While we do not anticipate that Blackwater will make any contribution to our profits this year we do anticipate that it. will further expand our mining income in the years ahead. We have had under exploration in Northern Queensland an area 30 times the size of Blackwater and we are confident that we have in this area one of the truly significant discoveries of coking coal in this century. We have reached agreement in principle with the Government of Queensland regarding mining rights within an area estimated to contain deposits aggregating more than 1 billion tons of minable coking coal and we have already started negotiation for long-term sales agreements for deliveries into the Japanese steel market. The extent to which the deposits will be mined will depend of course upon the magnitude of the market development. We are shooting for a long-term contract with an initial volume of 4 million tons. The initial investment in this new coking coal project is expected to total approximately $100 million and will involve the construction of mining, township and port facilities, and 140 miles of mine to port railway, together with locomotives and rolling stock. Utah will hold an 85% interest in the project with Mitsubishi Trading the remaining 15%. A ready market for coking coal exists in Japan where the steel industry is expanding rapidly and where indigenous coal is scarce, expensive and of low quality. The Japanese have for years been bringing in high quality coking coal from West Virginia both for use as "medicine coal" to blend with other coals and to augment the total supply. Australia is a natural new source of supply for Japan because of its freight advantage. -13-