RUSSIAN RIVER PROJECT Another new project which has not yet received a great deal of publicity, but which may have long term significance for the Company, is located on the Russian River about 60 miles north of San Francisco. Here, we have options on a substantial acreage on both banks near the mouth of the river and have recently acquired a lease from the State to extract gravel from the river bed. We will dredge this sand and gravel from the river and load it on barges for transport to markets in the San Francisco Bay Area. Initially, we expect to produce at the rate of one million tons annually, ($1.5 to $1.6 million in gross revenue) but as population grows and the demand for concrete aggregate increases, and as local sources of sand and gravel become depleted, we can visualize the market for this material growing substantially in Cont'd. excess of this one million ton annual rate. We plan to get this operation underway within the next few months in order to fulfill a two year contract with the Transbay Constructor for 400, 000 tons annually of fill material for the BART Tube. A capital expenditure in the amount of $2. 6 million, (including $1. 35 million for leased equipment,) will be required for the barge mounted dragline, processing plant at Richmond and other equipment. Transport of the material by ocean-going tugs and barges will be handled by an independent barging firm under contract.