1.

10.

Cassiar Asbestos Corporation Limited

and its subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1970

Depreciation and amortization
The basis of depreciation and amortization is as follows:

Depreciation —
Buildings — 5% per annum on cost.
Equipment — 10% per annum on cost.
Automotive equipment cost is charged to operations at uniform rates over the estimated useful
life.
During the year the depreciation charged to operations amounted to $3,939,274 (1969 —
$3,436,982).

Amortization of waste removal costs —
Waste removal costs are charged to operations on a per ton of ore mined basis, the rate being
determined by dividing the cost of waste removal by the estimated tons of ore to be released.
During the year waste removal costs charged to cost of production amounted to $3,170,197
(1969 — $2,317,309).
Amortization of preproduction costs —
Preproduction costs are amortized on a per ton of ore mined basis, the rate being determined
by dividing the cost by the estimated ore reserves.
During the year preproduction costs charged to cost of production amounted to $666,235 (1969
— $627,141).
Exploration costs
The companies’ policy is to write off all general exploration expenditures incurred during the year and to
capitalize the direct cost of acquisition and expenditure thereon in mining properties which were in good
standing at the year end. Upon disposal or abandonment of such interest the net gain or loss is reflected
in the statement of operations.
Bank credit
The companies have established a line of credit secured pursuant to section 88 of the Bank Act by a
general assignment of accounts receivable and inventories of asbestos fibre, ore and supplies in the
aggregate amount of $9,000,000.
Income taxes
The provision for income taxes for the 1969 and 1970 years reflects the fact that under the Income Tax
Act the income from the Clinton mine is exempt from income taxes for the three-year period ending
March 31, 1971.
The companies follow the income tax allocation method of accounting for all differences in the timing
of deductions for tax and accounting purposes arising from depreciation, waste removal costs, and
exploration and development costs. Income taxes deferred of $10,175,000 on the balance sheet represents
income tax reductions which have arisen to date from claiming such items for tax purposes in excess of
the amounts recorded in the accounts.
Consolidated subsidiaries

Cassiar Asbestos (Alaska) Inc. — 100% owned
Kutcho Creek Asbestos Company Limited — 100% owned
Territorial Supply Company Limited — 75% owned

Fixed assets

The mill expansion at Cassiar Mine is scheduled for completion by April 1971. The estimated cost has
been revised to $6,800,000 of which $5,339,350 was expended to December 31, 1970.

Other statutory information

iReesspaidutomtbinteensdinectonssen teen tee tenn nn rer ae $ 17,650

Remuneration of seven officers of which three are directors ........... 148,000
Remuneration of three others deemed officers pursuant to section 1(29)(ii)

OfsthewO@ntahionSeCuULIUesieA C Umea nme nae 73,834

3 239,484

Accounting presentation

In 1970, employees’ home purchase agreements have been included in investments instead of current assets
and the 1969 figures have also been reclassified.

Capital

As previously reported, 247,500 shares of the company’s capital stock were issued for cash consideration
of $4,950,000 as of March 23, 1970.

Subsequent event

Subsequent to the year end the company has revised its pension plan. The actuarial estimate of the present
value of the vested past service liability under the revised plan is $600,000. It is intended that this amount
will be funded and charged to expense in future years in amounts to be determined when the details of the
plan are finalized.

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