the annual production of copper is approximately 125 million pounds completion of the expansion program enables pima to produce profitably copper from lower grade reserves which are sufficient to support the expanded level of operations for at least seventeen years construction the company's construction activities performed satisfactorily although gross income was below the level attained in the prior year significant gains in profits from dredging activities and australian operations were realized but these were offset by a decrease in revenue and profits from domestic and new zealand activities the backlog of unperformed con struction and dredging work at year's end amounted to 89,816,000 a decrease from the 122,311,000 at 1967 year end the current backlog consists of 88 per cent negotiated and cost protected work as compared to 85 per cent last year in march utah was awarded a contract for the construction of the river mountains tunnel in southern nevada this tunnel part of the southern nevada water project will bring water from lake mead to an area which includes las vegas valley basin the overall project includes intake facilities on saddle island in lake mead seven pumping plants a regulatory reservoir about 33 miles of pipeline and a four mile tunnel utah's contract covers the construction of the tunnel and outlet portal structure a tunnel boring machine is used to perform the excavation of the twelve foot diameter circular tunnel which will be concrete lined to ten feet in diameter the machine is guided through the mountain by a laser beam initially projected from the tunnel entrance other major construction activities now in progress include a dredging project at port hedland western australia for mt newman mining co pty an expansion of mining facilities at the el teniente copper mine in chile for sociedad minera el teniente s a a corporation owned by the government of chile and kennecott copper corporation and work on the manapouri tailrace tunnel and west arm powerhouse in new zealand additionally our domestic construction organization is per forming the expansion work at the navajo mine in late 1968 the construction division's australian branch was awarded a number of new contracts the largest of these was for the construction of forrestfield rail yard in perth for the western australian government railways the contract covers construction of the railroad site including 330,000 cubic yards of grading paving and drainage another contract