4. Pension plan:

As at December 31, 1979 the unfunded
portion of past service benefits is ap-
proximately $808,000 which is being

5. Lease commitments:

funded and charged to operations by
annual payments of $120,700.

At December 31, 1979, the Company is committed to future minimum lease pay-

ments estimated as follows:

Year ended December 31 Mine Equipment Other Total
1980 $1,788,500 $ 347,900 $2,136,400
1981 1,237,600 347,900 1,585,500
1982 1,125,200 365,100 1,490,300
1983 298,300 223,700 522,000
1984 = 129,200 129,200

$4,449,600 $1,413,800 $5,863,400

The Canadian Institute of Chartered
Accountants introduced recommenda-
tions, effective January 1, 1979, regarding
the accounting for lease transactions
which require, with respect to a capital
lease entered into thereafter, that the
present value of future minimum lease
payments be disclosed in the lessee’s
accounts as a Capital asset and a long-
term obligation. The amount capitalized
would be amortized over the economic
life of the asset leased, and the long-term
obligation reduced by the principal por-
tion of future lease payments.

The Company has not entered into any

new capital leases in 1979, however,
certain of its continuing equipment
leases would be considered capital leases
under the new recommendations. Had
the Company retroactively adopted the
new disclosure requirements, fixed
assets and liabilities in the accompany-
ing consolidated balance sheet would
have increased by $2,469,600 and
$2,599,400 respectively, at December 31,
1979 (1978—$2,943 800 and $3,122,600)
and consolidated net income would
have increased by $50,400 Le per
share) for the year then ended (1978—
$44,500; $0.01 per share).

6. Legal actions:

Auditors’ Report

The Company, as well as others, is con-
tinuing to be named as a defendant in
product liability suits in the United
States in which substantial damages are
claimed for alleged injuries to the health
of asbestos nates or members of their
families by reason of the inhalation and
ingestion of asbestos fibres or dust. The

Company is contesting or defending
such suits. Neither the existence of
liability nor the extent of any possible
damages can be determined at this time.
Thus no provision for such liability, if
any, has been made in the accompany-
ing consolidated financial statements.

To the Shareholders of Cassiar
Asbestos Corporation Limited:

We have examined the consolidated
balance sheet of Cassiar Asbestos Cor-
poration Limited as at December 31, 1979
and the consolidated statements of
aera and retained earnings and
changes in financial position for the year
then ended. Our examination was made
in accordance with generally accepted
auditing standards, and accordingly in-
cluded such tests and other procedures
as we considered necessary in the
circumstances.

In our opinion, ae ae to the outcome of
the legal actions referred to in Note 6,

13

these consolidated financial statements
present fairly the financial position of
the Company as at December 31, 1979
and the results of its operations and the
ee in its financial position for the
year then ended in accordance with gen-
erally accepted accounting principles
us on a basis consistent with that of
the preceding year.

PRICE WATERHOUSE & CO.
Chartered Accountants

March 12, 1980