Initial tests of the fibre from the wet
process, by the Company and selected
customers, have been positive.

If the pilot plant operation confirms the
results of previous tests, considerable
potential for utilization of the process
exists. The existing tailings stockpile
contains approximately 14 million
tonnes of crushed material grading 3.5
percent recoverable fibre.

Bissett gold project
feasibility study completed

In 1987 the Company commissioned a
study on the feasibility of bringing into
production its gold property in Bissett,
Manitoba on the basis of reserves estab-
lished by drilling carried out over the
past four years. This drilling was done
by a third party pursuant to an earn-in
agreement which terminated in 1987.

Kilborn Engineering (B.C.) Limited's
feasibility report, issued in August,
indicated the gold reserves would
support a viable operation.

In September, an equity financing
program was initiated with Richardson
Greenshields of Canada Limited to raise
the $12.5 million needed to bring the
mine to production. Although a
preliminary prospectus for that purpose
was filed with the regulatory authorities
by Cassiar’s wholly-owned subsidiary,
Mandor Mining Corp., the offering was
postponed because of the October 19
market collapse.

Kilborn issued an updated feasibility

report in late February 1988 which
incorporates results of additional site
work and more detailed engineering.
Capital costs are projected to be $11.2
million. Production is projected to be
approximately 40,000 ounces per year
with costs of U.S. $230 per ounce for
the first three years. Mill head grade is
predicted to average 0.25 ounces per ton
in the initial three years after which the
grade decreases to 0.205 ounces per ton.

The Company is actively pursuing
financing alternatives in order to bring
this gold project to production at an
early date.

Outlook

The Company’s commitment to the
development of McDame assures
Cassiar’s future in the asbestos business
beyond 1991.

Revenue from sales of asbestos is
expected to remain at the 1987 level.
Prices are expected to increase in some
grades but the average will remain
constant. Marketing efforts will be
directed to selling a mix of fibres which
more closely resembles that to be
produced from the McDame deposit.

Operating costs for the open pit
operation are expected to decrease
because of reduced waste rock removal.
Cash flow from operations, as well as
net earnings, are expected to improve.

Priority will be given to the
development of the McDame deposit in
the most expeditious and efficient
manner. The key to this development