Surfacing Weekly Update #24

1 October 2004

SURFACING CONTINUES ON SCHEDULE

As of October 1, we have surfaced over 635 of the 800 pass miles that we had projected to be surfaced in the 2004 production year, well over 75% of the total miles scheduled. As of now, it appears we will meet or exceed that schedule.

¨ The engineering management teams on both properties are currently evaluating whether or not we need to get one more contractor to complete all of the surfacing that we now plan to accomplish on both properties. That decision will be made by the end of the week. This will depend a lot on our ability to deliver ballast in front of the crews.

¨ We added a contract surfacing crew from Progress Rail earlier this month on the Kansas City sub and this crew will spend the remainder of the year on the Kansas City and River subs.

¨ We have also added a contract surfacing crew, Railworks, on the DM&E who will work between Verdi and Huron for the remainder of the year.

¨ The ARB surfacing crew continues to perform well on the Waseca sub of the DM&E and will assist west of Mankato when they complete their work east of Owatonna. We expect them to be west of Mankato by the end of September or first of October.

¨ As of October 1, 2004, over 200,000 tons of ballast has been distributed on both properties. This is nearly 90% of the 230,000 tons of ballast that we now require to complete this year’s projects. There is still a significant number of carloads of ballast that need to be moved and unloaded yet this 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.