blackwater mine this year's earnings from the blackwater strip mining opera tions located in the bowen basin of cen tral queensland australia were higher than the profits realized during the start up period in fiscal 1968 and made a significant contribution to the overall company earnings spot sales in addition to sales under long term contract were a factor contributing to the earnings im provement the company has a sales contract to ship 21.4 million long tons of coking coal over a 10-year period from blackwater for utilization by japanese steel and chemical companies the first coal deliveries began in january 1968 shipments through this fiscal year totaled 1.6 million tons and sales contract requirements will increase to 2.4 million tons in fiscal year 1970 and each year thereafter the maximum pro duction rate of this operation is about 3.0 million tons of washed coal annually the negotiation of spot sales in addition to contract tonnage requirements should allow full capacity production the reserves of strippable medium vola tile coking coal with maximum 7 ash content at blackwater are believed to be sufficient to allow capacity production for many years in the future top : included in the new blackwater townsite this modern elementary school constructed by state of queensland bottom : at the blackwater mine overburden is removed by a 30 cubic yard dragline the unco1 coal sfiam is loosened through blastincj and thi coal is loaded into 100 ton haul units by 3n 8 c crushing washing and blending the coal is delivered by railroad to the gladstone queensland port for shipment to japan goonyella mine utah has an 85 interest through utah development company a wholly owned subsidiary in a venture called central queensland coal associ ates the purpose of which is to develop a large coking coal area north of black water the remaining 15 interest is held by mitsubishi development pty ltd sub sidiary of a japanese trading company utah manages the activities of central queensland associates the participants entered into a new agreement replacing an agreement which had been in effect since 1964 with the state of queensland australia in january 1969 under which an authority to prospect for coal was granted by the state cover ing 1,333 square miles in central queens land under the agreement the companies may take to lease a maximum of 175 square miles comprised of up to four sep arate leases with the right to mine and export 150 million tons of coking coal additional quantities may be mined and exported up to a total of another 150 mil lion tons subject to not exceeding 30 of the recoverable reserves of coking coal in the area coal agreements providing for the de livery of a total of 50.5 million long tons of coking coal from the goonyella area at the rate of four million tons a year were executed in january 1969 with 14 japa nese steel gas and chemical companies the company's total investment in this project will approximate 95 million in cluding advances to the state of queens land to construct part of the harbor work and a railroad from mine to port 127 miles long the state will own and operate the railroad shipments of coking coal should begin in mid-1971 metallurgical coal produced at blackwater is for the reduction of iron ore to pig iron in the gas industries a similar product will be produced at the goonyella mine with shipments of coal anticipated by mid-1971 peak downs the peak downs area is some 35 miles south of the goonyella area and is within the authority to prospect granted under our agreement with the queensland government sales arrange ments for the delivery of 34.5 million tons of peak downs coal at the rate of 3 million tons annually will become effective after confirmation that the peak downs project is economically feasible coal specifica tions can be met japanese test results indicate suitably and mitsubishi obtains japanese government approval to partici pate with the company in the program it is anticipated that the conditions with re spect to the peak downs area sales will be satisfied in early 1970 an additional investment by the company of between 55 and 60 million will be required if the conditions of the sales contracts are met and the anticipated affirmative decision is made to proceed with the project the goonyella and peak downs coal sales agreements with escalation provisions covering the delivery of 85 million tons of coking coal from these two regions sub ject to the satisfying of the conditions for the peak downs sales provide for reve nues exceeding 1 billion and is the larg est group agreement ever executed for the sale of coking coal this is also the largest undertaking by the company in terms of capital investment required and the dollar revenue that would be realized from the sale of seven million tons of coal annually would far exceed that heretofore realized from any other project a continuing exploration and develop ment program in central queensland may well result in further mining operations in addition to those presently underway and planned