Results

The difficult conditions experienced by the
mining industry in 1982 persisted through 1983
with demand and prices remaining under
pressure for most mineral commodities,
including asbestos and coal, the principal mine
products of the Brinco Group. The effect of
lower sales revenues was offset by significant
cost reductions and by the improved
performance of Brinco Oil & Gas Limited;
consequently, cash generated from operations
after interest costs was $5.184 million.

The 1983 loss from operations was $5.641
million ($8.921 million in 1982) and after
allowing for charges for extraordinary items of
$14.440 million ($19.835 million in 1982) the
loss for the year was $20.081 million ($28.756
million in 1982). Loss from continuing asbestos
and oil and gas operations was reduced from
$5.061 million in 1982 to $1.425 million in
1983, while the 1983 loss for discontinued gold
and coal operations was $4.216 million.

The net loss per share for 1983 was $1.41 after
providing for the extraordinary items amounting
to $ .85 per share. Retained earnings dropped
from $11.427 million to a deficit of $8.674
million in 1983 and working capital fell from
$11.677 million to a deficit of $177,000 at the
end of 1983, reflecting, principally, an increase
in the current portion of long term debt by $11
million. However, total corporate debt of the
Company and its subsidiaries, net of invested
cash, was reduced during the year from $84.3
million to $79.1 million.

The charge to earnings for extraordinary items
reflects continuing depressed conditions in the
uranium and coal industries. Assets which have
been offered for sale have been written down to
their estimated net realizable value and those
properties on which little work is planned for
the immediate future have been written off.

Counsel have advised the Company that the
provisions of the Newfoundland Companies Act
prohibit the redemption of Preferred Shares so
long as its retained earnings are negative.
Accordingly, no redemption of Preferred Shares
Series A was possible in January, 1984, as
provided for under the provisions attaching to
the Preferred Shares Series A. This restriction
on the redemption of Preferred Shares Series A
will also likely apply to the redemption which
would otherwise take place in October, 1984.
Also, given the financial performance of the
Company, the Board of Directors did not
declare dividends on the Company’s Preferred
Shares during 1983.

Markets

In 1983 Canadian shipments of asbestos fibre,
which fell sharply from 1979 to 1982, stabilized
at 1982 levels. Since 1980, the Cassiar mine’s
share of Canadian shipments has increased from
8 to 10 percent. Canadian mine capacity, which
supplies approximately 36 percent of the
asbestos requirements of the free world
economies, currently greatly exceeds demand
and prices remained under pressure throughout
the year, consequently, Cassiar sales were
approximately $6 million lower than in 1982.

In the face of poor export performances by ULS.
coal producers, coupled with depressed demand
from the domestic steel and utility industries,
coal prices deteriorated throughout the year. In
parts of the United States, eastern Kentucky
amongst them, approximately 50 percent of the
mines were idle by mid-year. The Loftis mine
was shut down intermittently to ensure a
balance of production and orders and, with no
improvement in markets in sight, the decision
was taken in October to close the mine and
place it on a care-and-maintenance basis.
Consequently, sales for the year were $4 million
lower than in 1982.