The bench-scale laboratory development reported in the 2nd Quarterly Report pointed toward a process combining a number of steps as the way toward producing low-ash, low-sodium micronized slurry fuel. The steps were (a) physical cleaning, (b) acid treatment, (c) hot-water drying (HWD), and (d) micronizing/slurry preparation. Since then, laboratory experiments have been made combining these process steps. A quantity of 1/2''x 0 Eagle Butte coal was physically cleaned by heavy-liquid separation at a specific gravity of 1.4 for use in these experiments. This clean coal contained 4.71% ash. AMAX R and D has had good results using a stirred ball mill for preparing micronized coal-water slurry fuel and specified these mills in a conceptual design for a gas-turbine fuel manufacturing plant. This appears to be true for low-rank coal as well. Good results were achieved during a trial run on Eagle Butte coal in a Draiswerke Perlmill. Over 99% of the ground coal passed through a 30-micrometer opening sieve. Even finer grinds are possible at reduced feed rates. Several alternatives were considered for preparing the dry powder fuel efficiently so that realistic information would be available when designing a conceptual plant processing LRC. 2 refs., 11 tabs., 4 tabs.