units, with an aggregate capacity of 350,000 kilowatts, went into operation in early 1963. They will require 1.5 million tons of coal annually. A third and larger generating unit, having a capacity of 225,000 kilowatts and requiring 1 million tons of coal per year, went into operation in July 1964a year earlier than first anticipated, bringing the total plant capacity to 575,000 kilowatts. The combined requirements of these three units are 2.5 million tons annually. The term of the contract is for 35 years, with options for an additional 15 years, and the price is subject to esca-lation. The contract contemplates a fourth unit of 225,000 kilowatts, but that option has not yet been exercised. The first two generating units went "on stream" several months after the beginning of our 1963 fiscal year, and the third unit came into commercial operation when our current fiscal year was two-thirds gone. It will be 1965, therefore, before we shall for the first time deliver a full year's fuel requirement of 2.5 million tons to the Four Corners Power Plant, and the effect on our earnings will be greater than in either this year or last. This development is one of the most significant in Utah's recent history. Studies made by us and by others indicate that in the years before nuclear fuel becomes fully competitive in the West, coal will be a prime source of energy for the immense growth requirements of the electric utilities. Under our present contract only about a third of our Navajo coal reserves are committed, directly or provisionally, to the requirements of APS. Navajo is already the eighth largest coal mine in the country, and to the extent that other utilities are attracted to this fuel source we shall expect to see further improvement in our earnings for many years into the future. Other substantial coal reserves which Utah can marshal into this program are located near Craig, Colorado, and in southern Utah. Based on our experience to date, there seems to be an optimistic future for our steam coal reserves. I referred to "steam coal" to distinguish our interest in metallurgical coal with which we have already had successful experience. We have now located an extensive bed of coking coal in Australia. Its commercial quality has been confirmed and we are now making a more accurate determination of the extent of its reserves. Geography makes it a logical and economic source of supply for the Japanese steel market, and if 8 suitable firm contracts can be negotiated it will become another new source of earnings for Utah. Copper Copper is also of interest to Utah. Our one-fourth ownership of Pima Mining Company, which operates copper mining properties near Tucson, Arizona, has produced sizeable profits in the past. With last year's expansion of its crushing and concentrating facilities, Pima is able to utilize lower grade ores, and the life of its mine has been extended to at least 1975. Pima's earnings in 1963 were higher than in 1962, and with its new facilities and continued price stability the outlook should be favorable. We think Utah's overall mining picture looks very good, indeed. I would emphasize that existing contracts provide a firm basis for long-term future earnings. Recognizing the need to replace mineral reserves which are being depleted, we are aggressively seeking new reserves and new minerals in which we see opportunities for profitable expansion. Conclusion In the time that we have had together I have tried to tell you what Utah Construction & Mining Co. does, what its problems are and how we are dealing with them, what its opportunities are and how we propose to take advantage of them andso far as business prudence permitswhat we think some of its prospects are. Earnings are the vital measure of performance, and in 1964 as in 1963 we shall not be able to realize our profit objectives for the reasons I have given you. However, those of us who direct the affairs of Utah Construction & Mining Co. are heavily interested financially in the company and have a very strong stake in its success. As a matter of management philosophy we are deliberately building as best we can a backlog of earnings for the futurenot so much for this year or next yearbut for the long-term future. I have used deliberately the term "backlog of earnings" and not "backlog of work," and to us the distinction is clear and meaningful. Almost without exception every security analyst with whom I have talked in recent years has pressed me to disclose our backlog of construction work, but no one has ever put to me the more significant question about the size of our backlog of undelivered contracts for ore or coal where existing profit 9