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r"~ . . ~o oo;...j1 rl (.' ("" ~: Schedules Before I close, I'd like to describe some of the steps that we plan to take in the next few months. As previously mentioned, we will be undertaking a marketing study to evaluate the market for commodities that might be shipped in AQUATRAIN. The market research should be completed by mid-year. Concurrently, we are being assisted by the International Engineering Company, a Division of Morrison Knudsen Inc. and Ernst & Whinney Company, certified public accountants, to complete engineering designs, cost estimates, and financial analyses on the AQUATRAIN I System configured as shown on the map attached to this statement. That configuration involves a mainline trunk system from Gillette. wyoming, to Southern California with laterals off of that trunk to source and delivery locations. That work will become part of a Preliminary Feasibility Study to be completed by year-end. In the near future, we will seek conditional transportation contracts for use of the AQUATRAIN I System. These conditional contracts will be the basis for securing the development costs of the project, contingent upon Aquatrain, Inc. meeting certain performance obligations. Those conditional contracts are expected to be in place later this year and will form the basis for determining the project configuration. A decision on the amount of saline water that can be economically handled by the Project will also be made at the same time. Based on those conditional contracts and resultant project configuration, we will seek the approvals of Federal and State governments and the necessary development capital for the Project. AQUATRAIN II Briefly, I should mention to you the status of AQUATRAIN II. We continue to be interested in pursuing AQUATRAIN II; however, we have agreed with the Department of the Interior that we will pursue that project only if the affected States so petition the Department for a joint venture with us. For example, we have a meeting in Santa Fe on May 3 to review AQUATRAIN II with the Governor of New Mexico's Subcabinet. We also understand that coal producers in Wyoming and utilities in Texas are aSking their governments for a similar petition. As the AQUATRAIN II project moves forward, we will continue consulting with affected States. Conclusion In summary, I would like to state that we purchased Aquatrain, Inc., primarily in the belief that it is the key to Western coal reaching markets outside its region and overseas, and particularly as a method to economically transport ChemCoal. We are seeking ways to integrate the saline water function in the -4-