Cassiar Asbestos Corporation Limited

Report of the Directors

To the Shareholders,
Cassiar Asbestos Corporation Limited:

Your directors present herewith the twenty-first annual report on the affairs of your Company
including the consolidated balance sheet as at December 31, 1972, statements of consolidated operations,
retained earnings and source and application of funds for the year ended on that date and your auditors’
report thereon.

FINANCIAL

The operating profit was $18,078,465 before providing for depreciation, waste removal and
other write-offs aggregating $10,880,307, leaving a net profit before income taxes of $7,198,158
compared to $6,768,146 in 1971. Provision for income taxes of $2,875,000 resulted in a net profit for
the year of $4,323,158 or 78.6 cents per share as compared to $4,628,146 or 84 cents per share in 1971.

Profits at the Cassiar Mine increased by $1,868,840 before income taxes. This is accounted
for by the greater tonnage of ore of a slightly better grade, treated during the year, less the higher cost
of labour and materials.

At the Clinton Mine, the reduction in profits before income taxes was $1,442,673 due primarily
to an increase in waste amortization of $1,610,080. The rate of amortization in accordance with the
company’s accounting practices was increased from $0.90 per ton of ore mined in 1971 to $1.80 per
ton in 1972. An improvement in the grade of ore treated was largely offset by the increase in the
cost of labour and materials.

The increase in taxes of $735,000 is basically attributed to the increased profit from the Cassiar

Mine.
Capital expenditures for the year are summarized as follows:
WHITEHORSE
& NORTH
CASSIAR MINE CLINTON MINE VANCOUVER
RiantaandeE qui pmen taelea aaa eee $1,632,881 $ 901,665 $ 264,577
Wastes GION leeegetts nae er antarer ia as itp erie ou 3,437,140 5,417,807
Developmen tis sre ee a aes rset ee ee 184,937 218,999
$5,254,958 $6,538,471 $ 264,577
SALES

Fibre sales in 1972 totalled 202,296 tons valued at $45,034,633 compared with 182,077 tons
valued at $40,563,996 in 1971. This is slightly above the previous record set in 1970. The increase
in sales of $4,470,637 is attributed $3,864,541 to Cassiar Mine and $606,096 to Clinton Mine. All
sales commitments were met.

The sales prices of Cassiar and Clinton fibres were increased on January 1, 1973 by
approximately 2% on spinning grades and 5% on asbestos cement grades. The previous increase was
on January 1, 1971.

While the demand for fibre has been good, the market did become highly competitive towards
the end of 1972 and is expected to continue in much the same fashion through 1973. Current indications
are that Cassiar sales for 1973 will approximate those of 1972.

CASSIAR MINE
Mine

During the year 1,115,502 tons of ore were mined, of which 1,109,952 tons were treated in
the rock rejection plant to eliminate 320,073 tons of rock. The untreated balance of 5,550 tons was
high grade ore which is not amenable to this form of concentration. The resulting 789,879 tons of
concentrate and 5,550 tons of untreated ore were delivered to the mill, 460,007 tons by tramline and
335,422 tons by truck.

PAGE SEVEN