A total of 3,596,481 tons of waste was removed from the orebody at a cost of $3,437,140. 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, the appropriate portion of waste removal is written off as a part of the current ore mining
cost. On this basis, the waste charge against the ore currently being mined is $1.68 per ton. During
1973 ore will be mined from the next and deeper section in which the waste to ore ratio is higher than
in previous years. The appropriate rate of amortization for this ore is estimated at $3.50 per ton. This
rate will be used during 1973 and will continue thereafter for approximately another five years.

With a view to reducing the cost of both waste removal and transportation of ore to the mill,
new and larger equipment will be introduced during the next two or three years.

Mill
The mill treated 755,189 tons of ore and concentrate and produced 106,905 tons of fibre. Mill
production improved throughout the year and is currently running close to capacity.

A new tailings conveyor system is needed to handle the required tonnages. It will be designed
to minimize dust emission to the atmosphere and will be installed in late 1973. The bag filter system
installed in the dryer circuit last fall has proven to be very effective in controlling dust emission from
this troublesome area.

Ore Reserves

Diamond drilling during the past two years has indicated some changes in the attitude of the
orebody, and a new pit design is being studied. The following figures are subject to minor changes
which may result from this study and from further diamond drilling.

The probable ore reserves currently estimated to a depth of 340 feet below the lower adit and
within an economic pit design are approximately 25,000,000 tons. The waste to ore ratio in later
years gradually increases from 3.5 to 1 to 7.5 to 1. Below this horizon the ore begins to plunge under
the South Peak and the waste to ore ratios become so high that the economics of an underground
Operation will have to be studied. A few drill holes in this area have reached a depth of 300 feet below
the level of the proposed pit floor and indicate the possibility of a substantial tonnage of good grade
ore with no suggestion of bottoming at this horizon. Further exploration will probably be deferred
for a number of years when better drill sites will be available and the work will not interfere with
current stripping operations.

CLINTON MINE
Mine

During the year 1,788,976 tons of ore were mined and delivered to the mill by the tramline.
A total of 506,160 tons of rock was rejected.

A total of 14,309,883 tons of waste was removed at a cost of $5,417,807. Waste removal
costs are capitalized and written off in the same fashion as at Cassiar. In 1972 the charge against
each ton of ore mined was $1.80. It is expected that this rate will apply to the mining of the probable
ore reserves.

Unit costs in the mine and mill were maintained at budget level.
Mill

The mill treated 1,267,178 tons of ore and produced 102,347 tons of fibre. The recovered
grade of the ore mined was 5.66% (excluding CZ) compared to 5.37% in 1971.

Ore Reserves

The ore reserves as calculated on the previous basis within the open pit design would be
approximately 16,000,000 tons. Recent geological interpretations indicate that approximately 7,500,000
tons of this total, requires further diamond drilling to determine more accurately the tonnage, grade

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