Cassiar Asbestos Corporation Limited

Notes to Consolidated Financial Statements

December 31, 1979

1. Accounting policies:

Principles of consolidation—
The consolidated financial statements
include the accounts of the Company
and its wholly-owned subsidiaries, Kut-
cho Creek Asbestos Company Limited
and Territorial Supply Company Limited.
Inventories—
Inventories of asbestos fibre and ore
stockpiled are valued at the lower of cost
and net realizable value; cost is deter-
mined on a first-in, first-out basis.
Supplies are valued at the lower of cost
and replacement cost; cost is determined
principally on a moving-average basis.
Fixed assets—
The basis of depreciation, except for
Clinton Creek Mine noted below, is as
follows—
Buildings—straight-line at 5%
Equipment—straight-line at 10%
Leasehold improvements—straight-
line over the seven-year lease
period
Automotive equipment—charged to
operations on a unit of use basis
At Clinton Creek Mine, the undepre-
ciated costs of remaining surplus equip-
ment and buildings were adjusted in
1978 to reflect their estimated net
realizable values. As at December 31,
1979, undepreciated costs of $1,706,395
are included in the consolidated balance
sheet (December 31, 1978, $1,988,263).

Deferred charges—
The basis of amortization and write-off is
as follows—

Waste removal—

Waste removal costs are charged to
roduction on a per ton of ore mined
asis, the rate being determined by

dividing the sum of the projected cost of

waste to be removed and the unamor-
tized balance of costs incurred, by the
estimated ore reserves.

Exploration and development—

General exploration expenditures are
charged to operations during the year
incurred. The direct cost of acquisition

of mining properties and exploration
expenditures thereon are initially capi-
talized. When disposal or abandonment
of an area is effected or considered prob-
able, the resulting net gain or loss is
reflected in the consolidated statement

of operations. Development costs are
amortized on a per ton of ore mined
basis, the rate being determined by 2
dividing the costs accumulated by the |
estimated ore reserves. )
Taxes— y)
The Company follows the tax allocation
method of accounting for all differences

in the timing of deductions for tax and
accounting purposes arising with re-

spect to mining claims and land, depre-
ciation and waste removal, exploration,
development and preproduction costs.
Taxes deferred of $34,793,000 have

arisen to date from claiming such items

for tax purposes in excess of the

amounts recorded in the accounts.

“2. Mine closure:

The Company’s asbestos mine at Clinton

Creek ceased production in August, 1978.

Additionally, as a result of this mine clo-
sure and the commencement of trans-
portation of Cassiar mine fibre through
Stewart, B.C., the transport division and
related facilities were also closed.

Included in Cost of Sales, as a net cost is
an amount relating to the closure of the
Clinton Creek mine of $98,732. (1978—a
net reduction of $1,112,959).

In the opinion of Management, the Com-
pany will not incur significant additional
net costs to complete the shutdown of
the Clinton Creek mine.

3. Remuneration of officers
and directors:

The Company and its subsidiaries paid aggregate direct remuneration as follows—

Year ended December 31

1979 1978
To the fourteen directors (seventeen in 1978) S$ 56,675
To the three officers of whom one is a director
(three officers of whom two were directors in 1978) $223,269
$279,944

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