Cassiar Asbestos Corporation Limited

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1966

1. At December 31, 1966 the company was committed to purchase mine plant and automotive
equipment at a net cost of approximately:
Cassiar Mine —$ 200,000
Clinton Mine — 4,400,000

2. Depreciation and amortization:
The basis of amortization and depreciation is as follows:
Depreciation —
Buildings — 5% per annum on cost.
Equipment — 10% per annum on cost.
Automotive equipment cost is charged to operations at a uniform rate over the estimated
useful life applied on a unit basis.
During the year the depreciation charged to operations amounted to $1,439,523 (1965
— $1,134,471).
Amortization of stripping expenditures:
Stripping costs are charged to operations on a per ton of ore mined basis, the rate being
determined by dividing the cost of stripping by the estimated tons of ore released.
During the year stripping costs charged to cost of production amounted to $1,539,972
(1965 — $1,249,525).
Amortization of preproduction expenditures:

Preproduction expenditures are amortized on a per ton basis, the rate being determined
by the estimated ore reserves. As the preproduction expenditures relate to mines
not yet in production no amortization has been written in the current year.

3. Exploration expenditures:

The company’s policy is to write off all general exploration expenditures incurred during the
year and to capitalize the direct costs of acquisition and expenditure thereon in mining
properties which were in good standing at the year end. Upon disposal or abandonment
of such interest the net gain or loss is reflected in the statement of income.

4. Bank indebtedness:

The bank loan is secured by a general assignment of accounts receivable and pledge of
inventories of asbestos fibre, ore stockpiled at mill, and supplies.

5. Capital:

The authorized share capital of the company was increased by Supplementary Letters Patent
dated November 1, 1966 from 5,000,000 to 5,500,000 shares without nominal or par
value.

Subsequent to December 31, 1966 the shareholders were offered the right to subscribe on or
before 4:00 p.m. Eastern Standard Time February 28, 1967 to 477,500 shares of the
capital stock at the price of $12.00 per share on the basis of one share for each ten shares
held as at the close of business January 31, 1967. Pursuant thereto subscriptions were
received for 473,818 shares. The remaining 3,682 shares not subscribed for under the
terms of the offering have since been sold to Bell Asbestos Mines Ltd. at the current
market price of $16.00 per share. Accordingly the total offering of 477,500 shares
has now been allotted and issued for a total consideration of $5,744,728.

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