Surfacing Weekly Update #12

1 July 2004

CONTINUING ON SCHEDULE

As of the 1^st of July, we have surfaced over 270 of the 800 pass miles that we had projected to be surfaced in the 2004 production year, over 33% of the total. As of now, it appears we will meet that schedule.

¨ All of the 53 new Ballast cars that were leased for 2 years have arrived on line and are in service. The general consensus of the engineering forces is that these cars are an excellent investment and allow increased efficiency of the ballast unloading process.

¨ As of the first of July, over 110,000 tons of ballast has been delivered. This is nearly 50% of the 230,000 tons of ballast that we will now require to complete this year’s projects. From a historical perspective, the DM&E, in a normal year, would use a total of about 60,000 tons annually and the IC&E would use about 40,000 tons. This year’s requirements are over two times the normal requirements.

¨ We are working very closely with the LG Everist Quarry and New Ulm Quartzite Quarry to provide adequate supplies of ballast throughout this busy season.