Cassiar Asbestos Corporation Limited

Report of the Directors

To the Shareholders,
CASSIAR ASBESTOS CORPORATION LIMITED:

Your directors submit herewith the thirteenth annual report on the affairs of your company
including the balance sheet as at December 31, 1964, the statement of operations and earned
surplus for the year ended on that date and your Auditors’ Report thereon.

FINANCIAL

You will note from the attached financial statements that the profit from operations was
$7,336,746 before providing for depreciation, stripping and other write-offs aggregating $2,358,284,
and the current year’s income taxes of $1,185,000. Of the remaining $3,793,462 there was
transferred to accumulated tax reductions applicable to future years $765,000, leaving a net profit
of $3,028,462.

During the year under review, there was expended on land, plant and equipment $1,962,105,
stripping $2,259,102, Clinton Creek exploration $305,250 and dividends $2,376,000. The land,
plant and equipment expenditure includes $425,000 for the purchase of the Conwest waterfront
property in North Vancouver, $375,000 of which remains to be paid over the next five years. It
also includes $195,679 worth of equipment budgeted for 1965 for which delivery was accelerated
in order to provide increased production capacity. Working capital decreased by $401,712.

SALES

Both the volume and value of sales were higher than in 1963. The market for spinning
fibres was somewhat stronger and the asbestos-cement grades moved very well.

It is worthy of note that the asbestos mines of Canada produced in 1964, according to
the preliminary estimates of the Dominion Bureau of Statistics, 1,377,079 tons of asbestos, having
a value of $148,370,312. The greatest part of this production represents exports for Canada
and your company accounts for approximately five percent of the quantity and ten percent of the
value.

Throughout the world, the asbestos-cement industry is continuing to expand. This is
evidenced by the encouraging number of machines that are being installed and new plants that
are to be constructed in the next three or four years. It would appear that the imbalance between
consumption and productive capacity, which has plagued the industry for a number of years, is
coming to an end.

The programmes of mine and mill development and of exploration, in preparation for
further expansion of your company’s productive capacity are detailed in other sections of this report.

RESEARCH

Research into the treatment and use of asbestos fibres is continuing. The progress is
encouraging, and the fields of investigation and the interest therein, are expanding as increased
knowledge is accumulated.

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