in mining the deposit, partial protection against future wage and tax increases in Peru, the substitution of pellets for direct shipping ore for Peru's Chimbote Steel Mill, and the principles under which we will operate after November 1982 when the present agreement expires. The new agreement appears to benefit both parties and allows us to proceed with greater confidence. Pima The second program for expanding existing facilities is being undertaken by Pima Mining Company, which is enlarging its mining and milling capacity from 6,000 tons per day to 18,000 tons per day, at an estimated capital cost of $20.50 million, of which $14 million will be borrowed under a term loan from commercial banks and the balance provided from Pima's cash flow. By gearing up its capacity to the 18,000 ton figure, Pima's costs will be lowered to a point enabling it to mine profitably the lower grade ore reserves that lie in its northeast ore body. The effect is to double the estimated life of the mine and to increase four-fold its estimated future profitability. Annual profits, while varying from year to year, will on the average double. Mount Goldsworthy The third on-going expansion program is the Mount Goldsworthy project in Western Australia where contracts have been entered into for the sale of l6 1/2 million tons of iron ore to Japan with the initial shipments commencing in late 1966 and running through April 30, 1973. During the last six years of the contracts shipments will be at the rate of 2 1/2 million tons annually. This program will cost approximately $52 million and each of the three partners is responsible for providing its third of the financing. Consideration is being given to selling a 20% equity interest in the venture to the Australian public. Sales and shipping 8 are being handled by our affiliated company, Cia San Juan, and Utah Construction & Mining Co. will perform the construction for Mount Goldsworthy just as it is also doing the construction for the Marcona and Pima expansions. Potential Expansion Turning now to my second category, Utah has offers outstanding and is in negotiation with potential buyers on sales contracts that could lead to the expansion of three additional mineral deposits under our control. None of these is a certainty, but each is a promising prospect now or for the future. Navajo The first and most important of these is the expansion of our coal operations at our Navajo Mine in New Mexico. In 1964 fifteen public utility companies in nine western states formed Western Energy Supply and Transmission Associates, or WEST for short. This organization has announced a 20-year program for the long-range joint planning of some 36 million KW of new generating capacity and extra-high-voltage transmission systems interconnecting its members. For my purposes here today I am going to confine my comments to information published by one or more of the participating utilities, rather than risk embarrassing these companies or ourselves while we are in the process of negotiation. Initially three major projects are under study by WEST or certain of its members: the first is the expansion of generating facilities at our mine in the Four Corners area; the second is the proposed new generating facilities near Davis Dam on the Colorado River; and the third is the proposed new generating facilities on the Kaiparowits Plateau in Utah. Southern California Edison, Arizona Public Service Company, and San Diego Gas & Electric have applied for water rights in connection with the Kaiparowits project. Edison alone has asked for water 9