Your 110 of 15th August. [1]

I took up with Chancellor of the Exchequer point you raised
therein and have now received the following reply.

Begins-
The defence project for which material is required will, we
anticipate, be continued indefinitely after termination of the war
and maintenance of the supply of uranium will therefore continue
to be of significance to His Majesty's Government in the United
Kingdom.

For this reason I must ask for option to purchase the material
produced to last for a minimum period irrespective of length of
war and in return I am prepared to agree that the cost of the
development work up to A45,000 should be borne entirely by His
Majesty's Government in the United Kingdom. On this basis it would
seem equitable that the United Kingdom should have an option to
purchase all uranium oxide produced during first five years after
commencement of production. His Majesty's Government in the United
Kingdom would be prepared to pay a price which would reimburse
Commonwealth Government fully for cost of production including a
reasonable allowance for overheads and allowing for the proceeds
of any byproducts. The form in which the material should be made
available to the United Kingdom could, of course, be settled
later.

We should expect further that at end of the period of five years
(assuming that we have [materially] [2] exercised our option to
purchase) your Government would discuss with us possibility of
renewing option for some further period on the same terms. You
will be aware that in asking your Government to undertake
development of this source urgently we have been concerned solely
with defence needs and in suggesting terms outlined above I have
been assuming that there will be no question of use of the
material for any other purpose. If, however, material acquired by
us in accordance with this arrangement should be put to some use
other than the military and strategic purposes which we have in
mind it would be reasonable to re-open the price terms so that
Commonwealth Government might participate in any benefits of non-
military exploitation. When I opened this subject with Mr. Curtin