letter to stockholders 1969 will be remembered as a landmark year in the history of the company it wit nessed • a fundamental change in the nature of the company's business • earnings at record levels for the fifth successive year • dividends increased for the nineteenth consecutive year and the stock split three for one • the largest addition to the mineral sales backlog ever recorded in a single year • commitments to capital spending for expansion of mining facilities on a scale without precedent for us • the listing of our shares and eurodollar debentures on the new york stock ex change a year of transition substantially all of the company's heavy construction assets and business and the associated good will were sold to fluor utah engineers & con structors inc a subsidiary of fluor cor poration effective april 30 1969 con struction has been our corporate heritage for it was to perform construction work that the company was formed in 1900 but the past quarter century has pro duced a new concept of the types of op portunities which offer greatest potential for the future in the face of progressive inflation the risks and limited rewards of construction a project-type service in dustry became less attractive than the more rewarding and substantial profits to be realized from equities and operations in the field of natural resources including both mining and land development in re cent years your company's interests in these areas increased until construction while holding its own in absolute terms became relatively less important in our overall operations with the urgent need for capital funds to finance our mining expansion it was logical to dispose of our construction divi sion to a firm of outstanding competence and stature where the careers of our valued long-time construction employees would be well served by new and broader opportunities proceeds of the sale of 2 10,752,610 are committed to our mining growth and expansion program it was this transaction which gave rise to the extraor dinary profit item of 1,844,291 reflected in our financial statements the sale marked a fundamental change in the nature and future direction of utah con struction & mining co record earnings excluding the extraor dinary item net income amounted to 24,878,448 or 1 93 a share an increase of 25 over the 19,943,580 or 1.55 a share reported last year this marks the fifth successive year in which earnings have set new records and the sixth con secutive year in which earnings have in creased the 1969 result is more than double the performance of five years ago including the extraordinary item of 1,844,291 resulting from the profit on the sale of the heavy construction assets net income for the year was 26,722,739 or 2.07 a share this amount is approxi mately equal to the total income recorded by the company in its first fifty years all of the company's principal activities were profitable last year with income from mining and land development reporting substantial increases while construction declined largely because of the transfer of the major part of these activities in mid year the company's remaining construc tion activities — dredging and commercial construction performed satisfactorily profit from land activities was the second highest in our history despite a marked decline in uranium profits resulting from lower prices on sales under our contract with the atomic energy commission min ing income rose sharply paced by record performances in coal copper and iron ore increased dividends dividends were in creased for the 19th consecutive year in january 1969 a dividend of 35c was paid on the company shares and thereafter the stock was split three-for-one subse quently regular quarterly dividends of 13p a share on the increased number of shares outstanding were paid in april july and october plus an extra of 52 in october bringing the total for the year on the ad justed number of shares outstanding to 55 7 compared to 48.3p in the prior year goonyella project our largest under taking in january contracts were signed with japanese steel and chemical com panies calling for the delivery of 50.5 mil lion long tons of coking coal from the goonyella deposits in queensland start ing at 2.5 million tons in the first year and increasing to 4.0 million tons thereafter in addition we entered into a conditional agreement to deliver an additional 34.5 million long tons from the peak downs region at the rate of 3 million tons an nually these undertakings will be per formed by central queensland coal associates in which utah holds an 85 interest the approximate dollar volume of our share of the goonyella contract is over 500 million and that of peak downs would be over 300 million although the latter has not been included in our min eral backlog figures because of its con ditional nature we estimate that utah's share of the investment for goonyella will approximate 95 million and that the peak downs project would require another 55 60 million investment a second large new mine - island cop per in june this year approval was given to proceed with the island copper mining project on vancouver island in british columbia this program calls for the con struction of a mill having a daily capacity of 33,000 tons and the development of an open pit copper mine the initial capital investment to bring these facilities into operation is estimated at approximately 59 million and the project is scheduled for completion in early 1972 during the year we contracted to sell approximately 60 of the concentrates to mitsui mining & smelting co ltd of japan over a ten year period after the close of the year we entered into a second agreement with mitsubishi shoji kaisha ltd for another sale of approximately 30 of our concen trate production over a five-year period the price under both agreements will be based upon copper quotations over the london metal exchange prevailing at the time of delivery after deducting for charges normal in the industry for smelt ing and refining expansion except for domestic iron ore where our reserves are limited every min ing activity in which we are engaged is either in the process of expanding or com mitted to new expansion uranium in uranium we are doubling our capacity by the development of an open pit mining operation and the construction of a mill at shirley basin wyoming the project is scheduled for completion in early 1971 and is estimated to cost 20 million of which 5.5 million had been expended at year end steam coal at our navajo steam coal mine in new mexico capacity is being ex panded to fuel two additional 755,000 kilo watt generating units the first of which was completed by the utility companies in mid-year but is not yet operating at full capacity because of start-up difficulties the second unit is scheduled for comple tion in mid-1970 coal shipments in creased from 2.3 million tons in 1968 to 3.1 million tons in 1969 and are expected to be near the level of 8v2 million tons marriners eccles chairman of the board when both new units are completed and operating to load capacity as of october 31 1969 the major part of the company's investment required to expand the navajo operations to the higher output had been made coking coal the blackwater coking coal mine in queensland is also expanding its capacity and by mid-1970 will be capable of sustaining production of approximately 3 million tons annually production during the current year was 1.6 million tons of which 1.4 million tons were delivered against the long-term contract and the bal ance was sold on a spot basis construction of the goonyella facilities was also commenced during the year the total program involves building a townsite opening the mine and construction of a railroad and harbor and coal shipments are scheduled to begin in mid-1971 iron ore marcona is also expanding both its mining and shipping capabilities shipments in 1969 were 9,589,000 tons compared to 8,346,000 tons the preceding year and should approximate 10,000,000 tons next year two new 130,000 ton ore oii carriers were added to the shipping fleet in november 1969 after having satis factorily completed the test trials and a third vessel of similar design and tonnage is expected to be delivered in may 1970 the mt goldsworthy iron ore operation in western australia in which we hold a one-third interest also increased its de liveries during the year shipping 4.8 mil lion tons compared to 4.2 million tons in the previous year on november 21 1969 an agreement was reached to deliver to japanese steel companies an additional 52.6 million tons making a total of 74.4 million tons committed under agreements for sales extending to march 31 1980 iron ore to cover these commitments will be mined from the present mine and new mines to be developed some 50 miles away at shay gap and kennedy gap mining rail and port facilities will be expanded to a production rate of 6 million tons during the next year and increasing to a rate of 8 million tons during 1973 copper pima mining co in which we have a 25 interest had a record year in earnings and in shipments the pima man agement is considering an increase in its milling capacity from 38,000 tons daily to 53,000 tons daily in order to treat lower grade ores presently being mined and stockpiled as described above the island copper mine will give us an important new stake in the copper industry financing the financing for the expand ing operations and new ventures has been arranged through the sale of 25 million 5 convertible subordinated debentures in november 1967 and 30 million 5 convertible subordinated guaranteed de bentures through utah international finance corp a wholly owned subsidiary in september 1968 in addition commit ments for eurodollar and australian bank loans totaling 60 million have been ob tained with the exception of the funds that may be required for the peak downs coking coal project in queensland australia cash generated from current operations should provide the balance of the funds needed listing on april 2 1969 the common stock of your company and the guaranteed sub ordinated convertible debentures sold on the eurodollar market by our overseas financing subsidiary were listed for trad ing on the new york stock exchange the price of the stock initially traded on the exchange at 38 v2 has shown gratifying strength in the face of generally declining share prices and we believe that listing on the big board affords better market ability for our shareholders management promotions during the year edwin c demoss manager of the mining division was elected a senior vice presi dent charles k mcarthur who is in charge of the island copper operation on vancouver island hollis g peacock manager of the company's mineral ex ploration and development program in all areas except australasia and keith g wallace who is responsible for mining interests and activities in australia were elected vice presidents in recognition of the enlarged scope and increasing impor tance of their duties and responsibilities looking ahead the continued outstand ing results of the company's operations and its bright prospects for the future are to a major extent the products of the talents energies and dedication of our staff to them and to our shareholders for their confidence and support we ex press our deepest appreciation over the past two decades we have forged a different company-certainly dif ferent than it was and indeed relatively unique compared with other companies its principal commitment now is to natural resources with mining representing the major source of earnings and assets in furtherance of this objective we have appropriated some 227 million for the development or expansion of company mining projects of which 44 million had been expended at year end the earning power of these mining assets is under written in part by our backlog of mineral sales which at year end was approxi mately 2 billion excluding marcona and pima with 80 of it under long-term contracts including cost escalation pro visions we consider the company soundly con ceived operating efficiently and capable of continued growth we face the future with confidence yours sincerely marriner s eccles chairman of the board e.w littlefield president and general manager