Energy Surcharge Policy

Dear Valued Customer:

As you know, the price of natural gas in the United States has recently increased to extremely high levels. This significant rise in energy costs has had a substantial impact on the production expenses at our plants.

To address this situation, we have updated our Energy Surcharge Program. An Energy Surcharge may appear as a separate line on your invoice, depending on the average price of natural gas.

Our primary kiln fuel source is natural gas, which is delivered to our plants via pipeline. These pipelines access gas from three distribution points, the most significant being in Sumas, Washington, but also from Opal. EP Minerals' Nevada and Oregon plants are indexed by the Sumas and Opal distribution points in a 70/30 percent blend. The price that EP Minerals pays for gas varies day to day based on supply and demand at these distribution points. We are always studying the gas market, and whenever justified, we purchase “forward gas contracts" to reduce price volatility. However, at this time, the natural gas situation is such that we will charge an Energy Surcharge when the average price exceeds $4.40/DTh in any given month.

NOTE: The trailing average price for November, 2017 was $2.76.

If the average natural gas price drops below $4.40/DTh for any given month, there will be no energy surcharge on shipments made in the following month. We will provide you with the specific plant information and the related natural gas pricing in the charts below and will update that information daily.

The Energy Surcharge will be applicable to all products and calculated based upon the plant where your products are produced and shipped.

NOTE: Nevada and Oregon are indexed by Sumas at 70% and Opal at 30%. We take that 70%/30% as the blended rate to calculate the energy surcharge for products that are manufactured at those plants.

Vale and Lovelock Plants:
Sumas & Opal Price blended average ($/MMBTU) (70/30%) ESC ($7/ST) ESC ($/MT) ESC (EUR/MT)
4.40 - 5.39 7 7.71 5.63
5.40 - 6.39 14 15.42 11.26
6.40 - 7.39 21 23.13 16.88
7.40 - 8.39 28 30.84 22.51
8.40 - 9.39 35 38.55 28.14
9.40 - 10.39 42 46.26 33.77
10.40 - 11.39 49 53.97 39.39
11.40 - 12.39 56 61.68 45.02
12.40 - 13.39 63 69.39 50.65
13.40 - 14.39 70 77.1 56.28
14.40 - 15.39 77 84.81 61.91
15.40 - 16.39 84 92.52 67.53
16.40 - 17.39 91 100.23 73.16
Clark Plant: (Product designations affected by the Energy Surcharge include FNs, MPs, MNs and LCS-3.)
Sumas & Opal Price blended average ($/MMBTU) (70/30%) ESC ($4/ST) ESC ($/MT) ESC (EUR/MT)
4.40 - 5.39 4 4.41 3.22
5.40 - 6.39 8 8.82 6.44
6.40 - 7.39 12 13.23 9.66
7.40 - 8.39 16 17.64 12.88
8.40 - 9.39 20 22.05 16.1
9.40 - 10.39 24 26.46 19.32
10.40 - 11.39 28 30.87 22.54
11.40 - 12.39 32 35.28 25.76
12.40 - 13.39 36 39.69 28.98
13.40 - 14.39 40 44.1 32.2
14.40 - 15.39 44 48.51 35.42
15.40 - 16.39 48 52.92 38.64
16.40 - 17.39 52 57.33 41.86

Daily Natural Gas Pricing for Sumas and Opal: (updated daily with pricing for each distribution center and the Energy Surcharge daily average pricing.)

December Daily Natural Gas Pricing
Date Sumas Opal ESC Average (70% Sumas, 30% Opal)
12/01/2017 2.58 2.70 2.62
12/02/2017 2.59 2.56 2.58
12/03/2017 2.59 2.56 2.58
12/04/2017 2.59 2.56 2.58
12/05/2017 2.79 2.71 2.77
12/06/2017 2.81 2.79 2.81
12/07/2017 2.87 2.81 2.85
12/08/2017 2.66 2.59 2.64
12/09/2017 2.58 2.49 2.55
12/10/2017 2.58 2.49 2.55
12/11/2017 2.58 2.49 2.55
12/12/2017 2.65 2.58 2.63
12/13/2017 2.75 2.64 2.72
12/14/2017 2.66 2.59 2.64
12/15/2017
12/16/2017
12/17/2017
12/18/2017
12/19/2017
12/20/2017
12/21/2017
12/22/2017
12/23/2017
12/24/2017
12/25/2017
12/26/2017
12/27/2017
12/28/2017
12/29/2017
12/30/2017
12/31/2017
Average 2.66 2.61 2.65
November Daily Natural Gas Pricing
Date Sumas Opal ESC Average (70% Sumas, 30% Opal)
11/01/2017 2.50 2.61 2.53
11/02/2017 2.56 2.61 2.57
11/03/2017 2.73 2.67 2.71
11/04/2017 2.77 2.63 2.73
11/05/2017 2.77 2.63 2.73
11/06/2017 2.77 2.63 2.73
11/07/2017 3.09 3.01 3.06
11/08/2017 2.96 2.92 2.95
11/09/2017 2.96 2.98 2.96
11/10/2017 2.99 3.02 3.00
11/11/2017 2.82 2.85 2.83
11/12/2017 2.82 2.85 2.83
11/13/2017 2.82 2.85 2.83
11/14/2017 2.85 2.90 2.86
11/15/2017 2.84 2.86 2.85
11/16/2017 2.81 2.86 2.83
11/17/2017 2.80 2.84 2.81
11/18/2017 2.75 2.79 2.76
11/19/2017 2.75 2.79 2.76
11/20/2017 2.75 2.79 2.76
11/21/2017 2.79 2.80 2.79
11/22/2017 2.62 2.73 2.66
11/23/2017 2.35 2.49 2.39
11/24/2017 2.35 2.49 2.39
11/25/2017 2.35 2.49 2.39
11/26/2017 2.35 2.49 2.39
11/27/2017 2.35 2.49 2.39
11/28/2017 2.64 2.62 2.63
11/29/2017 2.65 2.64 2.65
11/30/2017 2.76 2.75 2.76
Average 2.71 2.73 2.72

We at EP Minerals thank you for your business and support and look forward to continuing to work with you.

Al Kaczanowski
Vice President of Global Sales & Marketing
EP Minerals