Preferred Shares (a) At the option of the holder, each Preferred Share Series A is convertible into 0.55 of a Common Share. At the option of the Company, the Preferred Shares Series A are redeemable if the market price of the Company’s Common Shares is more than $15.00. The Company’s legal counsel have advised that the provisions of the Newfoundland Companies Act prohibit the redemption of Preferred Shares Series A as long as the Company is in a deficit position. The Company remained in a deficit position throughout the year and no redemption of Preferred Shares Series A was possible during 1984. Also, given the financial condition of the Company, the Board of Directors did not declare dividends on the Company’s preferred shares during 1984, and the dividend normally payable to holders of preferred shares on March 31, 1985, was also omitted. The obligation continues to offer to redeem all of the outstanding Preferred Shares Series A when it would no longer be contrary to applicable law to do so. (b) At the option of the holder, each Preferred Share Series C can be converted into 0.55 of a Common Share. On November 6, 1985, the conversion of any remaining Preferred Shares Series C to Common Shares will take place. Should the weighted average market price of the Common Shares for any ninety consecutive days after November 6, 1983 and prior to November 6, 1985 be more than $13.00, the Preferred Shares Series C will be converted at the end of such ninety days. (c) Each issued and outstanding Preferred Share Series A and Series C is entitled to a fraction of a vote equal to the conversion basis of such shares into Common Shares. (d) Dividends on the cumulative Preferred Shares Series A and Series C are payable quarterly on the last days of March, June, September and December of each year. The dividend payable in December, 1982 and all the 1983 and 1984 dividends for a total of $8,830,500 are in arrears. Common Shares In 1978, 9,973,067 Common Shares purchased for $7.07 each, pursuant to the 1974 tender offer to shareholders, were deemed by legislation to be a special class of Common Shares designated as Class A. If these shares are reissued, they revert to their former status as Common Shares. To date 2,210,435 such shares have been reissued. During the year, 377,073 Common Shares were issued with a value of $1,374,997 and these funds were made available for Canadian mineral exploration activities under a program organized by C.M.P. 1984 Mineral Partnership and Company, Limited. The Company has entered into an agreement for participation in a similar program in 1985 under which the Company will issue common shares for $3 million at a price to be determined on April 24, 1985, and will use the proceeds for Canadian mineral exploration activities. 7. Stock Options Under the Company’s stock option plan, 700,000 Common Shares have been set aside for issuance. At December 31, 1984, options were outstanding on 99,500 shares (including 17,500 to officers) at prices ranging from $8.55 to $9.45 per share exercisable at various dates to 1986. During the year no options were exercised. 8. Extraordinary Items The Company has reassessed its non-operating gold property and has determined that the property’s book value should be written-off. This action has been taken because of the depressed price of gold and the likelihood of no active development taking place in the foreseeable future. 1984 1983 (in thousands) Write-down of mineral resource properties, net of deferred taxes of $2,970,000 (1983-$3,450,000) $ 4,850 $14,440 $ 4,850 $14,440 During 1982, Brinco Mining Limited acquired the right to pursue an old insurance claim connected with the San Antonio gold property. A judgment has been entered by the court in favour of the Company in the amount of approximately $2,400,000 plus interest of $1,100,000. The judgment has been appealed and no amount has been recorded in the accounts for this claim.