 26 10 28 30 55 50 87 85 133 176 209 204 (1) (15) 2 0 (1) (3) (1) 11 (11) (8) 3 (10) (7) (25) (27) (16) (11) (48) (46) Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 Footnotes: (1) (2) (3) (4) (6) (39) (50) 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) (7) (55) (51) (48) (5) Client provided data, Pending Phase 1 Release (6) Client provided data, Pending Phase 2 Release (7) Client provided data, Pending Phase 3 Release (8) Sum of Col (5) through Col (7) (9) Col (4) + Col (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle (23) (66) (99) (94) Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 0 1 2 0 0 1 1 0 0 1 1 0 2 1 1 0 2 0 0 1 0 1 3 0 4 4 1 1 1 1 2 4 7 3 3 1 2 0 0 0 0 0 0 0 0 0 0 1 2 1 1 0 0 0 1 0 0 0 1 0 1 0 2 0 0 0 2 0 0 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 0 0 1 2 0 0 1 1 0 0 1 3 2 4 2 1 0 2 1 0 1 0 2 3 1 4 6 1 1 1 3 2 4 7 3 3 1 2 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 2 0 1 0 0 1 1 0 2 1 2 1 0 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 0 1 0 1 0 1 0 0 1 2 1 3 2 2 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 0 0 1 0 0 1 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 1 2 0 3 1 2 0 1 1 2 1 4 3 6 3 2 6 6 2 0 0 0 0 0 0 1 2 0 0 2 1 0 0 1 4 2 4 3 3 0 5 2 2 1 1 3 5 2 8 9 7 4 3 9 8 6 7 3 3 1 2 Total 52 12 2 66 19 24 5 48 114 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 58 76 89 12 25 7 2 4 5 72 105 101 103 16 4 30 33 19 34 12 28 30 61 51 94 104 133 156 195 207 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (6) (24) (37) 0 (13) 5 0 (2) (3) 3 15 (11) (9) 5 (10) (7) (23) (25) (6) (39) (35) (37) (13) (3) (46) (56) (19) (42) (81) (93) Permits Released Since Spring 2017 Total PSE of Permits Released Since Spring 2017 Net Adjusted PSE of Permits Released Since Spring 2017 22 6,972,000 5,074,813 Permits Issued Since Spring 2017 Total PSE of Permits Issued Since Spring 2017 Net Adjusted PSE of Permits Issued Since Spring 2017 3 5,565,000 5,093,500 Permits remaining in system from Spring 2017 to Spring 2019 Total PSE change of permits remaining in system from Spring 2017 to Spring 2019 Net Adjusted PSE change of permits remaining in system from Spring 2017 to Spring 2019 111 (8,070,000) (7,108,250) 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) (5) (6) (7) (8) (9) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 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) Issue Year Phase 1 (1) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 0 75 43 0 0 20 0 0 0 35 3 0 13 30 32 0 44 0 0 24 0 24 54 0 189 316 114 29 9 6 46 189 330 12 12 13 8 0 0 3 0 0 0 0 0 0 0 123 12 78 147 0 0 18 3 0 123 0 9 138 7 373 486 322 54 13 268 38 0 68 0 0 0 0 0 0 4 0 0 0 0 0 0 0 217 27 299 210 0 0 25 60 0 176 0 13 226 88 660 1,064 608 131 18 383 134 0 98 0 0 0 0 0 75 49 0 0 20 0 0 0 35 343 40 389 388 32 0 86 62 0 323 0 46 418 96 1,222 1,865 1,044 215 40 657 218 189 496 12 12 13 8 0 0 0 0 0 49 0 0 0 0 13 0 0 0 0 0 128 0 4 0 0 16 10 0 95 33 51 0 0 241 41 59 0 0 0 0 0 0 0 0 0 0 109 0 0 0 0 19 0 0 76 341 0 427 0 34 0 31 366 13 12 651 278 780 351 118 810 329 83 0 0 0 0 0 0 0 0 0 0 156 0 0 0 0 91 0 0 174 564 0 783 101 58 0 44 523 235 173 964 910 1,702 532 169 1,157 585 118 0 0 0 0 0 0 0 0 0 0 314 0 0 0 0 124 0 0 251 905 0 1,338 101 96 0 74 905 258 185 1,709 1,221 2,534 883 287 2,208 955 260 0 0 0 0 0 0 75 49 0 0 334 0 0 0 35 467 40 389 638 937 0 1,425 163 96 323 74 952 676 280 2,931 3,086 3,577 1,098 327 2,864 1,173 449 496 12 12 13 8 Total 1,668 2,283 4,441 8,392 742 4,828 9,037 14,607 22,999 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 2,295 2,736 3,744 3,680 6,913 5,903 6,530 12,157 10,283 12,505 21,806 19,931 18,571 411 213 1,723 4,202 2,108 6,762 9,384 8,124 15,465 13,997 10,444 23,950 23,585 26,502 32,251 43,881 42,157 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (627) (1,068) (2,076) (1,398) (4,630) (3,621) (2,089) (7,716) (5,842) (4,113) (13,414) (11,539) (10,179) 331 529 (981) 626 2,720 (1,934) (347) 913 (6,428) 610 4,163 (9,343) (8,978) Acres Released Since Spring 2017 Acres Issued Since 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) (5) Client provided data, Pending Phase 1 Release (6) Client provided data, Pending Phase 2 Release (7) Client provided data, Pending Phase 3 Release (8) Sum of Col (5) through Col (7) (9) Col (4) + Col (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle (3,503) (9,251) (20,882) (19,158) 3,288 21 Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 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 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 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 1 0 0 2 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 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 2 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 1 0 0 0 0 0 0 0 0 5 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 2 0 0 2 1 0 1 Total 11 0 0 11 5 0 0 5 16 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 10 7 7 0 0 1 0 0 0 10 7 8 8 5 5 4 0 0 0 0 0 0 5 5 4 5 15 12 12 13 0 0 (1) 0 0 0 1 4 3 3 0 0 1 0 0 0 0 0 0 0 0 1 0 1 4 4 3 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 1 4 4 Permits Released Since Spring 2017 Total PSE of Permits Released Since Spring 2017 Net Adjusted PSE of Permits Released Since Spring 2017 1 159,000 0 Permits Issued Since Spring 2017 Total PSE of Permits Issued Since Spring 2017 Net Adjusted PSE of Permits Issued Since Spring 2017 1 1,093,000 1,083,000 Permits remaining in system from Spring 2017 to Spring 2019 Total PSE change of permits remaining in system from Spring 2017 to Spring 2019 Net Adjusted PSE change of permits remaining in system from Spring 2017 to Spring 2019 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) (5) (6) (7) (8) (9) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 15 (14,972,000) (14,919,750) 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 2019 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 2017 2018 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 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 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 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 4 0 0 437 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 22 0 0 0 0 0 0 0 0 771 204 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 30 0 0 0 0 0 0 0 0 1,102 291 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 43 0 0 0 0 0 0 0 0 2,311 502 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 95 0 0 0 0 0 0 0 0 2,558 502 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 0 128 0 0 8 4 0 4 Total 325 90 128 543 500 1,055 1,507 3,061 3,604 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 321 286 792 90 60 60 128 86 85 539 432 937 480 516 509 483 1,167 1,155 1,118 1,667 1,650 1,597 3,350 3,314 3,197 4,873 3,889 3,745 4,134 5,353 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 4 38 (467) 0 30 30 0 43 43 (289) (253) (136) (1,812) (285) (141) (530) (1,749) 4 111 (394) 63 (16) (10) 17 (112) (100) (63) (160) (143) (90) Acres Released Since Spring 2017 Acres Issued Since 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) (5) Client provided data, Pending Phase 1 Release (6) Client provided data, Pending Phase 2 Release (7) Client provided data, Pending Phase 3 Release (8) Sum of Col (5) through Col (7) (9) Col (4) + Col (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 384 4 Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 0 4 2 1 0 2 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 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 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 1 4 2 1 0 2 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 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 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 0 0 1 6 2 1 0 2 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 0 0 0 Total 15 1 1 17 2 0 0 2 19 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 16 16 14 1 1 1 1 1 1 18 18 16 16 2 2 2 0 0 0 0 0 0 2 2 2 2 20 20 18 18 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (1) (1) 1 (1) (1) 1 1 Permits Released Since Spring 2017 Total PSE of Permits Released Since Spring 2017 Net Adjusted PSE of Permits Released Since Spring 2017 1 82,000 62,500 Permits Issued Since Spring 2017 Total PSE of Permits Issued Since Spring 2017 Net Adjusted PSE of Permits Issued Since Spring 2017 1 103,000 89,000 Permits remaining in system from Spring 2017 to Spring 2019 Total PSE change of permits remaining in system from Spring 2017 to Spring 2019 Net Adjusted PSE change of permits remaining in system from Spring 2017 to Spring 2019 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) (5) (6) (7) (8) (9) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle (1) (1) 1 1 18 25,835,000 25,777,500 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 2019 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 2017 2018 0 84 55 0 0 25 0 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 133 0 0 0 101 27 4 0 0 0 0 26 5 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 0 0 4 38 7 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 0 0 4 148 67 76 0 25 78 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 133 0 0 0 101 27 4 0 0 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 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 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 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 0 0 4 326 67 76 0 25 78 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 133 0 0 0 101 27 4 0 0 0 Total 444 94 141 679 35 58 85 178 857 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 448 416 388 97 123 78 144 184 117 690 724 582 678 35 131 131 58 183 183 85 262 318 178 576 632 632 867 1,300 1,214 1,310 0 (125) (125) 0 (177) (233) 0 (398) (454) (454) 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (4) 28 57 (3) (29) 17 (4) (44) 24 (11) (45) 97 1 0 (96) (96) (11) (443) (357) (453) Acres Released Since Spring 2017 8 Acres Issued Since Spring 2017 6 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) (5) Client provided data, Pending Phase 1 Release (6) Client provided data, Pending Phase 2 Release (7) Client provided data, Pending Phase 3 Release (8) Sum of Col (5) through Col (7) (9) Col (4) + Col (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle Issue Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 2017 2018 0 5 7 1 0 3 1 2 0 1 1 0 2 1 1 0 2 0 0 1 0 1 4 1 5 4 1 2 1 1 3 5 8 6 4 1 3 0 0 0 0 0 0 1 0 0 0 1 2 1 1 0 0 0 1 0 0 0 1 0 1 0 2 0 0 0 2 0 0 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 0 0 1 5 7 1 0 3 2 2 0 1 3 2 4 2 1 0 2 1 0 1 0 2 4 2 5 6 1 2 1 3 3 5 8 6 4 1 3 0 2 2 1 0 1 0 0 0 0 1 0 0 0 0 0 3 0 1 0 0 1 1 0 2 1 2 1 0 2 3 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 0 1 0 1 0 1 0 0 1 2 1 3 2 2 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 0 0 1 0 0 1 1 0 0 0 1 0 0 0 0 0 0 0 2 2 1 0 1 0 0 0 0 1 0 0 1 2 0 4 1 2 0 1 1 2 1 4 3 6 3 2 6 7 2 0 0 0 0 0 1 7 9 2 0 4 2 2 0 1 4 2 4 3 3 0 6 2 2 1 1 3 6 3 9 9 7 5 3 9 10 7 8 6 4 1 3 Total 78 13 3 94 26 24 5 55 149 84 99 110 13 26 9 3 5 6 100 130 125 127 23 11 36 33 19 34 12 28 30 68 58 100 111 168 188 225 238 0 (13) 4 0 (2) (3) 3 15 (10) (9) 5 (10) (7) (23) (25) Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (6) (21) (32) (6) (36) (31) (33) (13) (3) (45) (56) (19) (39) (76) (89) Permits Released Since Spring 2017 Total PSE of Permits Released Since Spring 2017 Net Adjusted PSE of Permits Released Since Spring 2017 24 7,213,000 5,137,313 Permits Issued Since Spring 2017 Total PSE of Permits Issued Since Spring 2017 Net Adjusted PSE of Permits Issued Since Spring 2017 5 6,761,000 6,265,500 Permits remaining in system from Spring 2017 to Spring 2019 Total PSE change of permits remaining in system from Spring 2017 to Spring 2019 Net Adjusted PSE change of permits remaining in system from Spring 2017 to Spring 2019 144 2,793,000 3,749,500 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) (5) (6) (7) (8) (9) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 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 2019 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 2017 2018 0 159 222 0 0 44 0 17 0 35 3 0 13 30 32 0 44 0 0 24 0 24 133 28 234 316 114 162 9 6 78 290 357 24 16 13 12 0 26 58 31 0 0 31 0 0 0 123 12 78 147 0 0 18 3 0 123 0 9 138 46 373 486 322 54 13 268 38 0 68 0 0 0 0 4 38 83 45 0 0 47 0 0 0 217 27 299 210 0 0 25 60 0 176 0 13 226 144 660 1,064 608 131 18 383 134 0 98 0 0 0 0 4 223 364 76 0 44 78 17 0 35 343 40 389 388 32 0 86 62 0 323 0 46 497 219 1,267 1,865 1,044 348 40 657 250 290 523 24 16 13 12 0 35 437 8 0 49 0 0 0 0 13 0 0 0 0 0 161 0 4 0 0 16 10 0 95 33 51 0 0 241 63 59 0 0 0 0 0 0 58 771 204 0 109 0 0 0 0 19 0 0 76 341 0 476 0 34 0 31 366 13 12 651 278 780 351 118 810 359 83 0 0 0 0 0 0 85 1,102 291 0 156 0 0 0 0 91 0 0 174 564 0 854 101 58 0 44 523 235 173 964 910 1,702 532 169 1,157 628 118 0 0 0 0 0 0 178 2,311 502 0 314 0 0 0 0 124 0 0 251 905 0 1,491 101 96 0 74 905 258 185 1,709 1,221 2,534 883 287 2,208 1,051 260 0 0 0 0 0 4 401 2,674 579 0 359 78 17 0 35 467 40 389 638 937 0 1,577 163 96 323 74 952 755 403 2,976 3,086 3,577 1,230 327 2,864 1,301 550 523 24 16 13 12 Total 2,437 2,467 4,710 9,614 1,277 5,941 10,629 17,846 27,460 Spring 2017 Total Spring 2015 Total Spring 2013 Total Spring 2011 Total 3,064 3,439 4,923 3,867 7,096 6,041 6,803 12,427 10,486 13,734 22,962 21,449 19,729 961 853 2,337 5,427 3,446 8,063 11,136 10,035 17,380 17,525 14,334 27,780 29,091 31,259 37,295 49,229 48,820 2019 vs. 2017 2019 vs. 2015 2019 vs. 2013 2019 vs. 2011 (627) (1,001) (2,486) (1,400) (4,629) (3,574) (4,120) (13,348) (11,835) (10,115) 315 424 (1,060) 514 2,495 (2,123) 321 3,512 (9,934) (11,245) (3,798) (9,835) (21,769) (21,360) (2,093) (7,717) (5,775) (507) 593 (6,751) Acres Released Since Spring 2017 Acres Issued Since Spring 2017 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) (5) Sum of Exhibits 7.3b through 7.5b Col (5), Pending Release (6) Sum of Exhibits 7.3b through 7.5b Col (6), Pending Release (7) Sum of Exhibits 7.3b through 7.5b Col (7), Pending Release (8) Sum of Col (5) through Col (7) (9) Col (4) + Col (8) Spring 2017, 2015, 2013 and 2011 Amounts from the Spring 2017, 2015, 2013 and 2011 Reports by Pinnacle 3,680 30 Calendar Year 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 Footnotes: (1) (2), (3) OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 8 Projected Investment Rates Based on US Treasury Returns in Spring 2019 Investment Return (%) Yearly Discount Factor (1) (2) 2.560% 2.520% 2.500% 2.500% 2.500% 2.550% 2.590% 2.630% 2.660% 2.700% 2.720% 2.740% 2.750% 2.770% 2.790% 2.810% 2.830% 2.840% 2.860% 2.880% 2.900% 2.910% 2.930% 2.940% 2.960% 2.970% 2.990% 3.000% 3.020% 3.030% Based on US Treasury Returns in Spring 2019; Returns not in Bold are interpolated from US Treasury Rates Based on Col (1) 97.504% 97.542% 97.561% 97.561% 97.561% 97.513% 97.475% 97.437% 97.409% 97.371% 97.352% 97.333% 97.324% 97.305% 97.286% 97.267% 97.248% 97.238% 97.220% 97.201% 97.182% 97.172% 97.153% 97.144% 97.125% 97.116% 97.097% 97.087% 97.069% 97.059% Compound Discount Factor (3) -1.256% -3.683% -6.032% -8.324% -10.560% -12.784% -14.986% -17.165% -19.311% -21.432% -23.513% -25.553% -27.545% -29.498% -31.412% -33.286% -35.122% -36.914% -38.668% -40.385% -42.065% -43.703% -45.306% -46.868% -48.395% -49.884% -51.339% -52.756% -54.141% -55.490% OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 9.1 Water Reclamation Cost Surface Acres Other Total 0 0 5.00% 0 1,633 0 5.00% 1,633 0 395 5.00% 20 (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 12.44 5.66 13.36 318.36 58.32 201.78 45.28 150.26 Selected Average Cost (9) Water capital selected avg cost per permitted acre (10) Water treatment selected avg cost per permitted acre 12.44 5.66 58.32 201.78 45.28 150.26 Number of Exposure Years (11) Number of years for water capital reclamation (12) Number of years for water treatment reclamation 75 75 75 75 75 75 Forfeiture Rate (13) Selected water forfeiture rate 0.50% 0.50% 0.50% Estimate 1 Gross Reclamation Cost (14) Water capital reclamation cost (15) Water treatment reclamation cost (16) Estimate 1 - Total gross water reclamation cost 0 0 0 35,720 123,578 159,298 335 1,113 1,449 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 1,842,842 5 1 149 4.03% 5.00% 92,142 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 (24c) Pinnacle's 2017 Ohio analysis selected gross water reclamation cost (25) Selected gross water reclamation cost 2,500,000 2,250,000 500,000 500,000 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) (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 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 (10) 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 (17) x Row (22) Selection from the Prior Ohio analysis (2013 Pinnacle Report, 2015 Pinnacle Report, and 2017 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)] 1,633 395 1,653 36,056 124,691 160,747 10% 450,000 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 77,000,000 75,014,625 N/A N/A 317 514 478,000 0 N/A N/A 319 502 1,335,000 952,125 OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 99 280,000 167,500 52 79 274,000 194,788 PSE Comparison 800,000 699,448 700,000 600,000 587,229 584,888 627,664 607,667 567,535 544,785 539,908 553,002 498,241 PSE (000's) 500,000 400,000 300,000 200,000 100,000 0 Total PSE Spring 2019 Spring 2017 Net Adjusted PSE Spring 2015 Spring 2013 Spring 2011 Average PSE Per Permit Count Comparison 4,500,000 4,000,000 3,941,134 3,656,277 3,500,000 3,481,476 3,232,273 3,213,736 3,108,658 2,941,498 Average PSE 3,000,000 2,789,619 2,384,600 2,500,000 2,093,451 2,000,000 1,500,000 1,000,000 500,000 0 Total PSE per Permit Count Spring 2019 Spring 2017 Net Adj PSE per Permit Count Spring 2015 Spring 2013 Spring 2011 Average PSE Per Bonded Acre Comparison 25,000 21,385 20,000 19,839 18,711 17,272 Average PSE 16,293 15,000 14,828 14,208 12,750 11,625 10,206 10,000 5,000 0 Total PSE per Bonded Acre Spring 2019 Spring 2017 Net Adj PSE per Bonded Acre Spring 2015 Spring 2013 Spring 2011 APPENDIX A - LOW FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2018 2019 2020 2021 2022 1,091,000 947,000 787,000 801,000 575,603 536,614 534,554 551,163 2,221,592 722,328 0 1,241,795 0 0 0 5,750 35,000 35,000 35,000 45,000 22,224,988 21,635,000 22,361,286 23,647,839 23,707,457 2023 2024 2025 2026 2027 800,000 765,000 375,500 0 0 539,042 536,592 526,262 508,538 484,273 1,250,878 1,282,524 1,221,144 1,237,445 1,253,597 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 23,744,829 23,713,051 23,342,758 22,562,861 21,742,468 2028 2029 2030 2031 2032 0 0 0 0 0 461,229 441,063 430,293 420,816 413,662 952,234 495,902 353,364 307,423 311,102 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 21,200,318 21,094,257 21,119,887 21,181,905 21,233,014 2033 2034 2035 2036 2037 0 0 0 0 0 406,318 398,796 391,110 385,830 382,778 314,764 318,407 106,295 47,053 47,575 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 21,273,041 21,301,827 21,534,963 21,821,986 22,105,360 2038 2039 2040 2041 2042 0 0 0 0 0 379,530 376,091 371,386 367,779 362,802 48,093 39,075 39,489 39,899 40,310 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 22,384,895 22,669,935 22,949,782 23,225,538 23,495,833 2043 2044 2045 2046 2047 0 0 0 0 0 358,898 354,808 351,738 347,373 344,007 0 0 0 0 0 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 23,837,461 24,174,927 24,509,251 24,839,137 25,165,587 2048 2049 2050 2051 2052 0 0 0 0 0 339,398 334,392 328,591 322,769 316,934 0 0 0 0 0 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 25,487,356 25,804,031 26,114,831 26,419,735 26,718,731 2053 2054 2055 2056 2057 0 0 0 0 0 311,095 305,258 299,430 293,619 287,829 0 0 0 0 0 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 27,011,813 27,298,982 27,580,248 27,855,626 28,125,136 2058 2059 2060 2061 2062 0 0 0 0 0 282,067 276,339 270,648 265,000 259,400 0 0 0 0 0 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 28,388,806 28,646,669 28,898,761 29,145,124 29,385,806 2063 2064 2065 2066 2067 0 0 0 0 0 253,850 248,355 242,919 237,544 232,233 0 0 0 0 0 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 29,620,856 29,850,328 30,074,281 30,292,774 30,505,871 2068 2069 2070 2071 2072 0 0 0 0 0 226,989 221,814 216,710 211,679 206,723 0 0 0 0 0 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 30,713,637 30,916,142 31,113,456 31,305,650 31,492,799 APPENDIX A - LOW FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 201,843 197,040 192,316 187,671 183,106 0 0 0 0 0 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 31,674,977 31,852,262 32,024,731 32,192,462 32,355,534 2078 2079 2080 2081 2082 0 0 0 0 0 178,621 174,217 169,895 165,653 161,493 0 0 0 0 0 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 32,514,027 32,668,021 32,817,596 32,962,832 33,103,810 2083 2084 2085 2086 2087 0 0 0 0 0 157,414 153,416 149,499 145,662 141,904 0 0 0 0 0 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 33,240,610 33,373,312 33,501,996 33,626,741 33,747,626 2088 2089 2090 2091 2092 0 0 0 0 0 138,226 134,627 131,105 127,660 124,292 0 0 0 0 0 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 33,864,729 33,978,128 34,087,900 34,194,120 34,296,864 2093 2094 2095 2096 0 0 0 0 120,999 117,781 114,636 111,564 0 0 0 0 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 34,396,207 34,492,221 34,584,981 34,674,556 Total 5,566,500 23,011,179 13,892,288 645,823 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 2019 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)] x (1 + Exhibit 8 Col (3). Years 2048 and subsequent based on 3.030% 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 2018 client provided data. Subsequent years = prior year col (6) + Col (1) + Col (2) - Col (3) - Col (4) - Col (5) APPENDIX A - LOW FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2018 2019 2020 2021 2022 2,221,592 722,328 0 1,332,670 2,221,592 722,328 0 1,241,795 0 0 0 6,389 0 0 0 5,750 35,000 35,000 35,000 45,000 2,256,592 757,328 35,000 1,384,058 2,256,592 757,328 35,000 1,292,545 2023 2024 2025 2026 2027 1,342,526 1,376,475 1,310,698 1,328,194 1,345,531 1,250,878 1,282,524 1,221,144 1,237,445 1,253,597 6,436 6,495 6,569 6,656 6,743 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 1,393,962 1,427,970 1,362,267 1,379,851 1,397,274 1,301,670 1,333,370 1,272,056 1,288,435 1,304,666 2028 2029 2030 2031 2032 1,012,635 531,183 376,557 327,284 331,201 952,234 495,902 353,364 307,423 311,102 6,828 6,914 6,998 7,084 7,168 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 1,064,464 583,096 428,555 379,367 383,369 1,003,380 547,124 404,662 358,798 362,553 2033 2034 2035 2036 2037 335,100 338,978 115,179 49,808 50,360 314,764 318,407 106,295 47,053 47,575 7,253 7,337 7,420 7,504 7,587 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 387,352 391,315 167,599 102,311 102,947 366,292 370,010 157,973 98,807 99,403 2038 2039 2040 2041 2042 50,908 41,234 41,671 42,104 42,538 48,093 39,075 39,489 39,899 40,310 7,670 7,752 7,834 7,915 7,997 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 103,577 93,986 94,505 95,019 95,534 99,995 91,051 91,539 92,023 92,507 2043 2044 2045 2046 2047 0 0 0 0 0 0 0 0 0 0 8,077 8,158 8,238 8,318 8,397 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 18,077 18,158 18,238 18,318 18,397 17,270 17,342 17,414 17,486 17,558 2048 2049 2050 2051 2052 0 0 0 0 0 0 0 0 0 0 8,476 8,576 8,656 8,738 8,820 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 18,476 18,576 18,656 18,738 18,820 17,629 17,718 17,791 17,864 17,938 2053 2054 2055 2056 2057 0 0 0 0 0 0 0 0 0 0 8,903 8,987 9,072 9,157 9,243 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 18,903 18,987 19,072 19,157 19,243 18,013 18,088 18,165 18,241 18,319 2058 2059 2060 2061 2062 0 0 0 0 0 0 0 0 0 0 9,330 9,418 9,507 9,596 9,687 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 19,330 19,418 19,507 19,596 19,687 18,397 18,476 18,556 18,637 18,718 2063 2064 2065 2066 2067 0 0 0 0 0 0 0 0 0 0 9,778 9,870 9,963 10,057 10,151 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 19,778 19,870 19,963 20,057 20,151 18,800 18,883 18,967 19,051 19,136 2068 2069 2070 2071 2072 0 0 0 0 0 0 0 0 0 0 10,247 10,343 10,441 10,539 10,638 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 20,247 20,343 20,441 20,539 20,638 19,222 19,309 19,397 19,485 19,574 APPENDIX A - LOW FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 0 0 0 0 0 10,738 10,840 10,942 11,045 11,149 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 20,738 20,840 20,942 21,045 21,149 19,665 19,756 19,847 19,940 20,034 2078 2079 2080 2081 2082 0 0 0 0 0 0 0 0 0 0 11,254 11,359 11,466 11,574 11,683 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 21,254 21,359 21,466 21,574 21,683 20,128 20,224 20,320 20,417 20,515 2083 2084 2085 2086 2087 0 0 0 0 0 0 0 0 0 0 11,793 11,904 12,016 12,130 12,244 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 21,793 21,904 22,016 22,130 22,244 20,614 20,714 20,815 20,917 21,019 2088 2089 2090 2091 2092 0 0 0 0 0 0 0 0 0 0 12,359 12,475 12,593 12,711 12,831 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 22,359 22,475 22,593 22,711 22,831 21,123 21,228 21,334 21,440 21,548 2093 2094 2095 2096 0 0 0 0 0 0 0 0 12,952 13,074 13,197 13,321 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 22,952 23,074 23,197 23,321 21,657 21,766 21,877 21,989 Total 14,666,752 13,892,288 717,581 645,823 1,590,000 16,974,333 16,128,111 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) APPENDIX A - LOW FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2018 2019 2020 2021 2022 2,249,849 749,950 0 1,390,631 2,249,849 749,950 0 1,453,677 2,221,592 722,328 0 1,332,670 2,249,849 749,950 0 1,295,804 2,249,849 749,950 0 1,354,551 2,221,592 722,328 0 1,241,795 2023 2024 2025 2026 2027 1,390,745 1,412,825 1,330,273 1,330,273 1,330,273 1,501,039 1,578,241 1,541,745 1,603,415 1,667,551 1,342,526 1,376,475 1,310,698 1,328,194 1,345,531 1,295,804 1,316,393 1,239,381 1,239,381 1,239,381 1,398,570 1,470,518 1,436,404 1,493,861 1,553,615 1,250,878 1,282,524 1,221,144 1,237,445 1,253,597 2028 2029 2030 2031 2032 988,638 512,212 358,709 308,024 308,024 1,288,869 694,472 505,803 451,707 469,775 1,012,635 531,183 376,557 327,284 331,201 929,668 478,191 336,615 289,332 289,332 1,211,992 648,345 474,649 424,295 441,267 952,234 495,902 353,364 307,423 311,102 2033 2034 2035 2036 2037 308,024 308,024 103,484 44,251 44,251 488,566 508,109 177,532 78,952 82,110 335,100 338,978 115,179 49,808 50,360 289,332 289,332 95,502 41,804 41,804 458,918 477,274 163,840 74,586 77,570 314,764 318,407 106,295 47,053 47,575 2038 2039 2040 2041 2042 2043 2044 44,251 35,463 35,463 35,463 35,463 0 0 85,394 71,173 74,020 76,981 80,060 0 0 50,908 41,234 41,671 42,104 42,538 0 0 41,804 33,606 33,606 33,606 33,606 0 0 80,672 67,446 70,144 72,950 75,868 0 0 48,093 39,075 39,489 39,899 40,310 0 0 Total 14,654,563 17,478,991 14,666,752 13,883,085 16,527,133 13,892,288 Footnotes: (1) (2) (3) See report for details. Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) APPENDIX A - LOW FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 21 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% Footnotes: (1) Exhibit 5.2 Row (10) APPENDIX A - LOW FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 5.2 Forfeiture Rate Calculation Evaluation Year Ending 6/30/XXXX 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 2017 2018 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 194 181 6 16 1 29 4 5 2 17 2 3 3 2 8 0 0 0 0 0 0 0 0 0 6 0 0 0 0.75% 2.06% 0.14% 4.25% 0.69% 0.88% 0.36% 3.73% 0.51% 0.83% 0.84% 0.56% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.73% 0.00% 0.00% 0.00% Total 10,217 104 1.02% (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 0.05% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 1.43% 1.02% (8) Weighted factor 0.86 (9) Weighted indicated forfeiture annual incremental rate 0.61% (10) Ohio selected forfeiture annual incremental rate 0.33% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) (10) Office of Surface Mining Reclamation and Enforcement annual evaluation reports of all mine sites in Ohio Client 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 Exhibit 5.3 Col (4) [Weighted average of rows (5) through (7)] / row (8) based on… OH = 60.0%, KY = 20.0% and WV = 20.0% Selected based on rows (5), (6), (7), and (9) APPENDIX B - HIGH FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2018 2019 2020 2021 2022 1,091,000 947,000 787,000 801,000 575,603 536,614 534,554 551,163 2,221,592 722,328 0 2,483,590 0 0 0 5,750 35,000 35,000 35,000 45,000 22,224,988 21,635,000 22,361,286 23,647,839 22,465,662 2023 2024 2025 2026 2027 800,000 765,000 375,500 0 0 511,275 480,538 441,292 396,012 344,438 2,501,756 2,565,049 2,442,288 2,474,890 2,507,194 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 21,224,389 19,854,033 18,177,626 16,047,758 13,833,933 2028 2029 2030 2031 2032 0 0 0 0 0 293,463 253,228 232,176 216,310 203,224 1,904,468 991,803 706,727 614,845 622,204 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 12,171,782 11,381,985 10,856,135 10,406,224 9,935,792 2033 2034 2035 2036 2037 0 0 0 0 0 190,133 177,059 164,023 158,261 155,161 629,528 636,815 212,591 94,107 95,150 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 9,444,869 8,933,510 8,833,264 8,845,664 8,853,847 2038 2039 2040 2041 2042 0 0 0 0 0 152,013 148,821 145,417 142,479 139,047 96,186 78,150 78,978 79,799 80,620 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 8,857,772 8,876,466 8,890,856 8,901,413 8,907,643 2043 2044 2045 2046 2047 0 0 0 0 0 136,064 134,354 133,034 131,230 129,808 0 0 0 0 0 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 9,026,437 9,143,449 9,259,069 9,372,812 9,485,063 2048 2049 2050 2051 2052 0 0 0 0 0 127,921 125,890 123,566 121,239 118,914 0 0 0 0 0 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 9,595,355 9,703,527 9,809,302 9,912,677 10,013,652 2053 2054 2055 2056 2057 0 0 0 0 0 116,592 114,277 111,972 109,677 107,397 0 0 0 0 0 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 10,112,232 10,208,421 10,302,228 10,393,664 10,482,741 2058 2059 2060 2061 2062 0 0 0 0 0 105,132 102,884 100,656 98,448 96,264 0 0 0 0 0 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 10,569,476 10,653,883 10,735,983 10,815,795 10,893,340 2063 2064 2065 2066 2067 0 0 0 0 0 94,102 91,966 89,856 87,774 85,719 0 0 0 0 0 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 10,968,643 11,041,726 11,112,616 11,181,339 11,247,922 2068 2069 2070 2071 2072 0 0 0 0 0 83,694 81,698 79,733 77,798 75,896 0 0 0 0 0 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 11,312,394 11,374,783 11,435,119 11,493,432 11,549,753 APPENDIX B - HIGH FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 74,025 72,186 70,379 68,606 66,865 0 0 0 0 0 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 11,604,113 11,656,543 11,707,075 11,755,741 11,802,572 2078 2079 2080 2081 2082 0 0 0 0 0 65,157 63,482 61,840 60,231 58,655 0 0 0 0 0 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 11,847,601 11,890,859 11,932,380 11,972,194 12,010,333 2083 2084 2085 2086 2087 0 0 0 0 0 57,111 55,600 54,121 52,674 51,259 0 0 0 0 0 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 12,046,831 12,081,717 12,115,023 12,146,781 12,177,020 2088 2089 2090 2091 2092 0 0 0 0 0 49,876 48,523 47,201 45,910 44,649 0 0 0 0 0 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 12,205,773 12,233,068 12,258,936 12,283,406 12,306,507 2093 2094 2095 2096 0 0 0 0 43,417 42,215 41,042 39,896 0 0 0 0 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 12,328,268 12,348,716 12,367,880 12,385,788 Total 5,566,500 11,670,779 24,840,657 645,823 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 2019 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)] x (1 + Exhibit 8 Col (3). Years 2048 and subsequent based on 3.030% 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 2018 client provided data. Subsequent years = prior year col (6) + Col (1) + Col (2) - Col (3) - Col (4) - Col (5) APPENDIX B - HIGH FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2018 2019 2020 2021 2022 2,221,592 722,328 0 2,665,339 2,221,592 722,328 0 2,483,590 0 0 0 6,389 0 0 0 5,750 35,000 35,000 35,000 45,000 2,256,592 757,328 35,000 2,716,728 2,256,592 757,328 35,000 2,534,340 2023 2024 2025 2026 2027 2,685,053 2,752,950 2,621,396 2,656,389 2,691,062 2,501,756 2,565,049 2,442,288 2,474,890 2,507,194 6,436 6,495 6,569 6,656 6,743 5,792 5,846 5,912 5,991 6,069 45,000 45,000 45,000 45,000 45,000 2,736,488 2,804,445 2,672,964 2,708,045 2,742,805 2,552,548 2,615,894 2,493,199 2,525,880 2,558,263 2028 2029 2030 2031 2032 2,025,270 1,062,366 753,114 654,568 662,402 1,904,468 991,803 706,727 614,845 622,204 6,828 6,914 6,998 7,084 7,168 6,146 6,222 6,299 6,375 6,451 45,000 45,000 45,000 45,000 45,000 2,077,099 1,114,279 805,112 706,651 714,570 1,955,614 1,043,026 758,026 666,220 673,655 2033 2034 2035 2036 2037 670,199 677,957 230,358 99,615 100,719 629,528 636,815 212,591 94,107 95,150 7,253 7,337 7,420 7,504 7,587 6,527 6,603 6,678 6,753 6,828 45,000 45,000 45,000 45,000 45,000 722,452 730,293 282,778 152,119 153,306 681,056 688,418 264,269 145,860 146,978 2038 2039 2040 2041 2042 101,816 82,468 83,342 84,208 85,075 96,186 78,150 78,978 79,799 80,620 7,670 7,752 7,834 7,915 7,997 6,903 6,976 7,050 7,124 7,197 45,000 45,000 45,000 45,000 45,000 154,485 135,220 136,176 137,123 138,072 148,088 130,126 131,028 131,922 132,817 2043 2044 2045 2046 2047 0 0 0 0 0 0 0 0 0 0 8,077 8,158 8,238 8,318 8,397 7,270 7,342 7,414 7,486 7,558 10,000 10,000 10,000 10,000 10,000 18,077 18,158 18,238 18,318 18,397 17,270 17,342 17,414 17,486 17,558 2048 2049 2050 2051 2052 0 0 0 0 0 0 0 0 0 0 8,476 8,576 8,656 8,738 8,820 7,629 7,718 7,791 7,864 7,938 10,000 10,000 10,000 10,000 10,000 18,476 18,576 18,656 18,738 18,820 17,629 17,718 17,791 17,864 17,938 2053 2054 2055 2056 2057 0 0 0 0 0 0 0 0 0 0 8,903 8,987 9,072 9,157 9,243 8,013 8,088 8,165 8,241 8,319 10,000 10,000 10,000 10,000 10,000 18,903 18,987 19,072 19,157 19,243 18,013 18,088 18,165 18,241 18,319 2058 2059 2060 2061 2062 0 0 0 0 0 0 0 0 0 0 9,330 9,418 9,507 9,596 9,687 8,397 8,476 8,556 8,637 8,718 10,000 10,000 10,000 10,000 10,000 19,330 19,418 19,507 19,596 19,687 18,397 18,476 18,556 18,637 18,718 2063 2064 2065 2066 2067 0 0 0 0 0 0 0 0 0 0 9,778 9,870 9,963 10,057 10,151 8,800 8,883 8,967 9,051 9,136 10,000 10,000 10,000 10,000 10,000 19,778 19,870 19,963 20,057 20,151 18,800 18,883 18,967 19,051 19,136 2068 2069 2070 2071 2072 0 0 0 0 0 0 0 0 0 0 10,247 10,343 10,441 10,539 10,638 9,222 9,309 9,397 9,485 9,574 10,000 10,000 10,000 10,000 10,000 20,247 20,343 20,441 20,539 20,638 19,222 19,309 19,397 19,485 19,574 APPENDIX B - HIGH FORFEITURE RATE Calendar Year OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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) 2073 2074 2075 2076 2077 0 0 0 0 0 0 0 0 0 0 10,738 10,840 10,942 11,045 11,149 9,665 9,756 9,847 9,940 10,034 10,000 10,000 10,000 10,000 10,000 20,738 20,840 20,942 21,045 21,149 19,665 19,756 19,847 19,940 20,034 2078 2079 2080 2081 2082 0 0 0 0 0 0 0 0 0 0 11,254 11,359 11,466 11,574 11,683 10,128 10,224 10,320 10,417 10,515 10,000 10,000 10,000 10,000 10,000 21,254 21,359 21,466 21,574 21,683 20,128 20,224 20,320 20,417 20,515 2083 2084 2085 2086 2087 0 0 0 0 0 0 0 0 0 0 11,793 11,904 12,016 12,130 12,244 10,614 10,714 10,815 10,917 11,019 10,000 10,000 10,000 10,000 10,000 21,793 21,904 22,016 22,130 22,244 20,614 20,714 20,815 20,917 21,019 2088 2089 2090 2091 2092 0 0 0 0 0 0 0 0 0 0 12,359 12,475 12,593 12,711 12,831 11,123 11,228 11,334 11,440 11,548 10,000 10,000 10,000 10,000 10,000 22,359 22,475 22,593 22,711 22,831 21,123 21,228 21,334 21,440 21,548 2093 2094 2095 2096 0 0 0 0 0 0 0 0 12,952 13,074 13,197 13,321 11,657 11,766 11,877 11,989 10,000 10,000 10,000 10,000 22,952 23,074 23,197 23,321 21,657 21,766 21,877 21,989 Total 26,389,585 24,840,657 717,581 645,823 1,590,000 28,697,166 27,076,479 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) APPENDIX B - HIGH FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 2.2 Land Reclamation Expenditures Calendar Year Expenditure (1) Gross Inflated (2) Discounted (3) Expenditure (4) Net Inflated (5) Discounted (6) 2018 2019 2020 2021 2022 2,249,849 749,950 0 2,781,262 2,249,849 749,950 0 2,907,353 2,221,592 722,328 0 2,665,339 2,249,849 749,950 0 2,591,609 2,249,849 749,950 0 2,709,102 2,221,592 722,328 0 2,483,590 2023 2024 2025 2026 2027 2,781,489 2,825,649 2,660,546 2,660,546 2,660,546 3,002,078 3,156,481 3,083,490 3,206,829 3,335,103 2,685,053 2,752,950 2,621,396 2,656,389 2,691,062 2,591,609 2,632,786 2,478,762 2,478,762 2,478,762 2,797,139 2,941,037 2,872,809 2,987,721 3,107,230 2,501,756 2,565,049 2,442,288 2,474,890 2,507,194 2028 2029 2030 2031 2032 1,977,275 1,024,424 717,419 616,049 616,049 2,577,739 1,388,945 1,011,606 903,414 939,551 2,025,270 1,062,366 753,114 654,568 662,402 1,859,336 956,382 673,231 578,664 578,664 2,423,984 1,296,691 949,298 848,591 882,534 1,904,468 991,803 706,727 614,845 622,204 2033 2034 2035 2036 2037 616,049 616,049 206,968 88,502 88,502 977,133 1,016,218 355,065 157,904 164,220 670,199 677,957 230,358 99,615 100,719 578,664 578,664 191,005 83,608 83,608 917,836 954,549 327,679 149,172 155,139 629,528 636,815 212,591 94,107 95,150 2038 2039 2040 2041 2042 2043 2044 88,502 70,927 70,927 70,927 70,927 0 0 170,788 142,347 148,040 153,962 160,121 0 0 101,816 82,468 83,342 84,208 85,075 0 0 83,608 67,212 67,212 67,212 67,212 0 0 161,345 134,893 140,288 145,900 151,736 0 0 96,186 78,150 78,978 79,799 80,620 0 0 Total 26,309,327 31,958,183 26,389,585 24,766,371 30,054,469 24,840,657 Footnotes: (1) (2) (3) See report for details. Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (2) + Col (2) x Exhibit 8 Col (3) (4) (5) (6) See report for details Years 2019-2021 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 2019-20 3.0% for years 2021-22 3.5% for years 2023-24 4.0% for years 2025 & Subs Col (5) + Col (5) x Exhibit 8 Col (3) APPENDIX B - HIGH FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 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 21 0.67% 0.67% 0.67% 0.67% 0.67% 0.67% Footnotes: (1) Exhibit 5.2 Row (10) APPENDIX B - HIGH FORFEITURE RATE OHIO RECLAMATION FORFEITURE FUND ANALYSIS SPRING 2019 Exhibit 5.2 Forfeiture Rate Calculation Evaluation Year Ending 6/30/XXXX 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 2017 2018 799 775 722 683 579 568 563 456 389 363 357 356 338 329 321 308 290 266 252 246 229 224 220 209 194 181 6 16 1 29 4 5 2 17 2 3 3 2 8 0 0 0 0 0 0 0 0 0 6 0 0 0 0.75% 2.06% 0.14% 4.25% 0.69% 0.88% 0.36% 3.73% 0.51% 0.83% 0.84% 0.56% 2.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.73% 0.00% 0.00% 0.00% Total 10,217 104 1.02% (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 0.05% (6) Kentucky forfeiture annual incremental rate (7) West Virginia forfeiture annual incremental rate 1.43% 1.02% (8) Weighted factor 0.86 (9) Weighted indicated forfeiture annual incremental rate 0.61% (10) Ohio selected forfeiture annual incremental rate 0.67% Footnotes: (1) (2) (3) (4a) (4b) (5) (6) (7) (8) (9) (10) Office of Surface Mining Reclamation and Enforcement annual evaluation reports of all mine sites in Ohio Client 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 Exhibit 5.3 Col (4) [Weighted average of rows (5) through (7)] / row (8) based on… OH = 60.0%, KY = 20.0% and WV = 20.0% Selected based on rows (5), (6), (7), and (9)