Surfacing Weekly Update #10

17 June 2004

CONTINUING ON SCHEDULE

As of the 17^th of June, we have surfaced over 225 of the 800 pass miles that we had projected to be surfaced in the 2004 production year. 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.

¨ The Brandt truck, operated by Ernie Lehmkuhl has been very instrumental in the ballast unloading operation. This truck can pull up to 20 cars of ballast or other material for MOW crews to unload saving on work train requirements and increasing the flexibility of the MOW forces.

¨ Surfacing continues at a very strong pace with over 25 miles completed again last week and averaging over 20 miles per week. We have eight surfacing crews operating on the two properties this year; seven are our own employees and one a contractor, ARB out of Northwood, Iowa. The surfacing crew foremen are Mike Cherne at Chillicothe, Jason Teynor at Marquette, Remington Hill at Mason City, Kent Maxon at Waseca, Earl Ruckdaschel at Huron, Jared Hook at Philip and Bob Tech at Belle Fourche. The crews are all doing an excellent job!

¨ As of the 16^th of June, over 95,000 tons (over 1200 car loads) of ballast has been delivered. This is nearly 50% of the 200,000 tons of ballast originally scheduled to be delivered this year. Because we have added the siding projects to our program, we expect to require an additional 30,000 tons of ballast for our surfacing program, so from this point forward, we will be using the 230,000 ton number as the “scheduled delivery requirement” for the 2004 production year.

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