= San - Significant

___ Accounting Policies

See The: financial statements have
~ been prepared on the historic

cost basis in accordance with ac-
- counting principles generally ac-

cepted in Canada and conform

in all material respects with Inter-
- national Accounting Standards

adopted by the International Ac--

- counting Standards Committee.
_ The accounting policies of

; ‘significance to the Sonny are
as follows: - :

PRINCIPLES OF CON SOLIDATI ON

The consolidated financial state-_
ments include the accounts of the -

Company and its subsidiary
companies. The operations of

_ the subsidiaries are included in —
the accounts from the date of
acquisition.

Substantially all of the oil and gas
_ exploration and production anda

significant amount of the mining

exploration and development is
conducted under joint venture
agreements. The Company's pro-
portionate interest in the assets
and liabilities and revenues and
expenses of such ventures is in-
cluded in the accounts.

The active subsidiaries, all of
which are wholly-owned, are as
~ follows:

Brinco Mining Limited

Brinco Oil & Gas Limited
Sharondale Corporation

INVENTORIES AND MINE SUPPLIES ~

Asbestos fibre and ore stockpiled
are valued at the lower of cost.
‘determined on a first-in, first-out

basis and net realizable value. Gold
concentrate is carried at the
= ons of cost, determined on a first-

OPERATING»
___ Asbestos
ee COal reser:
Oil and gas —
~ Corporate —

_Unamortized waste
__ removal costs (asbestos)

a Property Plat and Equipment

in, first-out basis, and net realiz-
able value less amounts received

_ in advance pending final settlement.
_ The Company does-not hold in-

ventories of coal. Mine supplies are
valued at the lower of cost, princi-
pally average cost, and replacement
cost.

MINERAL EXPLORATION -

Exploration expenditures and

costs related to the investigation
of possible investments in mineral
resource properties are charged

to earnings as incurred, net of reco-

veries from joint venture partners.
FUTURES CONTRACTS

The Company enters into

futures contracts for the sale of

gold and currencies as a hedge
against gold price and foreign
exchange fluctuations. These
contracts are not recorded in

_ the Company's accounts except

for deposits required.
PROPERTY. PLANT AND EQUIPMENT
MINERAL RESOURCE PROPERTIES

Development and preproduc-
tion expenditures on mineral

resource properties, net of

recoveries from joint venture
partners, are capitalized pro-

_ viding the properties are con-
_ sidered to be of value to the

Company. When the property
achieves commercial production
volumes, costs are charged to
earnings using the unit-of-produc-
tion method based on estimated
reserves. In the event of aban- —
donment or disposal of such
properties, the resulting gain or
loss is charged to earnings.

OIL AND GAS PROPERTIES —

Expenditures on oil and gas pro-
perties are accounted for using
the full cost method whereby all
costs relating to the SeQeee

for and development of oil and
gas reserves are capitalized. The
costs of such properties are charged
to earnings using the unit-of-pro-
duction method based on estimated
proved reserves.

PLANT AND EQUIPMENT

Expenditures for plant and
equipment are capitalized in the
property accounts. Depreciation
of oil and gas plant and equipment
is charged to earnings using the
unit-of-production method based
on estimated reserves. Mine
plant and equipment is charged
to earnings over its physical or

~ economic life using the unit-of-
production and the straight-line
methods of depreciation.

LONG-TERM INVESTMENTS

Long-term investments are recor-
ded at cost and the related income
is recorded when received. In

the event of a permanent decline
in value, the investment is writ-
ten down to estimated realizable
value and the loss is charged to
earnings.

TRANSLATION OF FOREIGN
CURRENCIES

The accounts of the Company's
foreign subsidiaries and assets
and liabilities arising in foreign
currencies are translated into
Canadian dollars on the following
basis: current assets and current
liabilities at the rate of exchange
in effect at the end of the year:
revenue and expense items at the
average rate of exchange for the
year; non-current assets, related
depletion and depreciation and non-
current liabilities at exchange
rates applicable at the time of
relevant transactions. Gains and
losses on currency translations
are included in the determina-
tion of earnings.

Accumulated
depletion and

Cost ___depreciation Net Net

‘ {in thousands)
$116807 $61,611 $ 55,196 $ 57,429
69,051 1,894 CEST 6,592
72,871 11,259 61,612 62.680
733 329 404 452

si99den Ss

127,153

75,093 |

124,369

39,018

37,210

- «5,792 18.803
- 2,006 472
- 8,102 8.366
mes. 0429 9,413
- ~ 271
- 25,327 37.325
$188,714 $201,688