Surfacing Weekly Update #20

2 September 2004

SURFACING CONTINUES ON SCHEDULE

As of September 2nd, we have surfaced over 525 of the 800 pass miles that we had projected to be surfaced in the 2004 production year, over 60% of the total miles scheduled. As of now, it appears we will meet that schedule.

¨ There have been some minor breakdowns on the production tampers recently which have reduced some of the pass miles we had expected to be getting from a couple of crews, but these problems have been corrected. We now expect to have increased production from our surfacing equipment for the remainder of the year.

¨ We have added a contract surfacing crew from Progress Rail last week and they will continue to surface on the Kansas City sub in Iowa for the next four weeks. This crew will then either travel to the DM&E to assist with the RRIF surfacing for the remainder of the year or finish out the year on the IC&E.

¨ We will be adding another contracting surfacing crew, Railworks, to assist with surfacing behind their own tie gang between De Smet and Huron on the DM&E, plus to do additional surfacing as needed.

¨ The ARB surfacing crew continues to perform well on the Waseca sub of the DM&E and may assist west of Mankato when they complete their work east of Owatonna.

¨ As of September 2, 2004, nearly 170,000 tons of ballast has been distributed on both properties. This is nearly 70% of the 230,000 tons of ballast that we now require to complete this year’s projects. The amount of ballast that is still required for the two properties is nearly ¾ of what is required in a normal year.

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