(6) "Assigned" reserves represent recoverable and strippable tonnage which can be produced through existing facilities or under existing contracts. "Unassigned" reserves represent tonnages requiring new facilities before commencing production from these reserves. (7) Assured reserves for the Norwich Park area. (8) Utah estimates that it has additional coal deposits in its Queensland lease areas approximating 2 billion recoverable tonnes of which about 70% would require mining by underground mining methods. The degree to which these coal deposits will be commercially mineable will depend upon the results of feasibility studies which have not been completed. Authorization to mine and export the major portion of these additional coal deposits must be obtained from the Queensland government. There is no assurance that the additional export authorizations will be acquired, but see the second paragraph under "Coking CoalGoonyella, Peak Downs and Saraji MinesAustralia." Coking Coal Blackwater MineAustralia UDC holds three Special Coal Mining Leases covering a total of 51,763 acres near Blackwater, Queensland, Australia. The area covered by these leases, which were obtained from the State of Queensland for a period of 21 years and are renewable for an unspecified number of additional 21-year terms, contained assured reserves of approximately 44.5 million tonnes of strippable, medium volatile coking coal with an 8.3% ash content at October 31, 1975. Under the terms of such leases, UDC has authorization from the State of Queensland to export 101.6 million tonnes of coking coal. The Blackwater mine currently has the capacity to produce 4 million tonnes annually. With respect to additional coal deposits on the leased areas, see Note (8) to the Summary of Estimated Recoverable Coal Reserves. UDC has contracted to deliver to Japanese steel and chemical companies a total of 28.6 million tonnes of coking coal from Blackwater over a ten-year period ending in December 1977. Under the terms of the contract, approximately 3.6 million tonnes are currently required to be delivered annually. A market for the strippable assured reserves not committed for delivery to Japanese buyers and the additional coal deposits has not yet been actively sought by UDC although some sales have been made in Europe. The extent, if any, to which such reserves and deposits will be mined depends upon future market developments. Total coking coal shipments from the Blackwater mine for the five fiscal years ended October 31, 1975 and the nine months ended July 31, 1976 were as follows: Tonnes Shipped Europe and Fiscal Year Japan Other Australia Total 1971 ................................................................. 2,706,924 22,030 88,747 2,817,701 1972 ................................................................. 2,976,528 47,671 31,634 3,055,833 1973 ................................................................. 3,049,161 224,285 75,377 3,348,823 1974................................................................. 3,056,332 202,548 243,741 3,502,621 1975 ................................................................. 2,887,264 135,892 111,147 3,134,303 1976 (nine months)........................................ 2,330,688 15,611 2,346,299 For further discussion of coking coal shipments see the last two paragraphs under "Goonyella, Peak Downs and Saraji MinesAustralia" presented herein. The Blackwater mine is required to make available at cost to the state-operated electrical utility near Gladstone (about 205 miles from the Blackwater mine) the steam coal which is encountered in the mining of coking coal. During the nine months ended July 31, 1976, approximately 358,000 tonnes of steam coal were delivered to the utility. 46 Goonyella, Peak Downs and Saraji MinesAustralia 47 UDC has an 85% interest in CQCA which is developing a large coking coal area north of Blackwater in Queensland, Australia. The remaining 15% interest is held by Mitsubishi Development Pty. Ltd. ("MDPL"), a subsidiary of a major Japanese trading company. If the agreement in principle with AMPS and UMAL described in "Business of UtahForeign Operations" is consummated, UDC's interest will be reduced to 76.25%, MDPL's interest will be reduced to 12% and AMPS and UMAL will own 7.75% and 4%, respectively. UDC will continue to manage the activities of CQCA. Under a 1968 agreement with the State of Queensland, the participants were granted an Authority to Prospect for coal over an area of approximately 1,300 square miles. As provided in the Authority to Prospect, 175 square miles of this area have been selected by the participants to be the subject of four Special Coal Mining Leases with the remaining area returned to the State. These leases are granted for terms initially expiring on December 31, 2010, renewable for two additional 21-year periods. CQCA is presently authorized to mine and export from the lease areas 304.8 million tonnes of coking coal. However in June 1976, as an incentive to the development of the Norwich Park mine, the State of Queensland Cabinet agreed to raise the limitation on exports of coking coal from such lease areas to 457.2 million tonnes, provided no more than 20.3 million tonnes mined from depths less than 200 feet could be exported in any one year. The State has also agreed that an additional 101.6 million tonnes of coal could be exported provided it is mined from depths greater than 200 feet. Even greater quantities will be permitted to be exported if Australian ownership of CQCA is increased at some future date beyond the level achieved as a result of the proposed agreement with AMPS and UMAL. At October 31, 1975, the existence of recoverable assured reserves of strippable medium and low volatile coking coal estimated at 238.2 million tonnes had been established in the leasehold area, of which 60.5 million tonnes are in the Goonyella mine area, 104.3 million tonnes are in the Peak Downs mine area and 73.4 million tonnes are in the Saraji mine area. In addition to these assigned reserves, as of October 31, 1975, the Norwich Park area assured reserves were estimated at 80 million tonnes of strippable low volatile coking coal, which are unassigned. Exploration and feasibility studies of the remaining deposits within the CQCA leases are continuing. With respect to additional coal deposits on the leased areas, see Note (8) to the Summary of Estimated Recoverable Coal Reserves. The Goonyella and Peak Downs mines commenced shipping coal in October 1971 and July 1972, respectively. In 1972, CQCA began development of the Saraji mine located 15 miles south of the Peak Downs mine. Stripping activities began in July 1974 and the first shipment was made in December 1974. The Saraji facilities have been designed in part to accommodate a potential mine at Norwich Park situated some 30 miles south of the Saraji reserves. The agreement with the State to increase CQCA's export entitlement and the program to expand Australian participation in the joint venture represent significant steps toward the development of the Norwich Park mine. A final decision to proceed with the project awaits conclusion of a rail freight rate agreement with the State of Queensland and adoption of necessary amendments to the CQCA Act by the Queensland Parliament. The State of Queensland has constructed a mine-to-port railroad for the transportation of coal from the Goonyella, Peak Downs and Saraji mines to the port at Hay Point. The proximity of the three mines makes it possible for common use to be made of the railroad and the port, which were designed and constructed for this joint service. Norwich Park, if developed, will be serviced by the same facilities. The participants in CQCA sell coal from the Goonyella and Peak Downs mines to thirteen Japanese steel, gas and chemical companies pursuant to agreements executed in 1969. These agreements provide for delivery of 51.3 million tonnes over a thirteen-year period from the Goonyella mine at the rate of 2.54 million the first year and 4.06 million annually thereafter and for delivery of a total of 35.1 million tonnes over a twelve-year period from the Peak Downs mine at the rate of 1.52 million the first year and 3.05 million annually thereafter. In 1972, additional long-term sales agreements were entered into with Japanese and European buyers for coking coal deliveries starting in 1974. The agreements with the Japanese provide for the sale of 26.4 million tonnes of coking coal (with an option to purchase an additional 2.6 million tonnes subject to agreement as to price) over a ten-year period. The European contracts call for the delivery of 16.3 million