shaft operations ores from both areas are processed into yellow cake uranium oxide at the 1200 ton/day company-owned and constructed lucky me mill near riverton wyoming sales are exclusively to the u s atomic energy commission under a contract extending through 1966 calling in total for delivery of 13,086,444 lbs of yellow cake at the year-end 18 per cent had been delivered during 1960 a total of 1,792,259 lbs of yellow cake was produced at the lucky me mill and shipped to the atomic energy commission an increase of 112,719 lbs from the preceding year the source of this pro duction was company controlled properties lucky me — gas hills area shirley basin area outside mines total 1,526,070 lbs 162,464 103,725 1,792,259 lbs below is the armstrong pit section of the company-owned iron springs mini located near cedar city utah the iron ore in these properties is extracted exclusively by strip mining methods our sales contract with the a.e.c contemplates that varying percentages of our annual shipments will be milled from ore mined from outside properties in the early part of i960 some of this outside ore failed to materialize and we were permitted to supply the deficiency from lucky me properties thereby earning additional profit above our original expectations shirley basin underground mining operations were commenced in may i960 and reached a profitable position by the year-end mining costs here are higher than expected because of difficult ground and water conditions encountered ore reserves on company-controlled properties will easily provide for contractual sales commitments since there is no immediate incentive to seek additional reserves in the light of the uncertainty of the uranium industry after 1966 drilling was confined primarily to the development of known ore bodies and the conversion of reserves from the inferred to the proven category coal since late 1949 we have strip mined and sold coking coal from com pany-controlled ozark-philpott mine in arkansas to major steel producers fn may 1960 after 1 1 years of steady operation and the sale of 1.6 million tons of coal operations were discontinued due to exhaustion of reserves in addition to a satisfactory return on our investment valuable knowledge and experience in coal mining techniques were acquired culminating a project begun in 1954 a fuel agreement was signed in august 1960 between our company and arizona public service company calling for delivery of fuel in terms of energy units over a 35 to 50 year period commencing in 1963 it will involve our mining 1.5 to 3.5 million tons of coal annually this is the largest single contract in terms of gross revenue ever enter ed into by the company the coal will be secured by us from properties located on the navajo reservation near farmington new mexico and leased by us from the navajo tribe of indians the production in terms of energy units will be used by aps to operate a 350,000 kw steam generated power plant that may subsequently be expanded to 800,000 kw capacity extraction of the extensive sub-bituminous reserves will be by large scale stripping methods iron ore domestic iron mining in 1960 was conducted at the company's iron springs mine near cedar city utah where virtually the entire produc tion is committed to filling a 7 million ton sales contract with the columbia geneva division of u s steel extending into 1968 earnings from this source were approximately 17 per cent better than the previous year during which operations were suspended for three months due to a labor stoppage in the steel industry the 683,515 tons of ore mined and shipped this year compares with 598,128 tons for 1959 a 1.3 million beneficiation plant is being installed in order to improve quality control and to allow a more efficient utilization of our ore reserves pima mining company our participation in the domestic copper in dustry is through a 25 per cent interest in pima mining company which has operated a 3000 ton mill and open pit mine near tucson arizona since 1957 the company mines uranium ore from its rich shirley basin wyoming prop erties bv underground shaft methods this 3000-ton/day copper mill and concentrator of pima mining company near tucson arizona wax constructed by utah in 1956 our equity in pima is shared with union oil company and cyprus mines corporation