President’s
Report

T he acquisition of the Similco
copper mine in June, coupled
with strong commodity markets,
has made 1988 an outstanding
year for the Company. Our
financial position is greatly
strengthened and our asset base
diversified. This success has

transformed Cassiar into a
significantly stronger mining
company, better positioned to meet
the challenges and opportunities
of the future.

Reflecting our confidence in the
future, the Company has
implemented a semi-annual
dividend policy. The first dividend
payment of $0.10 per share was
paid on January 23, 1989.

Financial Strength Increases
Since its acquisition in June 1988,
Similco contributed $45,687,000

to 1988 revenues and that,
combined with excellent sales from
the Cassiar operation, resulted in a
record year for the Company. Total
revenue was $112,313,000, nearly
double the 1987 total of
$58,129,000.

Net earnings were $22,210,000 or
$1.31 a share, as compared to the
1987 net earnings of $3,719,000,
or $0.23 a share. Similco
contributed $13,315,000 ($0.81
per share) to consolidated earnings
for 1988. Earnings from the
Cassiar operation were $8,895,000
— 2.4 times the 1987 earnings.

During 1988, cash flow from the
combined Cassiar and Similco
mining operations was $30.4
million, after deducting the cost of
fixed assets. Similco generated
$12.6 million of that total in the
seven months following the
acquisition. The purchase price for
the Similkameen mining assets
was fully paid to Newmont from a
portion of the Similco cash flow.
At year-end all monetary
obligations had been met and
Similco had surplus cash of $1.2
million.

The cash contribution of the
Cassiar operation was $17.8
million. Under the terms of the
bank loan facility, all funds
generated from the open pit are to
be applied to service the loan.
During the year, $10.8 million was
paid to reduce the balance from
$28.9 to $18.1 million. It is

anticipated that the remainder will
be fully paid by the latter part of
1989.

Similco Mine Provides
Diversification

Through the acquisition of
Similco, the Company diversified
its operations, and more than
doubled the Company’s size as well
as its cash flow, providing a solid
foundation for future expansion.

We acquired Similco on June | and
the entire $10 million purchase
price, as well as a $5.4 million
obligation to B.C. Hydro, has now
been paid from the mine’s cash
flow. The only liability still
outstanding from the purchase is
the return of copper concentrate,
containing 5.6 million pounds of
copper, which was borrowed from
the previous owner. This
concentrate is to be returned by
June 1990, and equates to one

Cumulative Net Earnings
@ Cassiar Mine 1987 ® Cassiar Mine 1988
Similco Mine 1988

$ Millions 25

20

Six Nine Twelve

Three i
Months Months Months

Months