In 1963 the earnings of Marcona and Cia. San Juan were approximately 50% higher than they were in 1959. For 1964, even with start-up costs and plant interruptions to increase production and provide better quality control, the profit outlook for these two companies for the calendar year 1964 appears somewhat better than in 1963, although for Utah, with its October 31 closing, the results will be about the same as in 1963. We anticipate more favorable results in 1965 because the additional pellet sales will improve the product mix. Our second source of iron ore earnings is from our Iron Springs Mine in Utah. This mine is isolated from the factors that affect the international iron ore markets and its output is sold under long-term contract to United States Steel. This contract was renegotiated last year and was extended from 1968 to 1975. The new contract gives the buyer greater flexibility in his purchases based on his operating rate. The special advantages of this rearrangement to Utah are greater total sales and profits over a longer period of years and the utilization of its remaining reserves in the Cedar City District. There are two other important iron ore deposits in which Utah owns an interest. The largest of these is the Mount Goldsworthy deposit in Western Australia, in which Utah has one-third interest in association with Cyprus Mines Corporation and Consolidated Gold Fields. This deposit contains in excess of 60 million tons of high grade direct shipping lump ore, and it is not without competition from other large iron ore deposits in the area in seeking a place in the Japanese market. To bring these mines into operation will require considerable capital for railroad construction and port improvement. We are prepared to go forward when suitable contracts are in hand. The Japanese 10-mill Committee is considering tenders from all the sources today. The second iron ore deposit, which we call the "Dayton" deposit, is located near Carson City, Nevada, and is shared by Utah and Cyprus Mines Corporation. This property has been fully engineered and developed, but the installation of facilities will depend upon the negotiation of firms sales contracts. The ore requires beneficiation and would logically either move in the international market or provide feed for a steel mill on the West Coast, a project that has been a long time coming but seems inevitable for some time in the 6 future. We have offered pellets to be produced from Dayton ore to the Japanese mills but have not as yet been able to consummate a contract on terms and conditions satisfactory to both parties. Dayton suffers from the disadvantage of any mine attempting to compete in the international ore market that is remote from tidewater, for ore moves thousands of miles by water more cheaply than hundreds of miles by rail. Uranium In our uranium operations, Utah is participating in the Atomic Energy Commission's "stretch-out" program, and under an amendment to our contract uranium deliveries formerly scheduled for the four year period from 1963 through 1966 have been spread out over a six year period ending with 1968. As the consideration for this change the AEC has agreed to purchase additional tonnages of uranium oxide in the years 1969 and 1970, at an acceptable formula price. The postponement of a part of the contract deliveries will curtail our annual income from this source, not only because the volume of sales is cut by a third but because of the higher unit cost of milling the reduced quantities of ore which are fed to process. Because of the timing of deliveries the impact on our profits in 1963 was greater than it will be in 1964. But this is another case in which we have increased our backlog through significantly increasing our total sales and profits now projected over another 6 years through 1970 instead of over another two years through 1966. When a commercial market for uranium develops we shall be ready for it. After deliveries to the AEC are completed in 1970 we shall have left more reserves than were used up in the course of our entire operation under the contractenough to support production at the present rate for at least 20 yearsand we shall own one of the most efficient and lowest-cost processing mills in the country. Coal In my last address to you I referred to the sub-bituminous coal reserves of almost 600 million tons located in our leasehold on the Navajo Reservation in New Mexico. Late in 1961 we concluded a long-term requirements contract with Arizona Public Service Company, which serves one of the fastest growing areas of the great Southwest, to deliver Navajo coal to fuel a mine mouth power plant. The first two generating 7