The following report presents the technical progress achieved during the first quarter. The completion of this contract entails engineering evaluation in conjunction with basic laboratory research to determine overall process improvements, associated cost savings and the effect of these savings on product price as they relate to the UCC Physical Beneficiation Process for coal-water slurry manufacture. The technical effort for this quarter has concentrated on two basic areas of concern as they relate to the above-mentioned process. First, an engineering evaluation was carried out to examine the critical areas of improvement in the existing UCC Research Corporation single-stage cleaning circuit (coarse coal, heavy media washer). When the plant runs for low ash coal product, at the specific gravity near 1.30, it was found that substantial product contamination resulted from magnetite carry over in the clean coal product. The reduction of the magnetite contamination would entail the application of more spray water to the clean coal drain and rinse screen, and the refinement of the existing dilute media handling system, to accept the increased quality of rinse water. It was also determined that a basic mechanical overhaul is needed on the washbox to ensure dependable operation during the future production of low-ash coal. The various cost elements involved with this renovation were determined by UCC personnel in the operational division. The second area of investigation was concerned with the laboratory evaluation of three separate source coals obtained from United Coal Company (UCC) and nearby mines to determine probable cleanability when using each seam of coal as a feed in the existing beneficiation process. Washability analyses were performed on each sample utilizing a specific gravity range from 1.25 to 1.50. 4 figures, 3 tables.