PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include
the accounts of the Company and its subsidiary
companies. The operations of the subsidiaries
are included in the accounts from the date of
acquisition.

Substantially all of the oil and gas exploration
and production and a significant amount of the
mining exploration and development is
conducted under joint venture agreements. The
Company’s proportionate interest in the assets
and liabilities and revenues and expenses of such
ventures is included in the accounts.

The active subsidiaries, which are wholly-
owned, are as follows:

Brinco Mining Limited
Brinco Oil & Gas Limited

INVENTORIES AND MINE SUPPLIES

Asbestos fibre and ore stockpiled are valued at
the lower of cost, determined on a first-in, first-
out basis, and net realizable value. Mine supplies
are valued at the lower of cost, principally
average cost, and replacement cost.

MINERAL EXPLORATION

Exploration expenditures and costs related to
the investigation of possible investments in
mineral resource properties are charged to
earnings as incurred, net of recoveries from
joint venture partners.

PROPERTY, PLANT AND EQUIPMENT

Mineral Resource Properties Brinco Limited and Subsidiarie
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS

December 31, 1983

Development and preproduction expenditures
on mineral resource properties, net of recoveries
from joint venture partners, are capitalized
providing the properties are considered to be of
value to the Company. When a property
achieves commercial production volumes, costs
are charged to earnings using the unit-of-
production method based on proven reserves. In
the event of abandonment or disposal of such
properties, the resulting loss is charged to
earnings.

Oil and Gas Properties

Expenditures on oil and gas properties are
accounted for using the full cost method
whereby all costs relating to the exploration for
and development of oil and gas reserves are
capitalized. The costs of such properties are
charged to earnings using the unit-of-
production method based on proven reserves.

Plant and Equipment

Expenditures for plant and equipment are
capitalized in the property accounts.
Depreciation of oil and gas plant and equipment
is charged to earnings using the unit-of-
production method based on proven reserves.
Mine plant and equipment is charged to
earnings over its physical or economic life using
the unit-of-production and the straight-line
methods of depreciation.

TRANSLATION OF FOREIGN CURRENCIES

Assets and liabilities arising in foreign
currencies are translated into Canadian dollars
at the rate of exchange in effect at the end of
the year and revenue and expense items are
translated at the average rate of exchange for
the year. Gains and losses on currency
translations are included in the determination of
earnings.