Our program with Arizona Public Service is proceeding well and is ahead of schedule. Their first two units of 175 megawatts each are already delivering power to the Phoenix area and con-struction has begun on the third unit of 225 megawatts planned for commercial operation next June, thus bringing the total to 575 megawatts out of the total of 800 megawatts contemplated by our contract. The Navajo Mine leasehold is approximately 23 miles long by a mile wide. It is an open-pit mine with stripping performed by a 40-yard dragline, the largest presently in existence. The mining rate is presently 1.6 million tons yearly and will increase to 2.6 million tons when generating plant capacity reaches 575 megawatts, which will make it the eighth largest coal mine in the Nation. Potential production under the APS contract could reach 3,600,000 tons annually and, if we are able to consummate our plans to provide energy to other utilities, could ultimately reach as much as 9,000,000 tons annually. The significance of this operation to our company lies both in the earnings that it is producing and is capable of producing as well as in the nature of those earnings. These earnings have the protection of very long-term contracts with escalation clauses and have the inherent stability and growth potential of the utilities they serve. COPPER Utah's interest in copper consists of our 25% equity in the Pima Mining Company, near Tucson. The expansion of its operating capacity mentioned earlier will make it feasible to mine a portion of the reserves of lower grade ore than those being mined presently and will extend the 16 estimated life of the mine from 1968 to 1975 and possibly longer, depending on the price of copper. Profits in the near-term will increase when reserves of richer ore are still available, but earnings after 1968 will drop below present levels as the company becomes entirely dependent on lower grade ores. FUTURE OUTLOOK Looking beyond 1963, we continue to feel that Utah Construction & Mining Co. has strength-ened its position and laid the foundation for increased earnings in the future. Progress is not made at an even pace in a project-type business such as ours, and much of our success in the future depends upon our ability to continue to conceive, plan, and prosecute successfully new ventures that will augment our existing stream of earnings. The additional investment made in Marcona, San Juan Carriers, Iron Springs, and Pima have made possible a greater reservoir from which to draw future profits. The lengthening out of the contracts for uranium and our domestic iron ore have underwritten future profits for a longer period of time. The rate of progress in our Navajo coal project has exceeded our expectations, and we hold high hopes for further earnings from this and other coal deposits. When and if some of our mineral deposits now under development are brought into operation, these could substantially improve our earnings from mining. We are fortunate that all of our mining properties are relatively low-cost producers and in an excellent position to sustain themselves under competitive circumstances. Except for Iron Springs we have abundant reserves that go far beyond any present sales commitments. 17