levels enjoyed in the past. It serves the world market which requires rapidly increasing quantities of imported iron ore whether it be the United States, the United Kingdom and Europe, or Japan. Marcona has acquired additional reserves adjacent to, but outside of, the Santa concession. This year the company has undertaken the $22,000,000 first step in a program designed to make marketable the huge reserves of ore having a high iron content but excessive sulphur, thereby eliminating the self-imposed marketing limitation dictated by the reserves of direct shipping ore available. The rate of earnings in the future will have its ceiling set by management's willingness and ability to invest funds to expand capacity and the market's ability to absorb the company's output. As a mine Marcona has many advantages an unusually low investment per ton of annual capacity, an ideal 12 months' working climate, close proximity to the sea coast, vast reserves of high quality ore economically mined and easily beneficiated. Nor are we now concerned with the fact that Marcona is located in South America. True, Peru is not the United States but neither is it Cuba. It has an enviable record in dealing with foreign investment, is dedicated to free enterprise, has dealt fairly with the mining industry in a way Minnesota might study. Before we were given our concession, Peru learned its lesson in trying futilely in the preceding 10 years to develop Marcona as a government enterprise before recognizing that greater benefits would accrue to Peru from placing the project in the hands of private enterprise. Even in our more conservative moments, we cannot help but be optimistic about Marcona's future. 14 Marcona, as well as other Utah-owned Western and Alaskan iron ore reserves, stands to benefit from any expansion of blast furnace facilities on the Pacific Coast, and this appears to be a certain development uncertain only as to time. Our existing real estate holdings are strategically located in areas of rapid growth, have already appreciated in value above cost, thereby providing a reservoir of profits that can be drawn out for some years to come. Our land holdings as well as our mineral assets provide a hedge against inflation in the future. Uranium, of course, is the big question mark in our picture. Between now and 1966 it will be a source of stable earnings but after the expiration of the present contracts the demand for uranium oxide is unknown. The government buying policy after that date has not been determined and the size of the peacetime demand that will then exist is speculative with expert opinion varying widely. From the facts now available to us, we believe these things. First, exploration for uranium is virtually stagnant and will remain so until some new incentive is provided. Therefore, the likelihood of new discoveries is remote. Second, a substantial part of the existing U. S. reserves will be consumed in filling contracts between now and 1966, and many of the present companies will perhaps be out of the picture by that time. Third, while technology and design of nuclear power plants is making rapid strides, the uranium suppliers remaining in 1966 will have excess capacity to meet the principal civilian demands until perhaps 1975. Fourth, any post-1966 government requirements of even modest proportions, when added to the civilian needs, could cause a shortage of 15