The term loan is repayable on demand and bears interest at the bank prime rate plus 2%. By agreement with the bank it is
being repaid in semi-annual instalments of $1,000,000. Included in interest on borrowings is interest on the term loan totalling
$1,024,878 (1975: $787,685)

3. REMUNERATION OF DIRECTORS AND OFFICERS
The Company paid aggregate direct remuneration during the year ended December 31, 1976, as follows:

HOROISEVENLCEN TC | FEGLOLS saserercetar tat ae ier ra tee ee a fete Oa te etre cone oo ae EE, $ 17,700
NOME SIX OIGers Ol: whom fVerare) GITECLOIS) 2... oracles os ne oes tee le wee Heels ke ce dieses teens 247,961
To one other, deemed officer pursuant to the provincial securities acts ................000-20005 44,685

$310,346

The aggregate cost during the year ended December 31, 1976, with respect to all pension benefits proposed to be paid in the
event of retirement at normal retirement age (65 years) was:

DIFCCLOlSea CL OLLI CCIS me memr erent rc ee ey eae yee en Ay I rh ee a teaver Sera Maaco $ 24,336
One other, deemed officer pursuant to the provincial securities acts ...............0 0.00.0 eee eee 1,724
$ 26,060

4. PENSION PLAN
The present value of the unfunded portion of past service benefits is approximately $664,000 at December 31, 1976. The amount
is being funded and charged to operations by annual payments of $73,000, including interest.

5. COMMITMENTS
The Company is committed to an equipment leasing programme for mining equipment. At the year end the outstanding
contracts for leased equipment amounted to $8,094,000 of which $2,080,450 will be payable in 1977.

6. ANTI-INFLATION PROGRAMME
Under the Federal Government's anti-inflation programme (presently scheduled to be in force until December 31, 1978) the
Company is subject to mandatory compliance with legislation which controls prices, profit margins, employee compensation and
shareholder dividends.

Because the majority of the Company's sales are for the export market the controls on prices and profit margins have
relatively little effect on operations. Management is of the opinion that the Company is in compliance with the requirements of
the anti-inflation legislation.

7. LEGAL ACTIONS

The Company, as well as others, has been named as a defendant in product liability suits in the United States in which substantial
damages are claimed for alleged injuries to the health of asbestos workers or members of their families by reason of the
inhalation and ingestion of asbestos fibres or dust. The Company is contesting or defending each of these actions. Neither the
existence of liability nor the extent of any possible damages arising from any of these cases can be determined at this time.
Accordingly, no provision for such liability, if any, has been made in the accompanying financial statements.

Auditors’ Report

To the Shareholders of Cassiar Asbestos Corporation Limited:

We have examined the consolidated balance sheet of Cassiar Asbestos Corporation Limited as at December 31, 1976 and the
consolidated statements of operations, retained earnings and changes in financial position for the year then ended. Our
examination was made in accordance with generally accepted auditing standards, and accordingly included such tests and other
procedures as we considered necessary in the circumstances.

In our opinion, subject to the outcome of the legal actions referred to in note 7, these consolidated financial statements
present fairly the financial position of the company as at December 31, 1976 and the results of its operations and the changes in
its financial position for the year then ended in accordance with generally accepted accounting principles which, except for the
change in the basis of accounting for waste stripping costs as explained in note 1, have been applied on a basis consistent with
that of the preceding year.

Vancouver, Canada CLARKSON, GORDON & CO.
February 25, 1977. Chartered Accountants

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