that our Blackwater mine will prove to be a very satisfactory investment and we hold exploration permits over a large area in Queensland in which we feel we may prove up even larger reserves of even better quality. Perhaps most significant of all was the signing of the letter of intent last month by Utah and a group of six utilities under which Utah would provide coal to fuel two generating units with a total capacity of 1 1/2 million KW to be installed at our Navajo mine, with the power thus produced serving markets extending from Texas to Southern California. Under the letter of intent provision is made for a 35-year fuel agreement with the buyer having an option to extend for 15 years, to be executed by September this year. If consummated, Utah will increase its coal production at Navajo from the present normal annual level of 2 1/2 million tons to 8 1/2 million tons, making Navajo output the largest of any coal mine in the United States. The first generating unit is scheduled to be in operation in late '69 and the second in 1970. Even with this additional commitment, only about one-half of Utah's Navajo reserves would be dedicated to service the existing contracts, so the mine is still far from its potential capacity. While our price from our Navajo mine is to the best of my knowledge the lowest of any coal mine in the country, this is a large-scale low-cost operation, and we are satisfied with our profit. We consider this particularly attractive business for our shareholders, for it has all the advantages of earnings tied to growth utilities without the restrictions of being in the utility business. - 10 -