SALES

Fibre sales in 1971 totalled 182,077 tons valued at $40,563,996 compared with 196,387 tons
valued at $41,321,623 in 1970.

__, __ The growth in fibre demand that was anticipated early in 1971 did not materialize and current
indications are that the market will continue at approximately the same level throughout 1972.

CASSIAR MINE
Mine

During the year 983,234 tons of ore were mined, of which 963,194 tons were treated in the
rock rejection plant to eliminate 276,503 tons of rock. The untreated balance of 20,040 tons was high
grade ore which is not amenable to this form of concentration. The resulting 686,691 tons of

concentrate and 20,040 tons of untreated ore were delivered to the mill, 420,634 by tramline and
286,097 tons by truck.

A total of 4,086,884 tons of waste was removed from the orebody at a cost of $3,464,235.
It is the company’s accounting policy to capitalize the cost of waste removal. The waste is related to
sections of ore released for mining by its removal and the cost is apportioned accordingly. As the ore
is mined from a “‘section”, the appropriate portion of waste removal is written off as a part of the
ore mining cost. On this basis, the waste charge against the ore currently being mined is $1.68 per ton.

Unit costs and productivity in both mine and mill were adversely affected by the problems
which arose running in the new mill.

Mill

The mill extension was put into operation during the year. As previously reported, considerable
difficulty was experienced in running in the new equipment with resultant adverse effect on planned
production and substantially increased operating costs.

The mill treated 739,954 tons of ore and concentrate and produced 87,244 tons of fibre. At
the year end production was quite steady and was approaching design capacity.

Recovery of the new AZ grade will commence in early July.

A bag filter system is being installed in the dryer circuit and other improvements will be
initiated to assist in environmental control.

Ore Reserves

The diamond drilling programme initiated in 1971 will be continued in 1972. There are
indications of some changes in the configuration of the orebody at depth, but insufficient information
is available at the present time to redesign the mining programme and to recalculate the probable ore
reserves. It is not anticipated that the current reserves of 22,000,000 tons estimated to a depth of
340 feet below the lower adit will be significantly affected.

CLINTON MINE
Mine
During the year 1,731,805 tons of ore were mined and delivered to the mill by the tramline.

A total of 285,028 tons of rock were rejected. An additional crusher was installed in the rock
rejection circuit in August, which has increased the rate of rejection to approximately 35%.

A total of 11,145,856 tons of waste was removed at a cost of $4,358,912. Waste removal
costs are capitalized and written off in the same fashion as at Cassiar. In 1971 the charge against
each ton of ore mined was $.90.

Unit costs in the mine and mill were maintained at a satisfactory level.

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