extended by virtue of these additional important iron ore reserves. The Pima Mining Company currently mines and mills about 3,800 tons of copper ore daily, and its Board of Directors has approved in principle a program that will about double this rate in order to mine the additional low grade copper ore reserves in Pima's northeast ore body. The Pima board has appropriated the funds necessary to acquire the additional equipment for mining and stripping, which is the necessary first step in this program, and engineering of the expanded mill capacity is nearing completion. This expansion program will cause a modest increase in the current level of annual earnings that Pima enjoys and more importantly it will extend the life of the company by 10 and possibly 20 years through utilizing these lower grade ores after the higher grade ores on which the company is presently operating are exhausted. The Marcona Mining Company, which has been selling about 4 million tons annually, has a continuing program of expansion in its Peruvian iron ore operations. By the end of this year the first phase involving the expenditure of 22 million dollars will be completed and will provide the company with a new dock, a downhill conveyor system, and beneficiation facilities that make it possible to treat the hundreds of millions of tons of primary ore that underlie the more limited quantity of direct shipping ore upon which the company has depended to date. Construction has also been started on the second phase of Marcona's expansion program which will require the expenditure of an additional 20 million dollars for the installation of pelletizing facilities, which should be completed by the end of 1962. Marcona will then have the productive capacity which will allow it to increase its sales program to 5 million tons or more, and even now the Board of Directors is giving consideration to the possibility of a third phase involving 12 an expenditure of approximately 10 million dollars which would make possible sales in excess of 6 million tons annually. Consider if you will Marcona's prospects. It has in hand abundant reserves of high grade iron ore susceptible to simple beneficiation resulting in a premium product. The property near tidewater is blessed by an ideal 12 months' operating season and is uniquely situated to serve the principal steel producing centers of the world. The market for its output is growing rapidly. The Japanese plan to treble their steel capacity, the Europeans to double theirs, and the United States finds that it must depend increasingly on imported iron ores to replace the higher grade domestic ore bodies that are becoming exhausted. Except for whatever political risks may be involved, the future of Marcona appears very bright indeed. Enlargement of Shipping Fleet Marcona iron ore must move to market by ships, and it is important to expand our shipping capabilities hand in hand with our sales program. This is being done and, as a matter of fact, orders have been placed for new ships and are coupled with long-term sales contracts to Japanese mills that assure utilization of those ships. San Juan Carriers is purchasing two 67,500-ton combination oil and ore carriers, the first of which will be delivered in September 1962 and the second in December 1962. The company also holds an option on a third sister-ship. The purchase of these vessels is largely financed through loans from the Japanese, and the repayment is geared to the delivery of ore under the iron ore sales contracts. Changes in Dredging Operations We have also taken some important steps that place our dredging operations on a sounder basis. As I previously indicated to you, our 13