To Our Shareholders

Your Company reached antici-
pated sales and achieved net earn-
ings for the year ended December
31st, 1979 of $11,992,503 or $2.18 per
share, compared to $11,825,204 or
$2.15 per share for the previous
year. The strike, which ended on
January 15th, 1979, had a negligible
affect on the year’s overall results.
The sale of Cassiar mine’s fibre gen-

erated 96% of the total pre-tax earn-
ings. By year-end, all of the Clinton
mine’s fibre inventory, produced in
1978, had been sold. Fibre prices
were increased by approximately
5% at the beginning of 1979. A
comparison of sales for the last two
years is as follows:

1979 1978
Tons $000 Tons $000
Cassiar fibre 109,245 74,463 82,140 55,721
Clinton fibre 17,067 8,757 48,575 25,054
126,312 83,220 130,715 80,775

During 1979, most of the fibre
produced by the Cassiar mine was
transported to Vancouver by the
newly established route via
Stewart, B.C.

The quarterly dividend rate
was increased from 10¢ to 15¢ per
share for the first three quarters,
and the last quarter's dividend pay-
ment of 25¢ remained at the same
rate as during the previous two
years. The higher dividend reflects
the improved cash position and
continuing trend of increased
earnings. Despite the relatively
high level of capital expenditures
and waste removal costs incurred,
there was a marked improvement
in the financial position of your
Company, as indicated by an in-
crease in working capital of ap-
proximately $4.7 million and the
repayment of the bank loan.

The total capital expenditures
at Cassiar for 1979 amounted to
$9,595,369 as compared to
$15,275,880 for the previous year. A
large portion of 1979 expenses rep-
resented the completion of the
prior year’s projects which were
interrupted by the 1978 strike. The

major projects were the installation
of shrink wrap equipment for pack-
aging palletized fibre, a new fuel oil
tank farm and the completion of
the conveyor system from concen-
trator to dryer.

A program, initiated in 1977, to
improve housing and community
facilities, has been a major factor in
reducing the turnover at the
Cassiar mine, from 92% in 1977 to
49% in the current year.

The continuing waste removal
program has maintained the avail-
ability of ore for mining, consistent
with requirements of the life-of-
mine plan. During the year,
6,335,560 cubic yards of waste
were removed at a cost of $2.51 per
cubic yard compared to a unit cost
of $2.04 in 1978. Due to the re-
evaluation of waste quantities, and
projected cost of waste to be
removed, the amortization rate
charged to operations was in-
creased from $9.50 to $10 per ton
of ore mined.

During the year 1,083,444 tons
of ore were mined from which
945,807 tons of concentrate was
produced. The recoverable mine

The plunge of the orebody into the side of
McDame mountain requires the removal
of massive quantities of waste rock to
sustain continuous ore mining. This mine
truck hauls an 85 ton load to the waste
dump, part of over 500 such loads every
day throughout the year. ;