CASSIAR ASBESTOS CORPORATION LIMITED

MINE

: During 1964, the mine produced 705,205 tons of ore, of which 349,632 tons were treated
in the rock rejection circuit to eliminate 118,112 tons of rock. The resulting 231,520 tons of
concentrate and the 355,573 tons of untreated ore, a total of 587,093 tons of mill feed, were
delivered to the mill by the tramline.

Stripping operations removed from the pit and peak 3,464,705 tons of waste rock at a
cost of $2,259,102. A 4% yard electric shovel was put into service on the stripping operations
in April 1964. The cost per ton of rock removed was reduced from an average of 86¢ per ton
in 1963 to 65¢ per ton in 1964. Further economies are anticipated in 1965 with the introduction
of 40-ton trucks to replace part of the existing 20-ton fleet and with the use of a new rotary drill.
The deferred stripping cost is currently being amortized at $1.68 per ton of ore mined.

Completion by the year end of the installation of a secondary crusher and rotary dryer
at the mine will permit rock rejection to operate on a year-round, all-weather basis, thereby
increasing the fibre carrying capacity of the tramline and the productive capacity of the mill.

MILLING

The mill treated 587,908 tons of ore and concentrate at an average rate of 1,611 tons per
calendar day. The mill addition, completed in July 1964, provided for production of the new
AY grade, which reached customers late in the year. Early consumer reports indicate that this
fibre is of the same high quality as other Cassiar grades and is expected to find a ready market.

VANCOUVER HARBOUR FACILITIES

The facilities in Vancouver Harbour, which up to the present time, have been leased and
rented are no longer capable of handling the tonnages and loads which will result from the increased
production of Cassiar and the eventual production from the Clinton Creek mine. In addition, the
White Pass & Yukon Route will, in late August 1965, commission a new and larger vessel to
replace the M. V. Clifford J. Rogers. It will be equipped with 20-ton containers and will have
approximately 214 times the capacity of the previous vessel. To handle the increased tonnage
and meet load requirements, a new wharf and warehouse will be constructed at an estimated cost
of $900,000.

In 1958, anticipating the ultimate need for additional waterfront facilities for its various
interests, Conwest Exploration Company Limited acquired a waterfront location at the foot of
St. Andrews Street in North Vancouver, near the West Indies Wharf property, which is under
lease to your company. The property was subsequently increased by purchase and lease of adjoining
land and during the year, the entire property and leases, having a harbour frontage of approximately
510 feet, were transferred to your company at the original cost of $425,000 pursuant to an
agreement which gives Conwest certain rights for use. Leases of the land under water on the
foreshore of the property have been extended and a new lease of the West Indies Wharf property
has been arranged with the National Harbours Board. The National Harbours Board leases are
for a period of 21 years, renewable for a further period of 21 years. Filling of land where required
has started and the construction of the new wharf and additional warehousing is scheduled for
completion by July 1965. These facilities will be known as Asbestos Wharf and will be an
important asset of your company.

CLINTON CREEK MINE

The geophysical work carried out in 1963 located two anomalous areas, one approximately
4,000 feet northeast of the main orebody and the other to the southwest and adjoining the main
orebody.

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