RECOMMENDATIONS AND SUMMARY Recommendations This report on the Mexican mining industry recommends that Utah International give favorable consideration to organizing a Mexicanized company for the purpose of acquir-ing and developing mineral concessions in Mexico. On the basis of its study of the investment climate, mining regulations, and economic geology, the Corporate Planning Group of Utah International recommends that Utah estab-lish a development company in Mexico but bearing in mind the following factors: 1. Foreign companies are subject to Mexicanization regulations which means that the majority of the company's board of directors would have to be Mexican nationals. It is recommended, therefore, that Utah initiate discreet inquiry in Mexico City toward acquiring a suitable partner preferably, a long-established international bank or investment banking group. For example, the Banco Nacional de Comercio Exterior, S.A. (or a similar institution) might prove to be an acceptable partner. 2. The tax laws of Mexico as applicable to mining are not clearly stated nor easily interpreted. It is recommended, therefore, that Utah secure outside assistance in tax areas before going into Mexico. 3. It is further recommended that Utah, working with tax and legal counsel, prepare pro forma financial statements to determine the payout and return on investment for a theoretical porphyry type copper deposit that is, one roughly analogous to Pima or Island Copper. 4. Utah's principal objective should be to acquire a porphyry copper deposit of suf-ficient size to support an operation of not less than 30,000 tons per day of plus 0.5 percent copper ore. Accordingly, the budget and geologic staff should be scaled to provide adequate funds to discover and develop such a deposit within a period of three to four years. 5. Consideration should be given to entering into a joint venture arrangement similar to that of the Freeport-Penoles agreement on asbestos in the project currently being investigated by Compania Minera Pegaso. 6. Although Mexico is famous for silver and is one of the world's leading producers of this metal, we do not recommend that Utah enter into the exploitation of silver because of the labor-intensive nature of underground mining required to 3